The goal was to prevent runs on banks. FDIC insurance was created to create confidence in people so that runs on banks don’t happen.

Secondly, if you have any clue how banking works and what’s going on in the marketplace you’d realize that keeping high value accounts in bank is CRITICAL to running a bank. Banks make money (traditionally) by taking borrower deposits and loan them back out. If everyone pulls their capital out (especially those w/ more to pull out) they have less to lend. Less to lend to homeowners, commercial property owners, and business owners. Everyone knows the easiest way to boost returns is to BORROW and LEVERAGE what cash you have. No borrowing = reduced returns = reduced risk taking and GROWTH.

The last point is the fact you point out this doesn’t help the middle class. Same myopic vision that our president elect has. If anyone really thinks that taxing small business owners who make over $250k a year an additional 4% ($10 for every $250k they make) doesn’t come RIGHT OUT OF THE POCKETS of everyone else – you’re crazy. Like small business isn’t going to 1) raise prices to boost profits and makeup this shortfall or 2) cut expenses (employees). Who’s then going to be out of a job – the ‘middle class’.

Take the blinders off and let’s see the bigger picture. The $250k increase has incentivized me to consolidate accounts and given me more confidence my HARD EARNED (key word EARNED) capital doesn’t dissappear in a bank collapse). I’ll now leave these $$s in an account and allow the bank to lend them out (to small business and homeowners). The whole LIQUIDTY CRISIS / CREDIT CRUNCH has EVERYTHING to do with banks NOT LENDING money. This move helps increase that ability. 100% off base article, sheesh.

http://www.crackinsurance.com/2008/11/04/fdic-insurance-sunset-provision/

2) Dont ever ever be down on the wealthy IF YOU LIKE MONEY/FREEDOM

It is the wealthy who are the last to be afffected in downturns, RIGHT? RIGHT!

So they are the only ones that can keep all others employeed.

We know everything rolls downhill and I GAURANTEE YOU THIS

who do you think has made more millionaires in this world, THE BILL GATES OF THE WORLD OR YOUR LOCAL WELFARE MOM ON HER 5TH BABY?

stop the nonesense and grow up America

MONEY = FREEDOM
2 THINGS ANY SANE ( this MIGHT BE THE OPERATIVE WORD) person wants

All others who talk down the wealthy etc at best HAVE NO CLUE or are afraid that others are “PASSING THEM BY” AND DONT HAVE THE CONFIDENCE n themselves

Lets not let the tail wag the dog anymore in this country, YOU SEE WHAT THAT REALLY GETS US!!

Just because you don’t have $100,000 or more, doesn’t mean that those who do are wealthy. Imagine being 70, living on a fixed income, and only having $100,000 to your name. I’m not talking about an IRA, but I do not consider $100,000 to be a large sum of money. If someone gets sick and doesn’t have insurance, that money would be gone in a flash. If someone loses his job or becomes disabled, that money can disappear quickly. This new limit is very helpful because the smaller banks can get more business. It might change the “bigger is safer” feeling which is good for competition.

By the way, over the past several years, seniors have lost millions in retirement savings because the interest in an account often exceeded the $100,000 limit. They were not rich by any means. It’s always been very easy to be insured for a lot more than $100,000 by asking the bank rep to add the title “ITF” (in trust for) or “POD” (payable on death) to an account with a list of qualified beneficiaries. Unfortunately, many people were not aware of this, since they never bothered to read the FDIC regulations or even ask about them. That;s what I don’t like about large banks. A personal banker would red flag such an account or advise the depositor of his limits. Unless you’re an only child with no living siblings, parents, children, grandchildren or a spouse, then you’ve got to have at least a couple of qualified beneficiaries. When you list a beneficiary that will inherit your money if you die, your account becomes a revocable trust which, unless you drop dead, means absolutely nothing, but it increases the FDIC coverage substantially. I have every penny in a POD account, including my $500 checking account, so it doesn’t go into probate if I die. Doesn’t mean I’m wealthy, just responsible.

Anyway, the Mr Wu you are talking about probably would use a CDARS partner so he wouldnt run around so much.

Shea writes: “Debmc, it’s not just helping 1.6% of American’s, it’s hurting ALL Americans. How are the banks going to pay for the extra insurance? ”

Obviously you aren’t aware that there has been unlimited coverage at many banks for years. In Massachusetts, for example, every chartered savings bank or cooperative bank has SIF or DIF. Mabe that’s why the interest rates in MA are so low. (I have relatives in MA) but you can always open up an account elsewhere by mail or online if the bank allows it. I live in FL and have had CDs in Nebraska, Ohio & Iowa. FDIC is private, so I don’t know why everyone keeps saying we are paying for the increase with our taxes. It is not funded by income tax, but by insurance premiums paid by the banks. The extra desposits many banks will enjoy might offset the costs. Right now the increase is only until Dec 2009. I assume that’s why I’ve seen a few 14 month CD specials.

