He would let Bank of America fail??? Don’t the government insure the deposits?
Insuring the deposits does not in and of itself prevent a bank from failing. It just guarantees the depositors get their money back when the failed bank’s assets are liquidated.
You can still insure the deposits without funneling more money and support to the main bank. Smaller banks get shuttered when the demands for cash (still insured) exceed their funds.
The government can allow a bank to fail while honoring the insurance on deposits.
I helped close a bank (Umpqua, about 1986) by cutting checks to all the insured customers.
In an interview with Cavuto afterwards, Cruz said it was silly for Kasich to suggest that the depositors would lose because they have depositer insurance. He is correct. He probably assumes that Kasich is more knowledgeable, especially since he worked in banking.
Yes and yes.
If Bank of America failed, all of the depositors would have their funds (up to $250,000 worth, the FDIC insured limit) transferred to another bank of their choice by the Federal Reserve.
But Bank of America would be no more.
All banks contribute to a fund which is administered by the Federal Deposit Insurance Corporation.
If the FDIC should run dry, only then is the federal government liable.
Are you saying you wouldn’t let it fail? The federal government only insures (I think the first 200k).
I say let it fail every time.