On Raising the FDIC Limit
Oct 6th, 2008 by Nut
M and I have been listening to all the chatter about this bailout package and what kinds of things might be included. One of the things I keep hearing mentioned is that the limit on FDIC insurance might be raised from $100,000 to $250,000.
Every time I hear I get worked up and start repeating “IT DOESN’T MATTER!” Why is that such a big deal when you can have multiple accounts at multiple banks that can each cover you for $100,000? And who has $250,000 in the bank, anyway?
Well, this explains some of the reasons. Small and mid sized businesses need to have that kind of money sitting around for payroll purposes, so that’s one group that might benefit from this move. But for everyday people, what does it do? All it does is “bolster confidence.”
From the article:
William M. Isaac, who was the chairman of the F.D.I.C. between 1981 and 1985, said that lifting the limit to $250,000 is “all show, no substance.” “It doesn’t do what needs to be done,” he said. “It might make somebody’s grandmother feel good, but that is not the problem that we have in the financial world: banks won’t lend to other banks.”
That’s how I feel about it: people hear this in the news and think “Oh good, more of my money is safe.” But that’s just a “for show” move that won’t affect their reality at all. Who thought this up anyway?
It’s the kind of thing that gets me all worked up and gets me thinking about how the government deals with citizens. Watching the VP debate the other night was depressing. It doesn’t matter what their plans or ideas are, it’s all about convincing the people that don’t know who they’re voting for. And convincing means that how often they smile, how much they cried, or how much “heart” they showed is more important that how they feel about the issues.
Some guy on CNN before the debate was railing about this just like I am here. And one of the anchors said something like “I don’t know what dream world you live in, but that’s the reality.” Really mocking the guy. Which he deserved, because if you work at CNN and are covering the elections, you should be over it at this point. Unfortunately, it’s all one big popularity contest.
And that’s the real reason why the FDIC limits might get raised: it sounds good.
PS Re-reading this post a few minutes after I wrote it, I realize it makes me sound childish, stubborn, and like the CNN guy—a whiner. But whatever, we’re all allowed to blow off a little steam.
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