Is $100,000 Enough?

Mon, September 29, 2008


Mr. PunditMom thinks I’m crazy.

OK, on certain things, that’s not news. But he is shaking his head about why I’m looking into moving my savings account money from the bank where we have our separate and joint accounts.

Since we’re both a little on the “older” side, we’ve got a nice amount of savings in the bank. But that means if the FDIC gets called on to pony up on our accounts, I want to make sure all of our money is protected.

Pretty much every banking talking head I’ve seen on TV recently tries to be the voice of calm and reason — no need to panic, you’re insured up to $100,000 per depositor, don’t run to the bank and take out your money!

I started wondering, though — with all the baby boomers in this country, I bet we’re not the only ones who’ve been saving for a long time, so would there be enough “insurance” for everyone? And $100,000 sounds like a lot of money, but when did they come up with that amount? In my hazy brain, it seems like it’s been that way for most of my working life.

Turns out that this time, my brain cells were still there. The FDIC depositor amount was raised to $100,000 in 1980. Yeah, 28 years ago and it hasn’t been raised since. If Congress thought $100K was a good amount to cover everyone almost 30 years ago, why hasn’t there been any effort to raise it to make up for inflation? (It is up to $250K for IRA accounts).

And as I was poking around the internet to find that factoid, I was reminded about something else — the death of the Federal Savings & Loan Insurance Corporation after the savings and loan crisis of the 1980s. Those funds were insured too and the FSLIC paid out. That sounded good until I got to the part that read that as a result of all the pay-outs, the FSLIC went under and was subsumed but the FDIC.

That didn’t instill a lot of confidence in the “don’t worry we have the FDIC’ argument. Because what happens if increasing numbers of banks fail? There were almost 750 S&L failures that cost taxpayers around $160 billion dollars in the 1980s and 1990s.

See where I’m going with this??

$100,000 isn’t even close to being enough to protect our collective savings. Think that maybe Congress could have put something in the $700 BILLION dollar bail-out package about that? It would have been nice, but then, we taxpayers don’t have special lobbyists to cover our backs like the commercial and investment banks.

Oh, wait, our “lobbyists” are supposed to be our congressmen and congresswomen. Has anyone clued them in to that?

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6 Responses to “Is $100,000 Enough?”

  1. Kady Says:

    PM – you’re so right $100k is not enough. But once again, thanks to the idiots who love deregulation, it’s still going to bankrupt (not literally, but only b/c of the fiction that is govt not being able to go bankrupt)the FDIC. Do you know they actually reduced the premiums that banks had to pay into FDIC over the last decade (b/c argument that the banks’ balance sheets were SOOOO strong)? So FDIC is so severely underfunded for this crisis it’s not even funny. Besides this bailout, expect to see FDIC going to Congress/treasury asking for more money.

  2. bloggingmom67 Says:

    You’re right, $100,000 is not enough, although not really an issue for me. I’d only wish I had that much in the bank.

  3. Robyn Says:

    It is not nearly enough. In my opinion, it should be at least 500K. The point of having FDIC was to cover most everyone who had money in the bank. 100,000 in today’s market really isn’t that much.

  4. anniegirl1138 Says:

    it is enough for the vast majority of people because we are not a nation of savers hence our current credit crisis. Most people’s “wealth” is tied up in property or pensions.

    The latter is the worrisome thing. A lot of 401k’s are not insured by the government.

    Oh and the demise of the savings and loan ins company. Dubya had a hand in there somewhere too.

  5. impromptublogger Says:

    ITA with everybody here. Not a problem with us (unfortunately) but perhaps you need to split up your accounts into 100K amounts…

  6. CanCan Says:

    I wonder about that too! Personally I am well under the limit (heh) but for people like my father, who didn’t have a retirement plan through his job and just squirreled away money over the years…what can the government offer him?
    Is dad going to be punished for being responsible?

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