If FDIC did not exist...

Without FDIC/NCUA I/we would...

  • Do nothing differently

    Votes: 25 32.9%
  • No longer purchase CDs

    Votes: 10 13.2%
  • Keep less in the bank/CU

    Votes: 30 39.5%
  • Keep nothing in the bank/CU

    Votes: 4 5.3%
  • I like bacon

    Votes: 28 36.8%

  • Total voters
    76
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njhowie

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Would you still purchase CDs?

Would you still keep any of your money in a bank at all?

Personally, I'd immediately close all of our bank accounts and move everything into our Fidelity cash management account. Without FDIC I wouldn't ever purchase another CD.

I suppose moving everything to a credit union might be an option. However, for purposes of this poll, we'll figure that NCUA would also be eliminated and credit unions are on similar footing as banks.

It would (not) be interesting to see what happens with existing outstanding FDIC-insured CDs if FDIC were eliminated.
 
FDIC is an established government agency and the oversight of banks and government backed guarantee of $250,000 simply can’t cease to exist. If this happens, it means the US government no longer exists.
 
[mod note] Our community rules haven’t changed, so let’s please keep politics out of the discussion
 
Folks, the question posed was, if there were no FDIC, what would you do? Not interested if any of us believe it would never happen, asking what would you do if it did happen?

Mods - if this goes off the rails, please shut it down...quickly.
 
Assuming there was nothing to replace the FDIC, then why would anyone put money into bank deposits or CD's? I suppose no one remembers the bank runs in the Great Depression. Plus, with the massive amount of (dis)information available online today, there would certainly be chaos. I think the banking system might fail spectacularly.
 
If the FDIC did not exist, I’d fight like hell and demand it be re-established.
 
One of life's little mysteries for me is the number of people buying equities, which have significant and uninsured risk while then turning around and obsessing about staying under the $250K FDIC limit. So I am in the do-nothing camp.
 
If FDIC did not exist, I think it would probably be created in some way, shape or form. Until then all my cash equivalent money would be in Treasuries - owned directly or through MM funds that only invest in treasuries.
 
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One of life's little mysteries for me is the number of people buying equities, which have significant and uninsured risk while then turning around and obsessing about staying under the $250K FDIC limit. So I am in the do-nothing camp.
"I am more concerned about the return of my money than the return on my money.". This is often attributed to Mark Twain (Samuel Clemens).
 
If there were no FDIC, I would just substitute Treasuries or Agency bonds for CDs. I pretty much do that anyway... I'll buy any of those three based on yield and call attributes because I consider them ll to be equivalent with respect to credit risk.

The key thing to me is negligible credit risk because the US government stands behind the FDIC but the same applies to Treasuries, albeit more directly, and for all intents and purposes to Agency bonds (though I'll concede that it hasn't been tested).

If there were no FDIC, I would think of CDs issued by banks as just a different form of low credit risk corporate bond.
 
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If this topic is related to the buzz in Washington as reported in the WSJ today regarding eliminating the FDIC, it's not what is being discussed.....I suggest folks read the article. The chatter is not about eliminating FDIC insurance protection but rather absorbing the agency in the Dept of the Treasury for efficiencies sake. There is redundancy in all the different federal regulators that audit banks with wasted overlap. It's being presented as an opportunity to be more efficient. Not eliminate FDIC insurance.

The polling question comes across as political to me as it seems to create suddenly a discussion about FDIC insurance going away (risk and panic) and that is nowhere being discussed nor would such a topic come up on here if it was not for political trolling.

I respectfully ask the moderators to review.
 
If this topic is related to the buzz in Washington as reported in the WSJ today regarding eliminating the FDIC, it's not what is being discussed.....I suggest folks read the article. The chatter is not about eliminating FDIC insurance protection but rather absorbing the agency in the Dept of the Treasury for efficiencies sake. There is redundancy in all the different federal regulators that audit banks with wasted overlap. It's being presented as an opportunity to be more efficient. Not eliminate FDIC insurance.

The polling question comes across as political to me as it seems to create suddenly a discussion about FDIC insurance going away (risk and panic) and that is nowhere being discussed nor would such a topic come up on here if it was not for political trolling.

I respectfully ask the moderators to review.
Seems that you are the one looking to turn this into something political when it is not.

It's really quite simple. Ignore the news and what is being proposed or not proposed. Does FDIC influence how/where you allocate your investments and savings? That's the question. Has nothing to do with politics.
 
