Wall Street Analysts, Honestly Wrong at Last
Sometimes the gains from a new regulatory regime are obvious. The creation of the Federal Deposit Insurance Corp. is a perfect example. Your bank deposits are guaranteed by the government up to some stated amount, no matter the recklessness or irresponsibility of the bankers running the place. It wasn’t always this way. Before the FDIC, bank runs were common and depositors could and did lose all their money. The changes were an enormous improvement, allowing people to safely deposit their cash without fear of a run on the bank in times of trouble. Savings increased, stress over bank accounts fell, bank lending rose. The entire economy benefitted. It was pretty hard to misconstrue the impact: a win-win-win.
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