This is like if you put $100 in Chase's security deposit box, and they opened it up, took the cash, and lent it out, and then when you come to get it, they say, woops, we lost it all. That would be just straight up theft or fraud.
https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m...
https://www.businessinsider.com/fbi-raid-1400-boxes-us-priva...
I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?
There are some nuances to work out to ensure cops can't accuse say Vladimir Putin of a crime involving the $8000 they found in your house, and then since Putin doesn't show up they keep your money, but the general idea seems more sound than civil forfeiture.
If you want to think of laws as an ecosystem, then think of civil asset forfeiture as a highly evolved species with all sorts of specialized defenses.
It seems to be slowly being ground away. The modern version of civil asset forfeiture was as a tool to take away the profits of drug kingpins in the 1980s and bootleggers during prohibition. Seems like the modern drug kingpins are companies like Johnson & Johnson, though.
If it were a big shipment of plutonium laced heroin, it seems fair game.
I think the biggest issue with civil asset forfeiture is the conflict of interest where police departments are keeping/using the seized assets. From the outside it looks a lot like the government acting like a gang.
The other big problem is it seems like it is up to the owner to prove the assets "innocence", rather than police proving the assets were the result of illegal activity.
If assets are seized, they need to go to a third party that can store them safely, return the assets to their owners. If found "guilty", the assets should go to some victims of crime fund, or destroyed.
Looking at Wikipedia's definition of civil asset I see my "in head definition is slightly wrong:
> Civil forfeiture in the United States, also called civil asset forfeiture or civil judicial forfeiture, is a process in which law enforcement officers take assets from people who are suspected of involvement with crime or illegal activity without necessarily charging the owners with wrongdoing. While civil procedure, as opposed to criminal procedure, generally involves a dispute between two private citizens, civil forfeiture involves a dispute between law enforcement and property such as a pile of cash or a house or a boat, such that the thing is suspected of being involved in a crime...
So my use of clearly illegal assets being seized means it wouldn't actually be civil asset forfeiture. Mea culpa!
With civil asset forfeiture: cop pulls a drug dealer over, the drug dealer offers to bribe the cop, the cop laughs and takes all his stuff anyway, books him, and the police department buys a martini machine.
Kind of a weak case, but that was the best steelman I could think of.
https://www.nytimes.com/2019/07/19/business/safe-deposit-box...
> Every year, a few hundred customers report to the authorities that valuable items — art, memorabilia, diamonds, jewelry, rare coins, stacks of cash — have disappeared from their safe deposit boxes.
https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
> In 2010, there were 11,000 noncriminal forfeiture cases.
If I'm reading it correctly, that's just the Federal cases alone.
There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depacco...
[0]:https://www.federalreserve.gov/monetarypolicy/reservereq.htm
If they aren’t providing safety or liquidity, why should you use them?
The safety is personal — no one can rob your home when you're gone and steal the money under your mattress because it's not under there, it's in a bank.
And in regards to liquidity, if you can tell me the exact day, time, and amount you tried to pull out of a consumer bank (large household bank names) and instead of getting cash in hand the bank told you "sorry, we spent your money on loans, we don't have any to give you", I'd love to see it.
Bonus points if then the FDIC didn't cover it.
Banks provide both safety and liquidity at the consumer level. It would also be a really bad idea to continue to encourage everyone to pull money out of banks and hold it in cash — both economically and personally. People largely benefit from banks existing, that's, well, why they exist!
Right, you can’t ramp up the printing presses instantly — which is literally what they would do if they had to.
I think people are missing the point that if it ever got so bad the FDIC had to worry about covering everyone your biggest worry would be the roving gangs looking for the Mormon food caches.
I think they've got enough to cover any consumer issues.
[0]: https://www.fdic.gov/about/strategic-plans/strategic/insuran...
[1]: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...
[0]: https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-...
And $119 billion where exactly? In US treasuries? If so it's about as safe as the social security "fund". What if the "customer issue" includes a govt default?
All you're saying here is that we can treat an FDIC guarantee like a govt guarantee, which is probably true, but still not the same as a case where the guarantor has actual assets which the prior poster was suggesting. The FDIC is making promises and backing those promises with other promises. There's not cash laying around anywhere to back it up. I'm not saying the only response is run for the hills like the other poster, but I find these defenses rather naive. The likelihood of any insurance scheme failing is not zero. Same for a government's finances.
Did you not read the part where they have $119.4 Billion dollars? And that was a year-and-a-half ago, it's probably closer to $130B now. It seems like you didn't read any of the source material, let alone my comment, before replying.
"DIF fund" being the $119B. In my post I presumed that 119 billion is in US Treasuries. I'm also presuming US treasuries are not the same thing as cash. Whatever the case, generally people don't refer to "cash laying around" as an investment.
EDIT: Try this much more readable doc: https://www.fdic.gov/about/financial-reports/reports/2020ann....
The $119B in assets includes only $3B in cash, with $110B in treasuries.
No; we're not. In fact, banks are positively awash with reserves by historical standards.
Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.
For comparison there were rumors that Credit Suisse was in trouble when r their asset to liability mix got around 1.65. That is they marked their assets to 165% of their liabilities and it was a major issue.
No; again. The Fed moved from a 'scarce reserves' regime for monetary policy to an 'ample reserves' regime; that was announced in 2019. Since the 'ample reserves' approach doesn't depend on bank reserves to implement short-term rate management, there wasn't really a need for an ongoing Fed reserve requirement.
>Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.
Bank reserves increased hugely from 2019 through the middle of 2021, as you can see from the chart I posted. Although they've dropped somewhat since then, they're still like 75x what they were in say 2007.
If you are married it is 500K, if you have a trust it is like 1.25M. 250K for each beneficiary up to 5 (or something like that).
A married couple each have 250k coverage for their personal accounts, and each have 250k for shared account(s), so they could in theory have 1M coverage at a single institution.
Other qualified relationships work similarly.
That's not right either. They promise you will get it back (the FDIC insurance), just that e.g. large amounts may have a delay. They are also scrutinized by regulators to ensure that the loans are sane enough not to all evaporate in value overnight, as a horse bet might.