Garmaine asked 4 years ago
The riskier something is, the more interest/coupon would be demanded by the lender. In the case of choosing where to put one's savings, wouldn't the existence of FDIC incentivize searching for the bank that pays the highest interest on my savings?
FDIC guarantees that my savings (as long as it is below some amount) will remain intact regardless of what happens to the risky savings bank. Wouldn't it incentivize me to disregard the risky nature of the bank? How does FDIC remedy this conflict of incentives?
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