PETER ROFF: Say ‘No’ To Upping Federal Bank Insurance Coverage

For over a century, progressives drawing their inspiration from Karl Marx have undermined the idea of “moral hazard” as they’ve pushed for brotherhood and universal equality. The latest manifestation of their effort, oddly enough, comes in what they claim is a move to protect savers and investors by raising the federal deposition insurance limit from $250,000 per account to $10 million.

This may seem prudent—especially for non-interest-bearing accounts used for payroll and daily business expenses. Ostensibly, it protects business owners and working Americans alike and will be funded by banks through fees paid to the FDIC meaning there should be no risk to taxpayers.

Some brilliant, capable people, including Treasury Secretary Scott Bessent, have expressed support for the move. They should rethink that. As we learned in 2008, taxpayers almost always end up holding the bag. The FDIC made individual account holders whole—up to the statutory limits—some depositors did face losses, leaving them bitter despite the federal bailouts.

Strangely enough, as The Wall Street Journal reported, big banks oppose raising the coverage level. As they sit, they will pay for most of it and get little benefit from it — they will not be eligible for the higher level of coverage. Which may be why supporters of the increased limits say the proposal is meant to help small banks and community-based institutions. Yet a recent study from the Cato Institute found that fewer than 1% of deposit accounts exceed $250,000, the level at which FDIC coverage currently ends.

When significant failures occur, the pressure on Washington to bail out affected parties to the full extent of their losses increases, and we all end up footing the bill. We all know that taking significant risks often leads to substantial rewards. This is how fortunes are built, and let’s be honest, few among us don’t want to be wealthy. If an endless class struggle shapes your worldview, however, these “rewards” come only at others’ expense. They are the product of injustice and must, therefore, be disposed of.

The process of doing that takes various forms, including eliminating or alleviating the consequences of risky behavior. A look around us shows that nearly all large government social welfare programs aim to shield people from the outcomes of poor decisions across all elements of life.