While Congress frantically tries to save Wall Street in order to save Main Street, it should focus first on directly protecting the financial security of all Americans and the U.S. banking system.
How? By raising the limit on FDIC insured deposits from $100,000 to $250,000—or even up to $1 million.
The loss of Lehman Brothers regrettable, as has been the ensuing pressure on the other big investment banks. But the core banking system—not the shadow banks—is what drives the economy, and deserves particular attention of policymakers.
Nothing could boost more investor (and depositor) confidence in the country’s banking system than an increase of the FDIC limit. Funds would flow into the banks, to be re-lent. Credit would dramatically loosen.
The FDIC is one of a handful of government program that is truly trusted and respected by the American people. It does its job effectively, efficiently, and at no cost to the taxpayers.
It is time for American bankers to rise and demand this as part of a solution to the ongoing credit crisis.