Catherine Rampell of WaPo has a disturbing report concerning the incoming Administration, because what else can you expect?
Consider the troubling idea to abolish the Federal Deposit Insurance Corporation, as the Wall Street Journal recently reported. Congress founded the FDIC in 1933 in response to a series of painful, “It’s a Wonderful Life”-style bank runs. Hordes of panicked customers tried to pull their money out of banks all at once because they worried their cash would not be safe, causing thousands of banks to collapse.
In the 90 years since, the FDIC has run a national insurance system for deposits, up to certain limits, so that customers can trust that their money would be protected if their bank got into trouble. The independent agency also supervises the banks it insures to prevent them from getting into trouble in the first place. (Knowing you’re backed by insurance can lead to riskier behavior, after all.)
Reportedly, one of the issues that infuriated many voters following the Great Recession in 2008 was the lack of punishment for those who were seen as abusing their corporate positions. So, just to make this proposal to abolish the FDIC a bit spicier, let’s refine it thusly:
The CEO of every bank that goes under must serve a prison term of not less than a decade.
There, that makes me feel better. After all, consumers cannot exert the necessary pressure to ensure their banks are run conservatively, but hang a sword over the CEO, that’s immediate pressure.
