Fed Governor John LaWare, moderating a Bank Fed symposium, offered this proposal to eliminate the moral hazard that deposit insurance brings to the banking business: Instead of giving it to depositors for free, give them the option of buying as much as they need.

Premiums would vary from bank to bank, depending on the institution's risk profile.

"I am willing to defend this outrageous position," he said, adding, "This is not the official view of the Federal Reserve Board."

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