GROVER: Dodd-Frank regulations strangling economy

‘Too big to fail’ has got to go

Question of the Day

Should Congress make English the official language of the U.S.?

View results

The Cato Institute’s Mark A. Calabria observes the high correlation between state deposit insurance and thousands of banks going belly-up in the 1920s. Yet even at the peak of the Great Depression’s 1933 bank failure, just 2 percent of deposits were lost.

Franklin D. Roosevelt opposed FDIC insurance, arguing it was “quite dangerous” and would “lead to laxity in bank management and carelessness on the part of both banker and depositor.” He was right.

While eliminating FDIC insurance might be a political bridge too far, it should at least be limited. The FDIC insures deposits up to $250,000 and since the end of 2010 has provided unlimited coverage for non-interest-bearing consumer and business accounts.

If all financial institutions were free to compete and to fail, serving shareholders and customers rather than Washington overlords, it would spur innovation and economic growth and curb systematic risk.

It ought to be possible to cobble together a political coalition of right and left willing to drive a stake through the heart of TBTF.

Eric Grover is a principal at Intrepid Ventures.

© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.

blog comments powered by Disqus
TWT Video Picks
You Might Also Like
  • Maureen McDonnell looks on as her husband, former Virginia Gov. Bob McDonnell, made a statement on Tuesday after the couple was indicted on corruption charges. (associated press)

    PRUDEN: Where have the big-time grifters gone?

  • This photo taken Jan. 9, 2014,  shows New Jersey Gov. Chris Christie gesturing as he answers a question during a news conference  at the Statehouse in Trenton.  Christie will propose extending the public school calendar and lengthening the school day in a speech he hopes will help him rebound from an apparent political payback scheme orchestrated by key aides. The early front-runner for the 2016 Republican presidential nomination will make a case Tuesday Jan. 14, 2014, that children who spend more time in school graduate better prepared academically, according to excerpts of his State of the State address obtained by The Associated Press. (AP Photo/Mel Evans)

    BRUCE: Bombastic arrogance or humble determination? Chris Christie’s choice

  • ** FILE ** Secretary of State Hillary Rodham testifies on Capitol Hill in Washington, Wednesday, Jan. 23, 2013, before the Senate Foreign Relations Committee hearing on the deadly September attack on the U.S. diplomatic mission in Benghazi, Libya, that killed Ambassador J. Chris Stevens and three other Americans. (AP Photo/Pablo Martinez Monsivais, File)

    PRUDEN: The question to haunt the West

  • Get Breaking Alerts