Abstract
This comment addresses the problems of the commercial banking industry and government deposit insurance in the United States. By way of introduction, it should be noted that banking reform has become much more political. Several years ago, it was a sleepy topic relegated to the inside of the business pages; by 1990, that changed dramatically. The largest element of the change was connected to the failure of the savings and loan industry in the United States, a monumental disaster of public policy with a present-value cost estimated to exceed $200 billion.1 Put in perspective, the Marshall Plan to help rebuild Europe after World War II had a present value, in current dollars, of about $70 billion. Now that in itself is not necessarily relevant to the commercial banking industry. There are differences between it and the thrift industry. Nevertheless, as a result of the savings and loan failures, people are much more aware and skeptical of deregulation proposals than they were a few years ago. Weaknesses in the system for regulating and insuring banks have also come to light and have proved a source of major concern.
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