The government has no incentive to do something cheaper, better, or even be accountable for their bad actions.
There are already private deposit insurance companies, but they only sell to rich people because the government has a monopoly on anyone under $250,000. If the released their monopoly on it, it could create a lot of jobs in the insurance market, and could be provided at a cheaper cost.
Saying something like, "it is obviously needed because of the great depression."
That's so absurdly wrong it is not even funny. That is like saying, the stock market collapsed, so we need to have the government prop it up. Government has not and never will be the answer to any of our problems.
First and foremost, the idea of the government being involved in insuring the cash a person has in a bank implies that he or she needs the government's protection from those mean old bankers who want to be frivolous and screw ordinary people out of their hard earned money. There's an implicit notion to this that's hidden in the fabric of 99% of all government programs and that's that U.S. citizens are powerless without the help of the government.
It would benefit the country if the Federal Deposit Insurance Company becomes privatized. Private companies are fun more efficiently than public ones. It is necessary for the government to cut waste, especially in the current economic climate. The government would benefit from agencies and departments becoming private in the future.
Simple. FDIC is a not for profit insurance corporation. Deposit insurance is mandated by Congress. Car insurance is also mandated by Congress. However, Car insurance companies spend billions on advertising, Executive pay and bonuses, Travel and entertainment, Etc. As private companies, Car insurance companies have to compete for your business, And their insurance fund is seen as a risk / reward profiteer system, Not a system of socializing risk with the funds of their clients solely for paying out on losses. The FDIC mission is simple, Protect depositors, Maximize recovery, Keep the insurance fund at safe levels. Most people screaming for privatization have little understanding of the greed and corruption that occurs within for profit insurance companies. Insurance companies at face value should all be not for profit systems, Designed soley to accept risk and pay out on casualties, Holding enough reserves and producing enough income to cover losses and administer itself, Respectively. This is what the FDIC does.
The FDIC is hard enough to monitor as a government agency. As a government agency, it generally works for the people it is intended to serve, the American people. Argue all you want about the bureaucracy and inefficiency. These things are in place because the people put them there. There are options to remove it. If congress wants to run the government into the ground over and over again and the people do not answer with elections, that is on the people. Privatizing it would just open the FDIC to further corruption and mismanagement. I would rather continue walking with the devil I know than invite a new one out.
It is the saying that if something is not broken, no attempts should be made to fix it. With this in mind, it can be stated that the FDIC has been effective for all the years that it has not been a private entity. Privatizing the FDIC would remove regulations from banks and provide them with more flexibility to do as they desire. Keeping the FDIC away from privatization maintains a checks and balances of sort to ensure that banks adhere to specific legal requirements. If it is privatized the rules will no longer be universal.
No, the FDIC should not be privatized. If private industry could do a better job than the FDIC then we wouldn't have had that little moment in history called the Great Depression in the first place. The FDIC needs to continue to have the backing of the full faith and credit of the United States.
I believe it could be a good idea to privatize the FDIC, but the question begs if we would simply be creating another business that was "too big to fail." How could a private company possibly guarantee a banks deposits to the depositors and furthermore, what would happen if a privatized FDIC couldn't follow through. It sounds like banking insurance, which I guess could work, but there wouldn't be a guarantee, which to me defeats the purpose.