What do you think about increasing the FDIC limit?

[livelongandprosper]

It's still just taxpayer money. If a bank fails and the FDIC have to cut your losses how is that better than
the current bailout epidemic?

[mikelgb]

1. non-issue for me

i'll never have even anywhere near $100,000

[livelongandprosper]

5. Yeah but many do have.

And not just rich guys.

[mikelgb]

40. the poor have more than $100,000 in their bank accounts?

[David Dunham]

2. It's help get support of seniors and small businesses who have over $100k in bank

[Barack_America]

3. It seems to make sense to increase it for inflation...

Which supposedly hasn't happened.

Personally, I'd rather just split my money between banks than count on the FDIC.

[trof]

18. True. It's been at $100,000 for decades.

A hundred grand ain't nearly what it used to be.

[ColbertWatcher]

37. I agree with this: adjust for inflation. n/t

[rucky]

4. It really will help small businesses. n/t

[Xithras]

31. People tend to forget about small businesses. Thanks.

My company has about $300k in various payroll, AR, and operations accounts, and we maintain them in different banks specifically because of the FDIC limitation. We're not a big company (8 employees at this moment), so it can be a bit of a hassle at times.

I don't know too many people who have $100k cash sitting in their personal accounts, but it's not uncommon for small businesses to have that kind of cash in their operating accounts.

[napi21]

6. It should have been increased a long time ago! Just another thing that should

have been linked to inflation, the same way they do your homeowners insurance.

[Winterblues]

7. Long overdue

:shrug:

[Johonny]

26. I agree

[Jakes Progress]

8. It's a sop to the GOP.

Their constituents making a couple of hundred thou a year, want more taxpayer protection. They are too lazy to divide their accounts up.

This is a way for Democrats who want to help bush to give cover to the republicans who want to help bush.

Stop tweaking a bad bill. Rewrite the bail out so the people get the benefits instead of the uber-rich.

[ManiacJoe]

9. Seems like a good idea given inflation.

Someone please correct me if I am wrong, but don't the banks have to pay "premiums" into the FDIC system just like we do for car/house insurance?

[sybylla]

19. It's been more than 26 years since the last increase.

I say that because the current rate of protection to $100,000 was the same rate when I started working in financial institutions over 26 years ago.

Seems pretty ridiculous that it hasn't increased at least once since then.

As for premiums, that is my recollection from my banking days. What, exactly, those premiums are based upon, I don't remember.

[kirby]

10. $100,000 == $240,000 in todays dollars, so yes.

The FDIC limit was increased in 1980. It has fallen way behind inflation. It is important to prevent runs on banks and to ensure people do not lose money when they are simply saving money at their bank.

[A HERETIC I AM]

20. Exactly the point. The $100K limit is almost 30 years old. It needs updating.

There are plenty of Americans who have saved and who do not like the idea of putting their money at any risk at all. That's why CD's are so popular. Raising the limit would mean that individuals could keep more of their money in their primary bank if that's what they want to do.

Having said that, the FDIC needs to be properly capitalized as well.

[tosh]

11. In favor.

[adamuu]

12. There are fewer banks now. After the mergers It is not as easy to spread out to multiple banks

some people might find that 100,000 insured at Wachovia and 100,000 insured at Citi is now
200,000 only half-insured at Citi. What is a depositor to do? Withdraw 100,000, that's what. Adding to the problem.

The FDIC limit should be at least doubled based on this observation.

[bluestateguy]

13. $100,000 is not that much money anymore

At least when you are talking about one's life savings, it's not that much money at all.

[girl gone mad]

14. It was a necessary step. I predicted they would do it today. n/t

[FarCenter]

15. It is a good thing to do

Given the inflation since it was set at $100,000.

[Odin2005]

16. Definitely needed. n/t.

[PsN2Wind]

17. Shares in the market are by there nature a gamble

savings accounts shouldn't be. If you really want to see credit dry up let people pull their uninsured dollars out of the banks.

[ITsec]

21. Great... but who will bail out the FDIC when they go bust? nt

[adamuu]

24. Its kind of a moot point. n/t

[CreekDog]

32. we will. FDIC will borrow from the Treasury (they should put your photo on the dollar bill)

the fewer banks the better because printing all that money will be hell on the dollar.

