an individual who reiels on FDIC insurance to â??bail them outâ?? is being responsible and additional diligence to make sure the bank remains viable is, or should be, unnecessary.Unfortunately, due to the fact that the FDIC is not a private insurer, it lacks the capitalization or cost structures that make the private insurers function. For example, banks that have riskier lending policies DO NOT pay more in premiums to the FDIC than those that are prudent. A private insurer would never allow this to occur (i.e. they would charge riskier policy holders much more in premiums).Consequently, consumers generally only care about picking the banks with the best customer service or interest rates rather than making their decision based on how prudent the institution manages its money. I call this irresponsible saving, and it has been encouraged by the existence of the FDIC.I am not against deposit insurance, I just believe that it should be structured quite differently, with better capital reserves and real penalties for lenders who decide to engage in risky behaviour. Rate this comment: 0 0

by Jaylee 05:26:56 AM 2012.11.03