I haven’t seen the rerevised bailout bill yet, but if its major improvement is raising the FDIC insurance cap, to $250,000 that’s a huge yawn. Such a move is helpful, but largely irrelevant to the current crisis.
Sure, it’s ridiculous that FDIC caps haven’t been inflation indexed, but this crisis is not about lack of FDIC insurance. The current cap is $100,000/depositor/institution. But there just aren’t that many Americans with more than $100K sitting in their bank accounts. The Federal Reserve’s 2004 Survey of Consumer Finances indicates (on p. 14) that of the top 10% of Americans in terms of wealth, the median amount held in accounts that could be FDIC insured was $58,000. Most Americans have nowhere close to $100K sitting around in the bank, much less $250K. And if you’re super rich, you don’t just park hundreds of thousands of dollars in your savings account–you either spread it out over several institutions or, more likely put it into higher-yielding investments.
So what is the $250K about?