All Posts Tagged With: "deposit insurance"
Mr. Obama and the Bankers: “Doin’ What Comes Natur’lly”
Speaking to a very receptive Elyria, Ohio, crowd a few months ago, President Obama took off the gloves and promised that he was ready to fight to provide more jobs, improved education, and security from the threat of bankruptcy for homeowners. Turning his attention to the Wall Street bankers, who had just announced another round [...]
20Apr2010 | Bruce Yandle | 1 comment | ContinuedDo We Need Deposit Insurance?
f banks can suspend convertibility, depositors know that runs merely precipitate suspension. This greatly reduces depositor incentive to panic and run. Allowing banks the right to suspend would probably not eliminate all runs, but it would plausibly limit them to banks that are insolvent rather than merely illiquid.
The question, then, is whether a banking system with less regulation—no prohibition on suspension and no deposit insurance—might work better than current regulation—prohibitions on suspension, combined with deposit insurance and balance-sheet regulation.
The evidence from the pre-1914 era suggests that the regime with less regulation has promise. Banks were not legally allowed to suspend convertibility during this era, but many did so anyway, sometimes with explicit approval of, or even encouragement from, regulators. This did not eliminate runs and panics, but the record suggests that suspension reduced contagion and failure in these episodes.
24Apr2009 | Jeffrey Miron | 4 comments | ContinuedToo Big to Fail
“Once you lose your freedom to fail, you also lose your freedom to succeed and you cease to be a free society.” —U.S. Rep. Jeb Hensarling of Texas In March 2008 the investment banking firm Bear Sterns failed and the federal government quickly stepped in. The public was inundated with the phrase “too big to fail” [...]
2Mar2009 | Michael Heberling | 8 comments | ContinuedGovernment Deposit Insurance: A Dumb Idea
A headline on an Associated Press story in mid-June read, “Doubling Deposit Insurance Opposed.” Surprisingly, the Clinton administration–which can usually be counted on to support anything that extends the reach of government–had come out against a proposal to raise the amount of bank deposits insured by the Federal Deposit Insurance Corporation from $100,000 to $200,000. [...]
1Oct2000 | Lawrence W. Reed | 0 comments | Continued-
The Latest
Contraception: Insuring the Uninsurable
Update below. Controversy rages over the Obama administration’s mandate that all employers – including... Read More
The Snow Plowers’ Petition
The following might have happened in a small college town in upstate New York… In a cold and snowy... Read More
Super Bowl versus Education?
In the spirit of Super Bowl weekend I’d like to deconstruct a Facebook status update that a friend... Read More
Capitalism, Corporatism, and the Freed Market
When a front-running presidential contender tells the country that thanks to Barack Obama, “[w]e are... Read More
Creating Jobs versus Creating Value
Picking on New York Times columnist Paul Krugman is one of the largest participation sports on the Internet.... Read More
