FDIC Insurance Hike?

Physician's Money Digest, November30 2003, Volume 10, Issue 22

The US Congress, under pressurefrom some banks, is thinking about raisingthe Federal Deposit InsuranceCorporation (FDIC) insurance limit to$130,000, but some experts think that's abad idea. They point out that only 2% ofall accounts are not covered under thecurrent limit, and depositors can getaround the cap fairly easily by openingdifferent accounts at the same bank or bysplitting accounts between banks. Theyalso point out that the last time Congressraised the FDIC insurance cap back in1980, the savings and loan industry wenton a foolish lending binge. When severalsavings and loans went belly-up as aresult, the FDIC had to cover millions ofdollars that depositors lost, with the taxpayersultimately footing the bill.