Free exchange | Narrow-minded

摘要

When Franklin Roosevelt took office in 1933, his first order of business was to arrest the banking collapse that was plunging America ever deeper into depression. As part of the plan for doing so, he signed into law the first federal insurance scheme for deposits, reshaping American finance. Roosevelt did so at the behest of Congress, but had deep reservations. He worried that deposit insurance would "make the United States government liable for the mistakes and errors of individual banks, and put a premium on unsound banking in the future." He was right to worry. As intended, deposit insurance made banks less prone to runs (depositors trying to withdraw their money before everyone else does). But it also reduced depositors' incentive to monitor banks' behaviour. With less market discipline, a heavy-handed system of regulation evolved.