> Isn't "banks will be conservative and responsible" the argument for not having mandatory insurance?
The problem is not so much that the insurance is mandatory, but that it's provided by an entity whose pricing is set by the government, and which also enjoys the (implicit or explicit) backing of the government.
Privately and competitively provided insurance, even if mandated by the government, wouldn't be quite as bad.
Though I agree that giving banks the choice whether to get insured is a good one. Otherwise, you'd have to write regulation about what counts as 'good enough' insurance. Instead of letting customers of the bank decide what they are ok with.
The problem is not so much that the insurance is mandatory, but that it's provided by an entity whose pricing is set by the government, and which also enjoys the (implicit or explicit) backing of the government.
Privately and competitively provided insurance, even if mandated by the government, wouldn't be quite as bad.
Though I agree that giving banks the choice whether to get insured is a good one. Otherwise, you'd have to write regulation about what counts as 'good enough' insurance. Instead of letting customers of the bank decide what they are ok with.