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Article: Deposit insurance: a market-based reform proposal. (Federal Deposit Insurance Corp.)
- Article from:
- Review of Business
- Article date:
- December 22, 1991
- Author:
CopyrightCOPYRIGHT 1991 St. John's University, College of Business Administration. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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It is clear that there are major problems with federal deposit insurance as it is currently structured. Widespread failures in the savings and loan industry have forced an expensive federal bailout, and the number of bank failures is at an uncomfortably high and rising level[2,4].
While it is now generally accepted that reforms in federal deposit insurance are necessary, proposals to abolish such insurance[5,6,10,16] have not received significant support. These proposals are generally considered politically unrealistic. Also, they lead people to recall the early 1930's when failures of a few banks produced panic and a run on the entire banking system. The key ...