• Chump [he/him]
    ·
    2 years ago

    Only for individuals with < $250k in assets in that bank. It also has knock on effects of making banks compete to provide the highest rate of return to creditors (since the risk to individuals is basically zero, as you pointed out). This leads to banks taking riskier and riskier bets in search of those returns, because if they don't then their users will inevitably swap to one that does.