The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006. The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts.
This is getting some play across the blag-o-net, and will undoubtedly be getting more, but I'd just like to point the following two facts out:
- In 1996, the first year in which Congress refused to authorize the FDIC to collect premiums, Republicans had just recently gained control of Congress
- 2006, the last year in which Congress refused to authorize the FDIC to collect premiums, was the last year that Republicans had control of Congress
PUBLIC CHOICE THEORY~!
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