Cato Podcast Banking on Moral Hazard: The Push for $10 Million Deposit Insurance
18 snips
Jan 1, 2026 
Norbert Michel, a Senior policy analyst at the Cato Institute, and Jill Castilla, CEO of Citizens Bank of Edmond, dive into the controversial push for $10 million in FDIC insurance. They reveal that only a tiny fraction of accounts exceed current limits and that customers aren't clamoring for higher coverage. Jill shares banking tools for protecting large deposits, while Norbert highlights the risks of moral hazard and market distortion. They advocate for targeted regulatory reforms over increasing coverage and emphasize the importance of open debate on this critical issue.
AI Snips
Chapters
Transcript
Episode notes
Most Accounts Are Far Below The Cap
- Far fewer accounts exceed $250,000 than the public assumes, so raising coverage to $10M would primarily help very wealthy depositors.
- Norbert Michel argues the interest-bearing distinction is irrelevant and the policy wouldn't protect typical small businesses.
Use Market Tools Before Government Backstops
- Sit with customers who hold large balances and map their ownership to maximize FDIC coverage.
- Use reciprocal networks, pledging securities, or letters of credit before leaning on government backstops.
Policy Push Misreads Deposit Movement
- The push for huge coverage grew from reactions to SVB but misreads deposit flows and government actions.
- Norbert Michel says money moved after the systemic-risk exception, undermining the argument that higher coverage keeps funds in community banks.