I am visiting @StanfordGsb and @HooverInst , so I decided to pass by the main Palo Alto branch of at 9.00am. This is my comment. A quick thread also with my "policy" observations.

🐦🔗: n.respublicae.eu/lugaricano/st

The branch was taken over by FDIC staff. SOme bank staff as well. An FDIC staffer telling customers they do not need to close their accounts and transfer because "this is probably the safest bank in the world today,since insurance is unlimited and everywhere elsy it will be 250k"

🐦🔗: n.respublicae.eu/lugaricano/st

The customers were very happy. One told me "man, it is all about payroll, if you do not make payroll you face jail". One very thoughtful entrepreneur said: "look, banks should not play with other people's money, banks should just be banks".

🐦🔗: n.respublicae.eu/lugaricano/st

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I asked him what he meant. He did not see at all, in his mind this was not the image, his role as ensuring the deposits were safe there. This had to be the case, by definition.

🐦🔗: n.respublicae.eu/lugaricano/st

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Now, the question is: if we do not think an extremely smart entrepreneur in charge of tens or hundreds of millions of dollars is able to monitor the bank, why the shop keeper or restaurant owner?

If the shop keeper or restaurant owner is not able, why anyone else?

🐦🔗: n.respublicae.eu/lugaricano/st

I think the 250K limit on deposit insurance died today. Germany took the same decision in the crisis and precipitated trouble in all other Euro Countries.

But, once more, the political decision is taken: deposit insurance is unlimited. reuters.com/article/financial-

🐦🔗: n.respublicae.eu/lugaricano/st

But this has huge implications: Banks become a utility. They are making bets with the house money. This model is untenable.
I believe there is a better way to do this, around the Chicago plan. I will write soon about this.
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elibrary.imf.org/view/journals.

🐦🔗: n.respublicae.eu/lugaricano/st

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