In a time where there’s a growing fear of a run on the banks, this idea is just moronic.
1) The FDIC already insures some retirement accounts to $250,000, but not other accounts.
2) Most people who have $100k or more in the banks don’t keep it in one bank. They diversify. It’s a way to increase their protection against bank failure. Raising it to $250k would push more people into one bank. It won’t help small businesses. It won’t help anyone, really, because those people with $100k don’t need help.
3) McCain wants the FDIC increase too! Evidently there’s a lot of people out there with uninsured cash in banks. (Idiots.) But, if you read the story, McCain seems to be exercising some kind of leadership. Obama– well, let’s just say he’s being put on hold by Chris Dodd & Barney Frank.
I can understand the move to put the limit up to $250,000, but it’s mainly symbolic and a psychological booster to those who have money in the banks. But believe that Joe Six-Pack doesn’t have $100k in the local savings account. Joe Wall Street does.