Originally published at: Half of Americans are afraid for their money's safety in banks | Boing Boing
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And the gQp is getting geared up to sabotage the entire country.
Can’t be helping how folks feel about their money right now.
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Turns out, Republicans, independents, those without college degrees, and people who are lower income are more concerned than others. Of course, the latter makes sense—even if not rational given the FDIC deposit insurance—because the less potential you have to earn money, the more disastrous it would be to lose what you do have.
While a lack of financial sophistication drives all of them, I agree with your last point. The last thing low-income people need is panic over a system they’re forced to use (indeed, “lucky” to use compared to the millions of un-banked Americans). Being poor is expensive in so many ways, with the “Sam Vimes “Boots” theory of socioeconomic unfairness” just one aspect.
What’s needed all around are financial literacy courses as a graduation requirement for K-12 students. Of course, that would lay waste to a whole swath of sleazy American industries (payday loans, MLM schemes, timeshares, etc, etc.) and damage the profits of the banks themselves (esp. the credit card divisions) so it likely won’t happen.
Part of the far right’s current messaging is that the USD’s reserve currency status is on the brink of collapse (as their GOP allies in Congress help out by raising the possibility of the U.S. defaulting on its debts). These “patriots” are basically doing Putin’s and Xi’s work for them.
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Yeah, it should probably be noted that I don’t think that any FDIC-insured depositor (with deposit amounts that were within the insured limits) has ever lost their money due to a bank failure since the FDIC system was created in 1933.
There are tons of ways that the economy could end up in the toilet soon, and it’s definitely possible that our currency gets devalued significantly due to debt limit B.S. and other GOP sabotage, but it still seems unlikely that the government will just let insured depositors lose their money without a whole lot of other shit going down first. They’d probably just print more money and make everyone’s net worth drop by half before doing that. And that would hurt the folks with mattresses full of cash as much as those with money in the bank.
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Part of the New Deal, which conservatives and Libertarians have spent the past 40 years telling us was a disaster for the country. In addition to financial literacy courses, better history courses would also help.
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I’d be curious whether the polling successfully disentangled the narrower question of “do you think you are going to lose your money because of a bank collapse?” and the broader “do you think you can feel good about what’s going to happen to your deposit?” question.
The article is written up about polling in the context of bank collapses; which makes it sound like they had the first question in mind; but the question they give is “How worried are you about the safety of money you have deposited in banks and other financial institutions?”; which is a slightly different question.
I’m sure that confidence in FDIC insurance is related to confidence in a variety of institutions; and varies by political inclination and income; but I’d also suspect that people who are close enough to the wire to have gotten a taste of transaction reordering for maximum overdraft charges have excellent, though not FDIC related, reasons for limited confidence in the safety of their money.
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I think most of Americans have money over FDIC insurance limit. But at the same time, most of Americans are uneducated. So it checks out.
[Edit, yes that’s a typo. Who in the right mind will keep more than $250k, let alone have that much cash, in an account anyway!?]
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Quick, put it all in crypto!!
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Yeah, technically FTX was (is?) a “financial institution,” and there are plenty of similar sketchy (but not FDIC insured) companies out there that people SHOULD be concerned about. The language in that poll is far more vague than the news stories suggest.
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I don’t think it’s tied to income at all. I think it reflects the loss of faith that Americans have in their institutions, particularly on the right. If you’re a MAGA or other type of low information right wing voter, you think the government is failing, the banks are all crooked and failing, etc. Those people live in an apocalypse echo chamber surrounded by commercials for bins of prepper chow and gold scams.
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The FDIC (and Credit Union Insurance equivalent) is $250k per depositor per bank.
Very few individuals have money in a bank or credit union that exceeds that amount.
For the vast majority of people, money in the bank is totally secure – far, far more secure than money in a mattress.
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Most bank failures in the U.S. over the past two decades have been linked to the 2008 financial crisis,
No, most bank failures in the US over the past 2+ decades have been due to deregulation. I say this as a former banker.
Banking is supposed to be boring. Mind numbingly, teeth itchingly boring. If you want excitement in finance, become a stock broker or go to a casino.
Back before Reagan led the great deregulation charge, banks were boring and failures rare. Bring back boring banking. People deserve no less.
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Oh yup. It’s a typo.
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Forget the FDIC, the poor are scared of their money being scammed away by surprise fees. I have an account I’m worried about right now.
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Yeah, most people’s real “wealth” isn’t in a bank anyway - it’s in a totally uninsured 401k, and if they are lucky, in a house (which hopefully is insured). Very few people (maybe a couple of %?) need to worry about the safety of the money in their bank account
But then again people also protest against an inheritance tax that they will never have to pay, and in fact would benefit from the wealthy paying
I assume that this all comes back to so many people being temporarily embarrassed billionaires
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Exactly. It says something that the previously biggest US financial crisis had been in the sketchy Savings & Loan business, which I’m sure a few Happy Mutants are old enough to remember. As soon as the US started letting banks play in hedge funds and other high risk nonsense, huge trouble was inevitable.
This is a new and dangerous phenomenon related to the above. When banks had to have high asset-to-debt ratios and couldn’t play with credit default swaps and other bullshit instruments, they needed a lot of depositors. That meant they competed on interest rates on savings accounts, which were thus very good. People seem to have forgotten this, but you used to be able to get a savings account with 7-8% interest on it. Better than most mutual funds, 401ks, or index funds.
Deregulation led to the death of the savings account, which led to everyone who could moving their money out into uninsured more dangerous financial instruments like mutual funds. That makes boom and bust cycles so much worse because half the middle class is wiped out every time.
This isn’t just bad for America. It’s maddening to watch from outside because when America has financial problems, we all feel it, and we can’t do anything about it.
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Deposit insurance is a good thing, of course, but so many people are living payday to payday that even a slight delay in getting access to their money sue to the insurance being needed if a bank collapses, that is enough to push them over the edge.
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Considering how far banks are leveraged for what they have and what they’ve loaned out, it’s not an unreasonable conclusion. Of course, there are investment firms who have invested a thousand dollars for every dollar they have- and in several cases, that original collateral is cryptocurrency.
Factor in the amount of “wealth” that’s entirely based on nothing but the assumption that someone will pay a lot for something at some later time, and it starts to look like the only people making sound financial decisions are the ones stockpiling weapons and canned goods in an underground bunker.
Seriously, when the debt bubble collapses, it will make the Great Depression look positively rosy by comparison.
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