FDIC Insurance Fund Doesn't Actually Exist, according to Vern Hill

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Wow! My long time friends and family usually assume I am the biggest skeptic in the room, but even I thought the FDIC insurance fund existed. I just thought it had to be severely underfunded for systemic risks. I also thought it was immoral because it gives a false sense of security to market participants.

Vern Hill cites former FDIC chairman, Bill Isaac in making his claim that "the FDIC Insurance Fund is an accounting fiction". Hill goes on to explain that the "insurance premiums" collected from banks for the FDIC fund, therefore must go to the general funds. Therefore, Hill calls this a tax rather than a premium.

When the government intervenes in the marketplace, distortions are caused and malinvestments are made by market participants responding to these distortions. Blind faith in bank liquidity was the result of the FDIC "insurance" program; more properly called the FDIC unfunded edict. Bottom line: your bank is probably not safe.