tomder55
Mar 20, 2023, 03:28 AM
Moral Hazard is defined as the lack of incentive to avoid risk and it's consequences . A person will purchase insurance to hedge against risk.
The Federal Deposit Insurance Corporation (FDIC )was set up to insure small investors of the risks of depositing their money in banks . It was set up to avoid the runs on banks that happened at the beginning of the Great Depression. It is supported by the banking industry and insures deposits up to $250,000 . If anyone has more than that in an individual bank then only they are covered only to the $250,000. If they want to deposit more than the way to avoid moral hazard is to make their deposits into more than one bank .
Peter Thiel is a billionaire venture capitalist . He was a founder of PayPal and other enterprises . He was the first outside investor in Fakebook .
He is also a heavy donor to politicians . Politically he is a log cabin Republican . 2022 he was a major donor to Repub candidates JD Vance and and Blake Master's campaigns .His donations in 2022 were over $20 million.
Thiel had $50 million deposited in SVB when it went belly up .His 'Founders Fund' urged start up companies to pull their money from SVB or risk losing it all in the weeks before it's shut down. Yet he kept his $50 million in the bank. His firm pulled it's money the day after it disclosed a $1.8 billion loss,sparking a run on the bank. But his personal money was not pulled .
He risked all except for that $250,000 insured by FDIC .
But wait !!!!
Clueless Joe has said that all bank depositors will be made whole .
The U.S. says all Silicon Valley Bank depositors will be protected : NPR (https://www.npr.org/2023/03/12/1162975615/the-u-s-takes-emergency-measures-to-protect-all-deposits-at-silicon-valley-bank#:~:text=The%20Biden%20administration%20has%20 announced,could%20lead%20to%20greater%20panic.)
Moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs. Clueless Joe is subsidizing moral risk . He says it will not be the taxpayer who bears the costs . He is lying .
The Federal Deposit Insurance Corporation (FDIC )was set up to insure small investors of the risks of depositing their money in banks . It was set up to avoid the runs on banks that happened at the beginning of the Great Depression. It is supported by the banking industry and insures deposits up to $250,000 . If anyone has more than that in an individual bank then only they are covered only to the $250,000. If they want to deposit more than the way to avoid moral hazard is to make their deposits into more than one bank .
Peter Thiel is a billionaire venture capitalist . He was a founder of PayPal and other enterprises . He was the first outside investor in Fakebook .
He is also a heavy donor to politicians . Politically he is a log cabin Republican . 2022 he was a major donor to Repub candidates JD Vance and and Blake Master's campaigns .His donations in 2022 were over $20 million.
Thiel had $50 million deposited in SVB when it went belly up .His 'Founders Fund' urged start up companies to pull their money from SVB or risk losing it all in the weeks before it's shut down. Yet he kept his $50 million in the bank. His firm pulled it's money the day after it disclosed a $1.8 billion loss,sparking a run on the bank. But his personal money was not pulled .
He risked all except for that $250,000 insured by FDIC .
But wait !!!!
Clueless Joe has said that all bank depositors will be made whole .
The U.S. says all Silicon Valley Bank depositors will be protected : NPR (https://www.npr.org/2023/03/12/1162975615/the-u-s-takes-emergency-measures-to-protect-all-deposits-at-silicon-valley-bank#:~:text=The%20Biden%20administration%20has%20 announced,could%20lead%20to%20greater%20panic.)
Moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs. Clueless Joe is subsidizing moral risk . He says it will not be the taxpayer who bears the costs . He is lying .