[Hekate]

22. Yes. Banks are where most of us keep what's called our "life savings", not in stocks...

... because we don't understand the stock market and all that fancy jazz that the high-rollers like to play with.

It has nothing to do with "laziness" as one poster here asserts. It has to do with what we understand.

A hundred thousand dollars sounds like an enormous amount of money to those with nothing -- and for those who have something (like maybe a paid-off house), it also sounds like a lot of money. You'd be a fool to risk that in stocks -- or at least that's how I've always felt about it. You get your monthly statement, and you know exactly what you've got and you know exactly where it is. Even at today's laughably low interest rates, it increases little by little. Maybe your skinflint mother dies and leaves each of her children something after the condo is sold, to your great surprise. It goes in the bank. And, whoops, your savings exceeds the FDIC insurance rates.

It's bad enough that inflation is eating away at the real value of your savings, but to have the feds be willing to bail out men and corporations for whom this is pocket change is beyond outrageous. The interest on my life savings is taxed, while the aforementioned big guys often get off scot-free. Increasing the FDIC limit is the least they can do for those who have been thrifty and have broken no laws.

Hekate

[Gormy Cuss]

33. I know several people who have had to shift money around because of exceeding the limit.

All surpassed the limit because of bank mergers. They're in two categories: retirees who have been forced to draw down IRAs and former house owners who are parking the money while looking to buy --parking it a lot long than they planned because of the current housing market as a matter of fact.

Someone asked on one of these threads how many people would be affected by an increase in the limit. I wasn't able to find that stat but I did find this in a Bankrate.com article :In fact, the FDIC says that less than 62 percent of the $6.88 trillion on deposit in FDIC-insured banks was covered at the end of 2007. That leaves more than $2.5 trillion unprotected in the event of bank failures.

2.5 trillion is a lot of uninsured money --holy cow!

[global1]

23. Another Thread On Same Topic - And More Opinions.......

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4135168&mesg_id=4135168

[gravity]

25. They should increase the limit to $1 million

Making sure our money is safe is good for the economy.

[Raine]

27. I'm for it, $100,000 is not that much money

anymore.

[TahitiNut]

28. As a part of a larger REGULATORY package, it's a good idea.

Gotta get the Chinese Firewall back in place and get the commercial banks out of the speculation game.

[slampoet]

29. If you have more than 100 grand find a second bank. Simpler than is was 30 years ago.

[Geek_Girl]

30. The government isn't buying up bad assets for one thing

The FDIC insurance should keep pace with inflation.

[BlooInBloo]

34. It's EXACTLY the right thing to do.

[magellan]

35. Although it implies a potential extra tax burden

...and won't effect me otherwise, it's the right thing to do for small businesses and long overdue.

[Romulox]

36. Self-delete. nt

[Captiosus]

38. I agree with it, as it needs to be adjusted.

But I'm concerned because it wasn't all that long ago that articles from Bloomberg made the case that the FDIC faces considerable trouble, due to bank failures this year, to continue insuring institutions (Source: http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=amZxIbcjZISU).

The FDIC fired back, of course, claiming this is untrue, but even they admitted they only have 54 billion dollars in reserve (Source: http://www.fdic.gov/news/news/press/2008/pr08084.html). It is speculated that the FDIC will need in excess of 200 billion, if you believe the Bloomberg article, to insure multiple bank failures through 2009.

So while I cheer that we're finally adjusting the FDIC insurance level, the question remains: How are we going to pay for the increase when they barely have enough cushion to last through a handful of major institution failures this year at the current 100K level?

[tkmorris]

39. It's a great idea, but under current conditions....

You also have to consider that it overexposes the FDIC. Simply put the FDIC is underfunded now, before any changes are made, and would be even more so if the cap were raised. If the FDIC needed more funds it would ask for them from the Treasury directly in the short term, and in the long term would pay them back through sales of the failed banks assets and almost certainly increased fees on the other banks it insures.

The idea has the advantage (to some) of protecting individuals accounts without protecting the banks themselves, but it also puts increased pressure on solvent banks through higher fees. Furthermore it does nothing to address the more immediate liquidity problem. It seems to me to be long overdue, but that perhaps this isn't the most ideal time to implement it. Undoubtedly I would feel different if it had a direct impact on me, which I admit it doesn't.