Raising the Deposit-Insurance Limit: A Bad Idea Whose Time Has Come?

Economic Commentary (Cleveland), April, 2000 by Thomson, James B.

We at the EDIC are undertaking a comprehensive review of our deposit insurance system. I want to take a hard look at certain issues, including: (1) Does the deposit insurance system create the right incentives? (2) Is the system fair? (3) What is the right coverage level? Donna Tanoue, Chairman Federal Deposit Insurance Corporation [1] Is there any reason why the American people should be taxed to guarantee the debts of banks, any more than they should be taxed to guarantee the debts of other institutions, including the merchants, the industries, and the mills of the country? Senator Carter Glass Author of the Banking Act of 1933 [2] Less than a decade has passed since the enactment of the Federal Deposit Insurance Corporation...