US Considers Raising FDIC Limit

The congress is now discussing the idea of raising the limit of FDIC insurance to 250k from 100k. This is a worthwhile idea, BUT I think that the FDIC insurance limit should be removed. The FDIC should be run like any other insurance company and allow banks to choose the limits they apply to their accounts and pay the appropriate rates to the FDIC to provide that insurance.

The congress could then mandate that all demand depost accounts carry a minimum of 100k or 200k.

This would run the FDIC similar to the SIPC and allow banks to target insurance on accounts at appropriate customers. Most banks don’t pay a real return on checking these days anyway, so they should have no problem peddling small business savings accounts and checking with a million dollars of deposit insurance.

Properly run, which for the most part the FDIC is (they’re running low on funds these days), this wouldn’t cost tax payers a dime.