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It’s the confidence, stupid.

Maybe combining this with the SEC rule change below will help confidence some. Funny, however, how they didn’t actually get around to doing this until the House defeated the first iteration of the bailout.

WASHINGTON (Reuters) – The chairman of the House Financial Services Committee has told lawmakers that a federal bank regulator will seek authority to increase the deposit insurance limit to a level above its current $100,000, said a source familiar with the chairman’s thinking.

Representative Barney Frank, a Massachusetts Democrat, has told lawmakers of his committee that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, will soon request the authority to boost the level of insured deposits, the source said.

Presidential nominees Barack Obama and John McCain both proposed an increase in federal deposit insurance to $250,000 from $100,000 as a way to broaden support for the bank asset bailout bill rejected on Monday by the U.S. House of Representatives.

Both of these changes seem like little things that cost the taxpayer nothing… and isn’t that the point?