Right. We need a plan like this in place in case all of these banks go and lose their $700,000,000,000 vacation money we can replace it for them again.

Actually there is a program for large depositors run by the Fed called CDARS. Basically it spreads out deposits among a network of very large banks to reduce risk of loss. This actually worked very well until a short time ago.

This really is an empty promise though. Most people will never have $100,000 in their account at one time except under unusual circumstances, (i.e. buying or selling a house or business, inheritance, retiring etc). The exception is for retirement accounts which is already $250,000. Most people with a large amount of wealth would have their money in a brokerage account which is not FDIC insured anyway.

@SkokieGuy:
Didn't Bush say though that its a slow and temporary fix? Meaning its not going to fix things in 2 days but a few months, and and its not guarenteed to fix anything, just kind of help things out a bit?

@dangermike: Not ad infinitum. There's a finite amount of money.

Why don't we give free insurance on all stock investments too, while we're at it.

@Rectilinear Propagation: It is true that anyone pulling money out of a bank and physically putting it in a shoebox or 'mattress' is a moron. IF the FDIC has guaranteed the account, that means that if they have to, they will PRINT more money and give it to you. That causes problems for inflation, but hey, that will affect your money whether you have it in the bank or under your mattress. a lot of economists are now saying the US needs to backstop ALL deposits, and only then will the LIBOR and other rates ease up.

Yeah, panic stricken morons ...

I have full faith in our government & our false financial system, don't you ?

The panic stricken morons are simply acting like they don't trust anyone right now. Money is a form of inventory (an inventory of wealth), and we all know that inventory is a substitute for certainty. If we could get Bernanke on TV (as one poster suggested),I'm not sure it would do anything unless he was forthright about the root of the problem and told the un-sugarcoated truth about how to fix it. When president pinnochio goes on the tube 4 times in a week and says that everythings ducky and the markets drop by 20-30 %,you would think that some one would tell him to shut the hell up.

The un-sugarcoated truth is that a great boom was built on quicksand and the bill is now due.I hate it,but there it is.

Only a moron would rely on the USD maintaining its value.

Knock Knock....
Who's There?
Hyper Inflation, Moron.

Thank you Fed, Treasury, Congress, Pres.

As far as "Well, if someone has more than $100/250/whatever thousand dollars, screw them..." - that's all well and good for people who have time to juggle their finances or hire people to do it for them, but in most cases these are corporations that we're talking about who may be moving lots of cash - it's too much of a burden to make sure cash accounts are under some limit for fear of a bank collapse.

Point is this: Don't make assumptions about the intelligence of others just because you don't have $250k in a bank account.

@nidolke:

No, it just means that we don't live in the 15th century.

@nataku83:

Which, ironically, is increasing in value, at least vs. the Euro. Weakening vs. the Yen, though.

@kingmanic:

Yeah, I should have noted, to be complete:

1. that the picture isn't quite as distorted when you include Social Security taxes, which effectively charge a higher rate on lower-income earners

2. the top income brackets make a large portion of the income as well.

Still, bottom line, if tax $ are going into insuring deposits, then, if there's any transfer going on at all, it's from people with high income/low net worth to people with low income/high net worth.

@Rectilinear Propagation: Why don't they put Bernanke on national TV? Address to the nation? Everyone knows nothing Dubya says at this point is going to make a damn difference, and Paulson is too tainted by the Goldman association, but can't Bernanke serve as a stabilizing, knowledgeable presence? All we need is five minutes: "Folks, your money is safe in banks, the FDIC and the Federal Reserve are here to make sure of that, please do not keep it in a shoebox, kthxbai."

But that is one of the issues. The people (and companies) who do have more then that are now running to the banks and taking out their extra money - leaving the banks with less cash to work with - and in turn, causing banks to get into trouble and possible collapse.

So yes - this is a good thing for everyone.

breakdown by state and sector
[www.taxpolicycenter.org]

re-enforcing your statement but also giving some context
[findarticles.com]

Income breakdown (Also re-enforcing the idea that the educated pay more)
[en.wikipedia.org]

@Victo:

The middle class doesn't really pay much in the way of income taxes. The bottom 75% of earners pay <14% of total income taxes, while the top 1% of earners pay 40% of income taxes. In fact, about 1/3 of US households pay no income tax at all.

I think $250k is fine, max at $500k. More than that, it would cost a lot of money and doesn't add much as far as confidence in the market as most (rich or poor) don't have that much money in a single account.

I think the government needs to stop trying to do stuff, at least in the short term. They can't do anything that would make the stock market rebound immediately, which is what they're trying to do. They need to wait and see if their bailout actually works. Frankly, all the new stuff is just panic. They can't berate us for being afraid and panicking when they're doing the same thing.

Comrads...it is a glorious day in the Fatherland!

Kimaroo, The FDIC says: "FDIC deposit insurance is backed by the full faith and credit of the United States government".

And we know how much that is worth these days.

If you're stupid enough, holding more that 100K in one account, then you deserve losing it, if your bank collapses.

I don't see why middle class is supposed to pay for stupid rich people, with its taxes.

It sounds like a nice idea to back all deposits everywhere.. but is that even realistically possible?

@SkokieGuy: I think that expiration date was created in the assumption that the crisis would be over by then. At this point, I think that was faulty.

Does everyone remember the 'bailout' package that passed included an increase to $250,000 to quell depositor fears and prevent a bank run?

What you didn't hear was that it expires December 31st, 2009!!!!!!

So if people do consolidate accounts because of higher limits, in just over a year, there will be either:

A panic as people rush to withdraw and move money before the limits decrease.
A huge risk if people don't move money and more banks fail

Basically, this portion of the bailout defered potential bank panic till another administration is in charge.

[www.fdic.gov]

...Ow, my cynicism stretched and it hurt.