My parents lived through actual bank failures. The scene in "It's A Wonderful Life" during the run on the Savings and Loan was UNDERSTATED according to my mom!

Both parents were scarred by the financial issues of the Great Depression. I was influenced by them to be very careful about money, savings, investing, storing food staples, and having back-ups (to my back ups.) Without FIDC, my mattress would be a lot lumpier but YMMV.
 
I'd put less in banks and more in money market funds or treasuries but it wouldn't be radically different. I'd also have accounts at a second bank
 
I do not buy CDs at all... I only have my checking account at a bank...

I did say I would do nothing but I 'MIGHT' keep less money in a bank... but then again probably not..
 
I'm in the camp that full 100% FDIC insurance causes bank lending practices to be riskier than it should be. Why? Because they need to do riskier loans to acquire assets (deposits), and if the other guy (bank) is doing riskier loans in order to provide higher deposit/CD rates, then my lending practices also have to suffer.

I believe the country would be better served if there were some (small) risk to consumers for a bank failure.

With the current rules (full FDIC insurance on the first 250K), I do not pay ANY ATTENTION AT ALL to how risky the bank or credit union is...I only pay attention to the rate they are willing to pay. (And to be fair, how easy it is to send/get money from them.)
 
If this topic is related to the buzz in Washington as reported in the WSJ today regarding eliminating the FDIC, it's not what is being discussed.....I suggest folks read the article. The chatter is not about eliminating FDIC insurance protection but rather absorbing the agency in the Dept of the Treasury for efficiencies sake. There is redundancy in all the different federal regulators that audit banks with wasted overlap. It's being presented as an opportunity to be more efficient. Not eliminate FDIC insurance.

The polling question comes across as political to me as it seems to create suddenly a discussion about FDIC insurance going away (risk and panic) and that is nowhere being discussed nor would such a topic come up on here if it was not for political trolling.

I respectfully ask the moderators to review.
I'll take njhowie at his word that there was no nefarious political intent. Here is a link to the article: https://www.wsj.com/finance/regulat...c?st=n5FuJF&reflink=desktopwebshare_permalink

... Any proposal to eliminate the FDIC or any agency would require congressional action. While past presidents have reorganized and rebranded departments, Washington has never shut down a major cabinet-level agency and rarely closed other agencies like the FDIC that are not.

Bank executives are optimistic that Trump will ease a host of regulations on capital cushions and consumer protections, as well as scrutiny of consolidation in the industry. But FDIC deposit insurance is considered near sacred. Any move that threatened to undermine even the perception of deposit insurance could quickly ripple through banks and in a crisis might compound customer fears. ... (emphasis added).
 
My parents lived through actual bank failures. The scene in "It's A Wonderful Life" during the run on the Savings and Loan was UNDERSTATED according to my mom!

Both parents were scarred by the financial issues of the Great Depression. I was influenced by them to be very careful about money, savings, investing, storing food staples, and having back-ups (to my back ups.) Without FIDC, my mattress would be a lot lumpier but YMMV.
I was just going to comment I would be buying a larger mattress and collecting old coffee cans to bury in the backyard.
I kind of miss the safe feeling of the good old days going to the physical bank. It does freak us out sometimes when we think about how much trust we have that our "money" is out there somewhere in the great big cyber vault in the matrix.......

big-data-matrix.png
 
It depends upon whether the Feds make other arrangements to secure deposits along the same line - a rose by any other name. I didn't see that as an option. In any event, due to risk of a run on the banks, I don't see FDIC insurance disappearing without protection of the depositors per the current limits.

As to what I would do, I suppose I would analyze my alternatives vis-a-vis credit risk.

I moved the majority of my cash out of my banks in into Fidelity's cash management account a number of months ago so there's that.
 
I'm in the camp that full 100% FDIC insurance causes bank lending practices to be riskier than it should be. Why? Because they need to do riskier loans to acquire assets (deposits), and if the other guy (bank) is doing riskier loans in order to provide higher deposit/CD rates, then my lending practices also have to suffer.

I believe the country would be better served if there were some (small) risk to consumers for a bank failure.

With the current rules (full FDIC insurance on the first 250K), I do not pay ANY ATTENTION AT ALL to how risky the bank or credit union is...I only pay attention to the rate they are willing to pay. (And to be fair, how easy it is to send/get money from them.)
But think about that...do you want to have to research what bank you put your money in, the same way as some investment in a company? Going through their financial statements, having to understand their capital ratios, trying to understand what risks they've taken? And then what if it's a complete sham? Fugettaboutit.
 
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