CRA was the start…read this-

http://pallante.typepad.com/we_the_cared_for/2008/09/governments-social-engineering-a-key-to-the-credit-crisis.html

If you have other facts I’m all ears. It’s obviously not the only reason but was the first bad decision in a mile long line of bad decisions. “In compliance” is a funny term…in compliance doesn’t mean good decision.

As you can see so far, this “Sell Out” hasn’t freed up the credit markets. The government will have to come in and force your bank to start lending…that was the purpose of the “Sell Out” wasn’t it?

Daisy-

It seems you’ve studied the data and have the numbers to back up your arguement. Could you share them with us? As the author said, averages can skew the analysis…but lets not forget the point here. Is banking a service or a right? Are banks businesses? I should not be paying MORE for OTHERS to feel security. Am I not being patriotic? If YOU have $250,000 + that you want to keep in the bank then YOU pay insurance for that SERVICE.

I agree that everyone in this country has the chance to make money and have $250,000 if they choose to. You contradict yourself when sarcastically saying “Let me guess….you also think its “patriotic” for people making over $250k to have their tax rate increased significantly in effect redistrubuting wealth.” The “Upper Class” should not be paying higher tax rates to help the “Middle Class”…and people should not be paying higher rates/fees so people (other than themselves) can keep $250k + with one bank…would that be patriotic?

- FDIC $250,000 means Mr. Wu needs to split his money into 60 banks.

- FDIC $100,00 means Mr. Wu needs to split his money into 150 banks.

I wish I had such problems.

To “NEXT PRESIDENT”….I’m sorry that you’ll never have more than $10k to invest in any bank but as with many other people I’m sure that is a function of the choices you made (or lack there of). I’m sure that most people who put the effort in to educate themselves and acquire valuable skills have over $10k to invest. I’m tired of hearing of the “working people” who can’t seem to afford everything they want or can’t afford to raise their kids. People make money according to the education/skills they CHOOSE to acquire. Yes…CHOOSE to acquire. There is a reason people spend years in college/graduate school and choose to have children only once they are finanically stable enough to be able to afford such a luxury and as a result don’t have to complain about not having money. ANYONE that grows up in the US has the opportunity to make a good living if they choose to. Its unfortunate that you perhaps made poor choices and now say that as a “working guy” you will never have more than $10k to invest but I don’t feel sorry for people who CHOOSE to build a poor foundation for their future.

Apparently you didn’t read my comments. #1 – CRA is not responsible for bad lending practices. Period. I am a residential loan officer at a bank, and CRA has never caused us to make a bad loan. As I said above, if you simply lend in the areas you collect deposits in, you are in compliance. #2, you are partially correct that banks stopped assessing risk because they sold their loans. However, eventually they went all out and started keeping some of those loans on their books as well. I work as a residential loan officer for a bank that keeps every single loan we make, so we never stopped accurately assessing risk. I hate the bailout because it is foregoing (postponing?) punishment on those who have earned it, however, credit markets are so locked up at this point that government has to step in or healthy companies will begin to fail. Look at GE, they are a great company but were unable to tap credit markets and had to go to Buffett just to pay their bills. That is what I call systemic failure of our financial markets. That is why I believe that stupid and annoying bailout is necessary. As for FDIC insurance, the original point of the whole comment, my contention still stands that depositors have demonstrated their ability to assess risk in the failure of WaMu. They afraid the bank would fail, so they withdrew their uninsured deposits. They knew the insured deposits were safe, so left that money in. I experienced it in my retail branch helping people make sure their money at my bank was fully insured, and by taking hundreds of thousands of dollars from WaMu from people specifically citing FDIC insurance reasons.

Finally, greater accountability for banks. If we are going to bail them out, we need to see greater accountability. The money they get should come with strings attached. Maybe a more frequent visit from their regulator, I don’t know. However, healthy institutions like mine should not be subjected to further government oversight. It is a giant pain in the neck, and we have consistently demonstrated high asset quality and have skirted everything other than a slowing economy.

Here is the irony, all those grease ball shorts will be stinking rich but there will be no where for them to park their riches and no where for them to go be serviced for the new lavish life styles they now could afford because all the businesses are gone.