Essays by Kent  •  About Kent Caveats  •  Legal Notices

Federal Deposit Insurance (FDIC)

by Kent M. Pitman (Monday, June 6, 2005)

The real way to protect "the little guy" is to make the FDIC protect $100,000 or $130,000 or even $500,000 per person rather than per account. It's true that the multiplicative effect you cite scales, but what doesn't scale is the availability of enough funds for the little guy to fill more than one of these accounts. If rich people (for pretty much any value of rich you want to draw) have to self-insure above a certain amount per-person (rather than per-account), it would more than pay for the ability to extend more protection to the poor. The idea that FDIC has no per-person upper bound means that rich people are protected when they keep large amounts of cash in the bank, which I think is not a necessary service of government.

Fixing the FDIC


This proposal has the following good effects:

Copyright © 2009 by Kent M Pitman. All Rights Reserved.

Comments? You can send me email.

Click here to go to the Essay Index.