Nobody wants to pay for somebody else’s bad luck or misjudgment. But that is the essence of insurance. The problem is illustrated by wrangling between US banks over the $15.8bn cost of containing this year’s bank runs.
The US Federal Deposit Insurance Corporation stepped in at struggling institutions such as Silicon Valley Bank to backstop uninsured deposits. It now wants to recoup the cost to replenish its funds. It would do so via a 12.5 basis point special levy on the balance of uninsured deposits at 113 banks.
This week, the FDIC grumbled that some banks were relying on suspect methodology to calculate uninsured deposits. They were, it said, excluding deposits that were otherwise uninsured but backed by collateral. The likely result would be a lower levy on the bank.