Although the FDIC was created to prevent bank failures,its existence encourages banks to
A)take too much risk.
B)hold too much capital.
C)open too many branches.
D)buy too much stock.

Question

Quizplus · Accepted Answer

The FDIC's insurance program essentially guarantees that customers' deposits up to a certain amount will be reimbursed even in the event of a bank failure. This can create a moral hazard, as banks may take on more risk than they otherwise would knowing that the government will cover losses.

Although the FDIC Was Created to Prevent Bank Failures,its Existence