WASHINGTON — The Federal Deposit Insurance Corp.’s second-highest official warned Wednesday that the deposit insurance system, while providing customers with "a sense of security," still poses moral hazard risk that can result in riskier behavior on the part of banks.

“Deposit insurance, like any insurance system, inherently invites its own abuse,” FDIC Vice Chairman Thomas Hoenig said in a speech Wednesday in Quebec City at an annual meeting of the International Association of Deposit Insurers. “That can cause unintended serious destabilizing effects on an economic system.”

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