Even Friedman and Schwartz endorsed deposit insurance in 1963, but they were observing an unusually placid, limited-coverage period and were wrong; deposit insurance is unnecessary because small savers could be protected via postal savings (invested in Treasuries with no risk), and it has been the single most important contributor to financial-system risk by removing risk-based bank competition.

normativepending

Speaker

Charles Calomiris

Evidence Quote

It has been the single most important contributor to risk in the financial system by removing the discipline that comes from banks having to compete along the dimension of risk

Source

Charles Calomiris on the Financial Crisis 10/26/2009EconTalk
Created: 6/15/2026, 9:20:15 AM

My Notes

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