I am so totally done with hearing about the economic crisis. Every day there's yet another claim that the world is basically going to explode in a firey holocaust because some asshole bankers made stupid choices when it came to loans, and now we must save them from themselves. Yeah, what the fuck ever.
No matter what happens, we'll deal with it, and I hope to God that Congress doesn't rush through a decision on the economy just because Paulson and Bernake are all ONOEZ PANIC!!!! due to the interest rates that banks are charging to loan money to one another are now higher than the average home mortgage interest rate (6.750%).
However, one idea that is being pushed absolutely floored me today, it made me angry enough to write to my House Representative (House Majority Leader Rep. Steny Hoyer) and tell him "Don't even think of doing this!" The idea is to increase the FDIC deposit limit from $100,000 to $250,000. Now I am all for extra insurance for when things go absolutely wrong, but this is something I just cannot get behind.
First of all, who does this really benefit? I can't think of anyone I personally know that has over $100,000 in their checking, savings, and money market accounts at their local bank. Therefore, they're already covered by current FDIC deposit limits. Hell, even if they weren't, there's other insurance that could kick in from a private company to make sure that people recover their money. I have also heard (but have not confirmed) that the FDIC on good faith tries to give all the money that a person had back to them, even though that portion is not guaranteed.
As banks have begun to fail and the FDIC has taken over, there has been concern that the FDIC won't have enough money to cover all of the deposits of all of the accounts, especially if several large banks fail at once. They have tons of money folks, but it's definitely not unlimited. So why the fuck would you raise the FDIC limit, which means the FDIC has to pay out even more money to depositors in the event of a bank failure, and therefore would deplete their funds even faster?! It makes absolutely no sense! Let's not forget where the FDIC gets their funds...that's right, Joe Taxpayer.
Finally, the claim is that by doing this it will bolster confidence. Confidence in what? If a person is going to panic and pull their money out, they're going to do it, whether they have $100,000 of coverage, $250,000 of coverage, or $10 gazillion of coverage. At the same time, most of the people making a run on the bank are people who have assets well under $100,000, so they're already covered by FDIC.
In my opinion, this doesn't do shit for the average person, except put us at greater risk as taxpayers to shoulder an even larger burden of the poor financial decisions made by so called "experts." I hope that Congress lets this idea die on the floor of the House.