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Deposit Insurance

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The Financial Modernization Act of 1999 created the most sweeping banking reforms since the Great Depression. But even as regulators, financial institutions, and policymakers have worked to implement this act, its critics have called for additional reforms. In particular, the Federal Deposit Insurance Corporation has initiated a study to reexamine and restructure federal deposit insurance; this would include doubling the deposit insurance limit. While raising the limit might benefit insured banks and thrifts, it appears to offer most depositors little or no benefit. After all, balances fall within the current $100,000 limit for more than 98% of insured banks’ domestic deposit accounts (regardless of a bank’s size).

Suggested citation: "Deposit Insurance," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-08, pp. 15-17, 08.01.2000.

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