‘One of the dumbest ideas’: Abolishing the FDIC could backfire on Trump and his allies

The Federal Deposit Insurance Corporation (FDIC) was created during the Great Depression to restore trust in a financial system shaken by the failure of thousands of banks.

The Federal Deposit Insurance Corporation (FDIC) was created during the Great Depression to restore trust in a financial system shaken by the failure of thousands of banks. Today, during a time of distrust in government, the FDIC stands apart in the alphabet soup of bank regulators as a rare agency that many Americans trust. It has a long track record of protecting insured bank deposits, during good times and bad. Yet it’s unclear whether the FDIC can survive Trump 2.0. Sources told CNN’s Kayla Tausche that allies of President-elect Donald Trump have discussed the possibility of dismantling the FDIC, giving Treasury oversight of deposit insurance, and allowing the federal government to substantially shrink or even close the rest of the agency. Former regulators and academics told CNN it makes little sense to shut the FDIC and Congress is not likely to greenlight such a plan. “This idea would pose an enormous risk of terrifying Americans about the safety of their deposits and triggering bank runs,” said Patricia McCoy, a law professor at Boston College and former federal regulator.