An interesting question: how is the FDIC financed?
Will they go bankrupt if enough small banks collapse?
Or are they sitting on an infinitely deep well of money somehow?
Will they go bankrupt if enough small banks collapse?
Or are they sitting on an infinitely deep well of money somehow?
Obviously if the money ran out the Fed would (probably) step in, but that is not how it is structured and supposed to work.
Right now, according to the law, if the FDIC rainy day funds run out there is no further source of funds to bail out banks.
In other words: the float is finite [1]
No other source of financing? Someone mentioned "backstopped by the government". What does that mean? Unlimited credit line with the Fed?
[1] https://www.arnolditkin.com/blog/insurance/understanding-ins...