Small savings banks are being exposed more to bankruptcy because of the massive transfer of funds by businesses from these small banks to larger, safer banks. Why so? It's because most of these businesses that pull out have funds greater than the FDIC limit. So by transferring the funds to larger banks, the possibility of a bankruptcy is reduced.
What's the solution to this problem? Raise the insurance limit.
Link: A Bailout for Small Business? - Risky Business (usnews.com)

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Tags: • insurance • bailout • - Permalink

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