Let’s face it: one of the things that we’ve learned from the current economic crisis is that the U.S. government isn’t going to allow any significant number of depositors to lose their money when a bank fails (which we completely agree it is the right and smart thing to do). If this is the practice, then, wouldn’t it be better to make this the official policy?
If the government is already unofficially insuring savings accounts, regardless of size, they would do well to turn this practice into public policy, and let Americans and the rest of the world know that, no matter the size of their savings account, their money will be safe in a U.S. bank.
By officially insuring accounts without limit, America will bolster public confidence in its banks preventing such disasters as a bank run. Having eased the public’s fear that their money is in danger, it will be easier for the government to manage public opinion and worry when, and if, it needs to restructure large banks (like Bank of America and Citibank). Lastly, this bolstering of confidence will be especially effective for attracting deposits into American banks from around the world.