Worth noting though. That over the last 20 years or so. So many banks have merged in all but name.
Per bank only applies to the owning company registered with the FDA.
So dividing wealth over 85k into multiple banks is getting more and more impossible. Not to mention, the same merging of banks puts the whole nation fiscal security at risk in the event of a collapse.
Firstly I don’t think that’s a problem in the UK anyway and secondly even if it was a problem if you have over 85 grand you can afford to pay someone to solve the problem for you.
85K Sounds like a huge amount of money. But really it is not life changing for anyone but the poorest in society.
Financial advice costs money, and no safe investment for 85k is going to return the cash to fund much good advice. Only the very young with that sort of cash are going to be looking for investment advice. Most people with that sort of money are middle income in their 50s. Having gained it from downsizing after children have left.
The average German household has about 160K to their name, total. Not just cash but total, including cars, homes, whatever. The median is going to be even lower, the average is always skewed upwards in these statistics.
Even for people in the median getting an extra 85k is going to drastically improve their lives. Maybe not life-changing. But go to the 25th percentile and this is going to look a lot different. And that’s not the “poorest” in society.
We supposedly have $250k, but the FDIC has 1% of the money they say they cover. A very few big banks or many small banks fail and the FDIC is broke and the money would have to be printed by the fed and cause hyperinflation. I bet your regulator has only a small percent too.
Obviously they can print it and give everybody their 250,000 back or whatever and if they do such then we will have hyperinflation like nobody’s business and the 250k you get back will be not worth the paper it’s printed on so to speak it won’t be worth shit
Not all banks go pop at once. Usually when banks go bust in UK, the gov steps in, recovers them and sells after. Many banks are perceived as too big to fail.
I don’t know a whole hell of a lot about the UK, so I will speak to the US. When the Federal Reserve raised interest rates, it has put tons of pressure on the commercial real estate office sector and has put serious pressure on most all of the regional banks. Your JP Morgan and your Wells Fargo are decently alright. But your local town banks are absolutely hurting. And enough of those very well could go bust to cause major issues. JP Morgan going down would be slicing an artery, but all these little banks going down would be death by a thousand cuts. You end up dying either way. It’s just how quick does it happen?
From what I’ve heard, we have about 4,000 banks and so most of those are going to be smaller regional banks. We only have a few big ones that take up most of the news cycle.
Likely. It’s like any insurance. Our FDA has a legal requirement as to the % the insurer must have available. It is well below 100% for any company.
Assurance like this as you say. The fact that governments with their own currency has the quantitive easing option means they can be a little more flexible than companies. But the cost is as described.
1995 was the last time we had to do it. With Baring’s Bank, and it cost around 800m at the time.
But just like the US in 2008. Our government moved to use the same quantitive easing to bail out the banks rather than have to pay this way.
The issue is not so much the % of assets vs coverage. But how many banks when looked at under the marketing are owned by the same company. And even with so few companies. They are all taking the same risks.
So when a bank goes. Assurance like our FSCS and your FDIC only cover individual/personal accounts. Investment or company accounts do not have this protection.
So the huge mergers the last 30 to 40 years of banking have allowed. Means any one bank actually means millions of customers, rather than having the risk divided as the systems were set up for. And even if the company paid out those customers in such huge numbers. The quantitive easing would like be equalled by the actual damage to investment and company fiscal availability.
So econs are forced to do as both the US and UK did in 2008 rather than let the banks fail. Its just a mess. And i seems like the banks are just taking it for granted and refusing to learn.
False, and I’ll assume you are American.
In the UK, you are protected up to £85k per bank.
https://www.fscs.org.uk/what-we-cover/
Government regulation can protect people. I know that concept seems crazy in USA.
Worth noting though. That over the last 20 years or so. So many banks have merged in all but name.
Per bank only applies to the owning company registered with the FDA.
So dividing wealth over 85k into multiple banks is getting more and more impossible. Not to mention, the same merging of banks puts the whole nation fiscal security at risk in the event of a collapse.
Why would the bank need to be registered with the FDA to operate in the UK?
