Pug,
My thoughts exactly. Everyone is going to stick their money into the banks that offer the best rates. Some of them may have very weak balance sheets, but with this backstop no one will care about reality (I know I won't and will opt for the best deal).
So, while this makes depositors feel safer (and I will benefit so I am not complaining), what are the long term ramifications to this? I think games are going to start getting played again and it will be interesting to see how it plays out. It could lead to larger lending rates if the big banks can't compete as effectively for depositors money.
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