Never lost a penny: An assessment of federal deposit insurance

F. Stevens Redburn

Journal of Policy Analysis and Management, 1987, vol. 7, issue 4, 687-702

Abstract: Current problems of the Federal deposit insurance system threaten not only to increase future Federal costs but also to destabilize the U.S. banking system as it faces new competitors. The system's problems can be traced to weakness in both the political and market feedback mechanisms. Current policies governing Federal deposit insurance are flawed in numerous respects. Recent extension of capital forbearance to troubled institutions appears to be another step in the wrong direction. Reforms are suggested that would improve political accountablity and market discipline. However, given resistance to such reforms, only a banking crisis seems likely to break the impasse.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jpamgt:v:7:y:1987:i:4:p:687-702

DOI: 10.2307/3323488

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