Many banking experts hold that deposit insurance induces banks to take unwise risks. However, the real problem with deposit insurance is that it shifts the cost of regulatory error to the nation’s surviving banks—a problem preventable with privatized banking regulation and “cross guarantees.”

Bert Ely is the principal in Ely & Company, Inc., Alexandria, Virginia.
Antitrust, Competition, and MonopolyBanking and FinanceBanking Law and RegulationBusiness and EntrepreneurshipEconomyLaw and LibertyPublic Choice