FDIC (The Agency That Insures Your Bank Account) Being Phased Out

July 16, 2008

http://www.fdic.gov/about/learn/learning/when/1980s.html

There’s been a lot of talk from government officials, attempting to prevent panic and a run on banks, assuring us not to worry, that our bank deposits are insured by the FDIC up to $100,000.  What no one has discussed is the fact that the FDIC is slowly being phased out by inflation.  Did you know that the $100,000 limit on insured savings has been in place for 28 years?  It was last increased in 1980, from $40,000 to $100,000. 

Depository Institutions Deregulation and Monetary Control Act of 1980
This act, which is passed as a response by Congress to get S&Ls out of interest- rate mismatch, is an effort to deregulate S&Ls.

This act:

  • Increases THE FDIC deposit insurance coverage from $40,000 to $100,000.

Since 1980, the CPI (consumer price index) has risen by 257%.  Therefore, the value of deposits insured by the FDIC has declined by 257% since 1980.  If this isn’t a gradual phase-out of the program, I don’t know what is.

Also, did you know that the FDIC only had about $52 billion in assets at the beginning of this year?  How many bank failures would it take to wipe out that fund?  Very few.  Then what?  Then taxpayers are on the hook – you and I.  The government will simply pick up the tab and add it to the national debt for our kids and grandkids to pay.