“A Monstrous System of Guaranteeing Deposits”

Time for a good chuckle: Have a read of this excerpt from TIME magazine, circa 1933, about the evils of FDIC deposit insurance:

“Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed by both houses of Congress would rivet upon their institutions what they considered a monstrous system of guaranteeing bank deposits. Such a system, they felt, would not only rob them of their pride of profession but would reduce all U. S. banking to its lowest level. They saw their deposits which they had spent a lifetime to build up and protect with their good names confiscated by the Government to pay for the mistakes and dishonesty of every small town bankster . . .

Bank deposit guarantee schemes have been tried in Nebraska, Oklahoma, Kansas, Mississippi, Texas, North Dakota, South Dakota and Washington. They have invariably ended in failure and loss, if not in outright scandal and default. They have weakened the moral fibre of bankers and served chiefly as a temptation to bad banking. Honest banking has been penalized for dishonest banking.”

Thanks, Paul!

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Source:
BANKS: Deposits Guaranteed
Time, Jun. 05, 1933
http://www.time.com/time/magazine/article/0,9171,745617-1,00.html

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