LAURENS WRIGHT profile image 78

How does the FDIC stand behind the banking accounts and guarantee the funds to be repaid.

For every certified banking account, the FDIC says that they back the funds in that account a certain amount. If the bank creates the money to loan out, how can the Feds or banks back the accounts? How long does the banks and Feds have to pay this guaranteed account amount back to the depositor?

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LandmarkWealth profile image87

LandmarkWealth says

2 years ago
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tehgyb profile image90

Don Colfax (tehgyb) says

2 years ago
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  • LandmarkWealth profile image

    LandmarkWealth 2 years ago

    Banks do not lend out deposits. Loans create deposits. It's called fractional reserve banking. It is illegal for banks to lend out reserves. All reserves must be held at the Federal Reserve and dictate a multiple of credit expansion in M2