Remember that scene at the beginning of It’s a Wonderful Life, where people are all desperately trying to get into the bank because if it fails before they get in, they lose their money? That’s what the FDIC prevents.
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I agree. Banks should never lend people’s money unless those people specifically agree to have their money lent out. A bank should not be legally allowed to lend out your money and then say that you can come get your money whenever you want because it’s not true. If the bank specifically tells you that this product will lend your money out and that you cannot retrieve your money for X amount of time, that’s fine. That tells you the consumer that your money will be unavailable for this amount of time. And that makes you make the decision as to whether you can deal with that or not. If you can’t, you don’t use that product and don’t lend out the money.