If we didn't have a deposit insurance system today, would we want to develop one? What would we want the system to do? To the extent the current system is at odds with the system we would design for the future, how might we get from here to there without undue turmoil? These questions are on the minds of a lot of bankers.
The direct costs of deposit insurance are significant. The cost of supervising and regulating banks is much higher than it would be if taxpayers weren't perceived to be at risk. Deposit insurance premiums, while minimal today, have been substantial over the years, reaching nearly $6 billion annually in the early 1990s.