Should FDIC insurance limits be raised?

[Veramocor]

There is some discussion of raising the FDIC insurance limits to 250,000, which is supported by both McCain/Obama.

Raise limits to 250,000


I remember seeing the sign for 100,000 limits even as a kid. So I did some digging and the last time the FDIC limits were raised was in 1980 from 40,000.

Back in 1980, 100,000 dollars of insurance would be equal to about 265,000 today.

Supporting document with FDIC limits over the years.

 

[WaTaGuMp]

Sure why not.

 

[Darwin333]

Someone on one of the news channels had an idea of the FDIC covering everything. Anything above a certain figure (say 250K) would be charged a percentage based fee if they decided to take the insurance.

I'll be the first to admit that I know next to nothing about economics but it sounded like a good idea.

 

[Budmantom]

How much insurance do we want to pay for?

 

[Cattlegod]

100K in 1933 = 1M in 2008.

It should be increased to at least 500k IMHO.

 

[umbrella39]

Originally posted by: Cattlegod
100K in 1933 = 1M in 2008.

It should be increased to at least 500k IMHO.

 

[Mani]

Sure, but it won't do much if the FDIC ever has to be used. A run on the banks would break the system regardless.

 

[The-Noid]

I think 100,000 was chosen in 1982. Inflation adjusted it should be around $230,000, I believe. These numbers are off the top of my head though.

 

[JS80]

Normally I would say no, government should not be subsidizing bad decisions of depositors for depositing with a weak ass bank, but I'm not sure it's incompatible with my support of the rescue plan.

 

[fallout man]

It makes sense to raise it. Raising the guarantee will go a long way to prevent a run on the banks when shit hits the fan, in which case the FDIC loses anway.

 

[Eeezee]

Originally posted by: JS80
Normally I would say no, government should not be subsidizing bad decisions of depositors for depositing with a weak ass bank, but I'm not sure it's incompatible with my support of the rescue plan.

If I'm not mistaken, the government doesn't subsidize it at all; the banks purchase insurance from the FDIC. The banks will pass this cost along to customers, but that's why consumers primarily choose banks that are FDIC insured - consumers who don't want FDIC protection for their deposits don't have to pick a FDIC insured bank.

 

[JS80]

Originally posted by: Eeezee

Originally posted by: JS80
Normally I would say no, government should not be subsidizing bad decisions of depositors for depositing with a weak ass bank, but I'm not sure it's incompatible with my support of the rescue plan.

If I'm not mistaken, the government doesn't subsidize it at all; the banks purchase insurance from the FDIC. The banks will pass this cost along to customers, but that's why consumers primarily choose banks that are FDIC insured - consumers who don't want FDIC protection for their deposits don't have to pick a FDIC insured bank.

Well then the question is do you want higher bank fees in return for $250k protection?

However, my guess is that the FDIC insurance is highly subsidized - otherwise there would be private insurance where premium accounts would have higher protection limits.

 

[Dissipate]

Originally posted by: JS80
Normally I would say no, government should not be subsidizing bad decisions of depositors for depositing with a weak ass bank, but I'm not sure it's incompatible with my support of the rescue plan.

The banks are heavily subsidized by inflation. Banks make billions depositors get risk. I see how it works.

 

[fallout man]

Originally posted by: JS80

Well then the question is do you want higher bank fees in return for $250k protection?

However, my guess is that the FDIC insurance is highly subsidized - otherwise there would be private insurance where premium accounts would have higher protection limits.

Putting your shit into a BANK in the US should not be a gamble, it should be a fundamental right after all of the fuck-ups and lessons learned.

I will be playing a very tiny violin for all the profit the banks lose due to the necessary purchase of insurance for their account holders. Seriously, those bankers are out there begging in food pantries and shit.

:roll:
:roll:
:roll:

 

[Drakkon]

So if there was a higher cap on FDIC more people would be looking to CD's than to treasuries in tough times?
CD's are investments in the bank and are usually FDIC insured so it would prop up the banks a bit better AND give people a protection and return on their money that was somewhat limited by the 100k cap. If this would be the case then I'd say up the cap to 1 mill.

 

[SP33Demon]

I don't see why not after inflation-adjusted. Not like we're going to see this level of fiscal stupidity again in our lifetimes (if we learn anything from this mess).

 

[fallout man]

Originally posted by: Drakkon
So if there was a higher cap on FDIC more people would be looking to CD's than to treasuries in tough times?
CD's are investments in the bank and are usually FDIC insured so it would prop up the banks a bit better AND give people a protection and return on their money that was somewhat limited by the 100k cap. If this would be the case then I'd say up the cap to 1 mill.

What this guy said.

 

[smack Down]

Originally posted by: JS80

Originally posted by: Eeezee

Originally posted by: JS80
Normally I would say no, government should not be subsidizing bad decisions of depositors for depositing with a weak ass bank, but I'm not sure it's incompatible with my support of the rescue plan.

If I'm not mistaken, the government doesn't subsidize it at all; the banks purchase insurance from the FDIC. The banks will pass this cost along to customers, but that's why consumers primarily choose banks that are FDIC insured - consumers who don't want FDIC protection for their deposits don't have to pick a FDIC insured bank.

Well then the question is do you want higher bank fees in return for $250k protection?

However, my guess is that the FDIC insurance is highly subsidized - otherwise there would be private insurance where premium accounts would have higher protection limits.

Oh, yes republican fantasy that everything is cheaper if done by the private industry.

 

[Fern]

Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

 

[The-Noid]

Law firms are required to have trust accounts that often times contain many millions of dollars. By law they can not receive interest on the amount. It usually sits in a run of the mill checking account.

 

[fallout man]

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

 

[spidey07]

Originally posted by: Cattlegod
100K in 1933 = 1M in 2008.

It should be increased to at least 500k IMHO.

Thanks, I was wanting to know what the inflation difference was and when that limit was set.

If your figures are even remotely correct then ABSOLUTELY it should be increased. But the bigger problem is can FDIC actually insure it without further devaluation of the dollar?

<---NOT an economist

 

[StageLeft]

Sure, but who really cares anyway; doesn't everybody open multiple accounts, so in effect they have infinite $100k insurances anyway? It's not per person but per account.

 

[fallout man]

Originally posted by: Skoorb
Sure, but who really cares anyway; doesn't everybody open multiple accounts, so in effect they have infinite $100k insurances anyway? It's not per person but per account.

WRONG, according to my interpretation of this quote from FDIC.org

Basic Insurance Amount Is $100,000

The basic insurance amount is $100,000 per depositor per insured bank. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured bank.

If you and your family have $100,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage -- your deposits are fully insured.

Coverage Over $100,000

The FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership.

You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

If you have more than 100k combined in savings across multiple accounts within one bank, you are only isured up to 100k.

 

[JS80]

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.