Fewer Than One Percent Of Accounts Are Above The FDIC Limit

Norbert MichelYesterday, the Brookings Institution hosted anonline debate titledShould the Ceiling on Deposit Insurance be Lifted?Most of the participants didnot support lifting the cap so that all deposits would be covered by FDIC deposit insurance, and everyone seemed to acknowledge (atleast some of) the risks and challenges of federally insuring all deposits. They also seemed to agree that raising the cap above $250,000 would only help the wealthiest depositors at the expense of everyone else.While the participants did use data to support their arguments, and we have no quibble with their figures, there is important additional evidence that further emphasizes just how few accounts are above the $250,000 FDIC insurance cap.For starters, the Federal Reserve ’smost recent Survey of Consumer Finances shows the median transaction account balance – defined to include checking, savings, money market, call accounts, and prepaid debit cards – was $5,300. And, as pointed out in the Brookings debate, the average (mean) balance was $42,000. But it’s also important to note these are conditional averages, ones calculated after eliminating all accounts with zero balances.A moredetailed look, by income percentile, shows that even most high ‐​income families have balances well below the $250,000 cap. For instance, the (conditional)median balance in the 80th to 89th percentile was $20,000, while the median for those in the 90th to 100th percentile was $70,000. Even the condition...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs