Is sanity on its way?

Maybe, just maybe:

The U.S. Senate may consider expanding the authority of the Federal Deposit Insurance Corporation as part of a package of legislation to reduce turmoil in the financial markets, Senate Banking Committee Chairman Christopher Dodd said today.

You’ll note that the FDIC specializes in concentrating its actions on insolvent banks, which is exactly what we should be doing.  The FDIC also has experience in this area, believe it or not.

Comments

If this happens and it is better than the original bailout....doesn't it mean the people who voted against the bill yesterday did the right thing?

I also don't understand how there could be many people who have more than $100k in a single account. Are the interest rates a lot better or something? What are we missing?

Tyler (or Alex), I'm not trying to be a wiseguy here. I don't see how the FDIC limit has anything at all to do with the current mess. Seriously, could one of you elaborate in a future post?

The FDIC has a lot of powers, both actual and potential, not just raising the account limit. We'll see what they actually come up with, of course...

Sorry, but what kind of signal would raising the insurance limit send to the market? Certainly not one of faith & confidence.

I have no problem seeing how businesses (i.e. employers) which cycle through tons of cash each day/week/month would be helped by having a higher cash protection from FDIC. Thus, they would be less likely to contribute to bank runs of the sort which disintermediation hammered WaMu very recently.

Normally many such businesses try to keep that cash in money marekt funds, but with State Street's money market fund for instituional investors having major withdrawal problems, this (assuming that FDIC limits were raised high enough, at least for businesses) would have huge helpful effect on the issue businesses safely and confidently being able to meet their short term cash needs.

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