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When Economic Moves Don't Make Sense

Both McCain and Obama are now calling for an increase in the deposit insurance cap, from $100,000 to $250,000. Their stated goal is to rebuild confidence among the public and small businesses. But how? Unless you have more than $100,000 in an FDIC-insured account, this means nothing to you (and if you do, why?). And it certainly means nothing to the banks and credit markets. Moreover, while the FDIC has been an important part of the federal response to bank collapses in recent weeks, that role has been to ease the purchase of one bank by another. And since a raise in the cap won't make credit any easier to get, it will mean little to the small businesses that, in coming weeks, will struggle to get the short-term loans necessary to meet payroll and other expenses. It also won't mean much to the people who are facing lower limits on credit cards, or who are reassessing that new car or even their children's college prospects. If this is a political stunt, it's an odd one.