Raising The FDIC Limit To $250,000 Has Me Wondering .....

[global1]

does FDIC have enough money to cover the total amount should their be more bank failures and runs on banks?

Are they raising the limit to $250,000 because they think that at that higher rate - less people will be apt to withdraw funds if they think they're insured to that higher amount?

Really - if the FDIC had to cover all bank accounts - can they afford to do so?

[Subdivisions]

1. Nope. Not according to rumors that they are nearly broke. n/t

[global1]

3. So What Exactly Does Raising The Limit To $250,000 Accomplish Other.....

than giving people a false sense of security?

[Subdivisions]

5. Scam Plan B? n/t

:shrug:

[Stellabella]

6. Well, we don't want a panic and a run on the banks.

So I guess they figure even a false sense of security is better than that.

[rucky]

8. It'll prevent them from having a false sense of insecurity

which could create a nightmarish reality, if acted upon en masse.

[pnwmom]

10. It reduces the likelihood of bank runs.

One way or other, the U.S. govt. would honor the FDIC commitment, but it would rather not have to, of course. And sound banks can be ruined in a run.

[kiranon]

13. Helps cover business accounts/payroll/operating expenses

[ben_meyers]

9. What rumors? Even Senator Obama has stated that

the FDIC hasn't had to pay out one penny yet. Are you trying to start a rumor, or do you know something that he doesn't?

[pnwmom]

11. That's because of the deals that have been made thus far -- which might

not always be possible.

[galileoreloaded]

15. habba whozza WHAT? Did you miss the $14 billion to IndyMac??? n/t

[Renew Deal]

2. Wouldn't they have to raise their insurance premiums by 150%?

:shrug:

[crazylikafox]

4. answer: No, FDIC can't cover that amount. But.....

The reason is to try to prevent runs. If they can cover more money, they won't have to use it. Evidently 100K isn't enough, especially for small businesses that need those accounts to make payroll, etc.

Hopefully if they can give banks more confidence that they won't be subjected to runs, they'll be more likely release capital to make loans and keep credit flowing.

[hfojvt]

16. good grief, any business that has over $100,000 in its accounts

does not fit my definition of small. According to stats that I recently looked up, there are 25 million businesses in this country. 19 million of them, only employ their owner and that group has average sales of $55,000. Those are small businesses, not some business with 125 employees making an average of over $800 a paycheck and needing an account larger than $100,000 to pay them.

[annabanana]

7. It just increases the taxpayer's liability. . It increases the amount of

money that will have to be printed, it further depresses the value of a dollar. The printing presses at the mint will explode

[avaistheone1]

12. Keep it at $100,000, People who have more should open $100,000 accounts at other banks.

By having these big accounts split over more than one bank it distributes the risk, and therefore less chance the taxpayer will have to pay up if one of the banks goes bad.

[kiranon]

14. Larger accounts allow for more lending by the bank . n/t

[adamuu]

18. 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.

[ddeclue]

17. Meaningless fluff - what % of individuals and small businesses even have 100k on deposit?

It's got to be minuscule.

[adamuu]

19. kick n/t

[Dover]

20. Don't CDARS already have this function...and cover up to $50 million?

Apparently they are a new thing. Anyone have some good info on them? What's the catch?

Welcome to CDARS

CDARS® is the Certificate of Deposit Account Registry Service®. And it's the most convenient way to enjoy full FDIC insurance on deposits of up to $50 million. With CDARS, you sign one agreement with a participating local bank or other financial institution of your choice, earn one interest rate, and receive one regular statement. It's that easy.


CDARS is the perfect solution for many depositors — from non-profits and public funds to businesses, advisors (including trustees, CPAs, financial planners and lawyers) and individuals, as well as socially-motivated investors.


You've worked hard for your money. Now let it work hard for you. See for yourself
http://www.cdars.com/index.php

---------

CDARS: Beat the $100,000 FDIC limit
By Laura Bruce • Bankrate.com

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x40915

[slipslidingaway]

21. Kick n/t