FDIC Banking Insurance ‘Coverage’

Everyone has heard of the FDIC insurance on their bank accounts.  Consequently no one is concerned about their money being ‘lost‘ as a result of a ‘significant event‘.  However what they don’t know is, how much money does the fed have to cover America’s bank accounts?

Per FDIC rules individuals’ accounts are covered up to $250,000.  Joint accounts (married couples) are covered up to $500,000.  Which all sounds great.  But I recently got this information which is concerning.

In the U.S., the FDIC has about $30 billion in capital.  But those funds are all it has to back an estimated $9 trillion worth of deposits in the U.S.  In essence, the FDIC is broke and in the event of a major bank failure or systemic failure, your money at U.S. banks could also go up in smoke.”

I find this similar to the California earthquake coverage.  At one time residents of California could buy commercial insurance to cover their home in the event of earthquake.  However several years ago the insurance commissioner in California changed the law.  He required that any company operating within the California boards were required to offer earthquake insurance — whether they could afford it or not!  Consequently all insurance companies dropped their coverage for homes in California.

In response, California created an earthquake insurance fund.  The purpose was to cover anyone who chose to pay the premiums to California!!  One problem, homes in California are often priced at $1M or more for a three bedroom older home!  I actually read the state law and it stated that those funds would cover homes up to the balance of the earthquake fund’s balance — everyone else, you’re screwed!!  Oh, by the way, their balance was about $30B!!?!  How many million dollar homes will that cover??

This FDIC thing sure sounds a lot like California’s plan for residents..?!  Scary stuff…



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