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Comment by lumb63 | Hacker News Reader

Does it seem crazy to anyone else that the FDIC is levying a “special assessment”? The I in FDIC is insurance - the fund should have enough money to cover bank failures at the rate they are expected, much like an insurance company would, not charge other banks.

This is like your car insurance company levying a fee on everyone every time someone gets in an accident. It’s not insurance, it’s transferring one bank’s losses to all others in an arbitrary manner.

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If I am reading this correctly, they have enough to cover this:

> The Deposit Insurance Fund (DIF) balance was $128.2 billion on December 31, 2022, up $2.8 billion from the end of the third quarter.

https://www.fdic.gov/about/strategic-plans/strategic/insuran...

No. It's not any different than an insurance company realizing that the risk that a 1 in 500 year extreme weather event has dropped to a 1 in 100 year probability and adjusted insurance rates accordingly. Silicon Valley thought leaders used social media to create a bank run on steroids, a scenario apparently unforeseen by the actuaries at banks and their regulators. So…the regulator is adjusting risk in reaction.

The FDIC is the insurer of last resort. They don't get to go bankrupt.

They also wield the authority of the federal government, which is the authority of the people, represented more or less collectively, and which is operating under the principle of maximizing social utility, in contrast to the insurance company in your metaphor which is trying to maximize profits for its shareholders.

Health insurance in the US has a concept of “deductible” and “copay” in the event of a failure; this is not dissimilar to copay.

A copay for someone else? I've never had my insurance company send me an extra bill because my neighbor got in a car accident.

You all but certainly have, though it's not usually framed like this.

Many auto insurance policies include risk indicators based on location, age, educational levels, and similar factors. If members of that cohort prove to be a higher risk than earlier actuarial models had presumed, rates increase.

That's similar in general spirit to what's happening here.

The banks are not paying insurance to insure “themselves.” They are paying insurance to insure all depositors in the banking system, so the failure event belongs to the banking system at large not the failed bank in particular.

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