‘Targeted’ deposit insurance could work. But it will have to wait.

By  Ebrima Santos Sanneh

WASHINGTON — A recent Federal Deposit Insurance Corp. report pointed to increased deposit insurance coverage for certain business accounts as the most promising policy response to the recent spurt of bank failures. But so-called “targeted insurance” poses significant administrative challenges to work as intended, the agency said, and experts say that getting Congress to grant the FDIC the authority before the 2024 election is improbable….”I do not think the operational problems, while notable, are in any way insuperable,” said Karen Petrou, managing partner at Federal Financial Analytics. “There are already numerous ways to game coverage the FDIC seeks to control via reporting requirements, etc. If these accounts are non-interest-bearing and available only to entities that are not natural persons or other corporate structures the FDIC wishes to include, this will work as well as most other coverage limits.”