Taking the limits off deposit insurance

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Stacey Vanek-Smith: Yet more government intervention on the horizon from Uncle Sam. Marketplace’s Jeremy Hobson has more.

jeremy Hobson: The government is weighing a plan to insure all of the nation’s bank deposits. Up until the bailout plan passed Congress last week, depositors were insured for up to $100,000. Lawmakers raised that limit to $250,000.

Now, amidst all the market turmoil, Washington is considering removing the limits altogether. The idea is aimed at keeping individuals from pulling money out of their bank accounts, and thereby weakening bank balance sheets even further.

While there haven’t been widespread bank runs in recent weeks, there have been reports of consumers quietly removing cash from banks. The government move, according to the Wall Street Journal, is currently only in discussion stages. It would require several government agencies to agree that there’s a systemic risk to the economy.

In New York, I’m Jeremy Hobson for Marketplace.