Also if having to split my money between multiple banks is the price to pay for having more than 85,000 it’s a price I’m more than willing to pay.
FCA Typo sorry.
The issue is the definition of a bank. It is not the high street name but the parent organisation.
So many banks have merged over the last couple of decades. It can be hard to ensure that money is not all covered with one bank.
Firstly I don’t think that’s a problem in the UK anyway and secondly even if it was a problem if you have over 85 grand you can afford to pay someone to solve the problem for you.
It’s not really a big issue
85K Sounds like a huge amount of money. But really it is not life changing for anyone but the poorest in society.
Financial advice costs money, and no safe investment for 85k is going to return the cash to fund much good advice. Only the very young with that sort of cash are going to be looking for investment advice. Most people with that sort of money are middle income in their 50s. Having gained it from downsizing after children have left.
The average German household has about 160K to their name, total. Not just cash but total, including cars, homes, whatever. The median is going to be even lower, the average is always skewed upwards in these statistics.
Even for people in the median getting an extra 85k is going to drastically improve their lives. Maybe not life-changing. But go to the 25th percentile and this is going to look a lot different. And that’s not the “poorest” in society.
Okay so I’ve just asked someone who actually knows, and apparently that’s not how it works in the UK anyway, it’s per Bank, not per owner.
Anyway I don’t think banks have consolidated all that much in the UK. There is HSBC and then basically everyone else is separate.
We supposedly have $250k, but the FDIC has 1% of the money they say they cover. A very few big banks or many small banks fail and the FDIC is broke and the money would have to be printed by the fed and cause hyperinflation. I bet your regulator has only a small percent too.
Tell me you don’t have a clue without telling me.
Obviously they can print it and give everybody their 250,000 back or whatever and if they do such then we will have hyperinflation like nobody’s business and the 250k you get back will be not worth the paper it’s printed on so to speak it won’t be worth shit
Hyperinflation doesn’t happen that quick.
Not all banks go pop at once. Usually when banks go bust in UK, the gov steps in, recovers them and sells after. Many banks are perceived as too big to fail.
I don’t know a whole hell of a lot about the UK, so I will speak to the US. When the Federal Reserve raised interest rates, it has put tons of pressure on the commercial real estate office sector and has put serious pressure on most all of the regional banks. Your JP Morgan and your Wells Fargo are decently alright. But your local town banks are absolutely hurting. And enough of those very well could go bust to cause major issues. JP Morgan going down would be slicing an artery, but all these little banks going down would be death by a thousand cuts. You end up dying either way. It’s just how quick does it happen?
Most of the smaller banks in the UK are gone. We don’t have a lot of “town banks”.
The risks to the US may be very different from here. Either that or you could be guilty of catastrophising.
From what I’ve heard, we have about 4,000 banks and so most of those are going to be smaller regional banks. We only have a few big ones that take up most of the news cycle.
Likely. It’s like any insurance. Our FDA has a legal requirement as to the % the insurer must have available. It is well below 100% for any company.
Assurance like this as you say. The fact that governments with their own currency has the quantitive easing option means they can be a little more flexible than companies. But the cost is as described.
1995 was the last time we had to do it. With Baring’s Bank, and it cost around 800m at the time.
But just like the US in 2008. Our government moved to use the same quantitive easing to bail out the banks rather than have to pay this way.
The issue is not so much the % of assets vs coverage. But how many banks when looked at under the marketing are owned by the same company. And even with so few companies. They are all taking the same risks.
So when a bank goes. Assurance like our FSCS and your FDIC only cover individual/personal accounts. Investment or company accounts do not have this protection.
So the huge mergers the last 30 to 40 years of banking have allowed. Means any one bank actually means millions of customers, rather than having the risk divided as the systems were set up for. And even if the company paid out those customers in such huge numbers. The quantitive easing would like be equalled by the actual damage to investment and company fiscal availability.
So econs are forced to do as both the US and UK did in 2008 rather than let the banks fail. Its just a mess. And i seems like the banks are just taking it for granted and refusing to learn.
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