Permanent FDIC Coverage at $250,000?

The FDIC insurance limit was temporarily raised to $250,000 per depositor per bank in 2008. Today lawmakers are deciding if the increased limit should become permanent.

The temporary increase was a response to panic in the face of large bank failures. Some big names went under, and nobody knew who would fail next. Rumors (however accurate they might have been) were enough to send uninsured depositors running, and banks teetering on the edge got kicked over the edge due to bank runs. The increased limits helped mitigate the problem.

Now the House Financial Services Committee wants to beef up the FDIC insurance program for good. They hope to keep the $250,000 limit in place, and they want to expand the FDIC's ability to use funds from the US Treasury when needed. [via Bankdeals]

Further reading:

• How FDIC Insurance Works
• What is a Bank Run?