Banking regulators past and present met with academics and consultants last Thursday to rehash the handling of the banking crisis of the late 1980s and early 1990s and draw lessons for the future.
"History of the Eighties: Lessons for the Future," a conference sponsored by the Federal Deposit Insurance Corp., showcased drafts of the first three of 14 papers scheduled to be published over the next year.
The papers focused on supervision issues and touched off heated debate on matters such as which oversight methods work best, whether Camel ratings should be made public on a voluntary basis, what market indicators might predict bank failures sooner, and even what caused the banking crisis.
The conference was held at the FDIC's annex of sorts in suburban Washington. The sparkling L. William Seidman Center in Arlington, Va., stands in stark contrast with the Depression-era black-and-white photos that hang on its walls. Among the images are ones of lines of citizens making a run on their deposits - the very panics the FDIC was formed in 1933 to prevent.
Despite the haunting images of bank failures that surrounded them, some conference-goers questioned whether deposit insurance would be necessary in the future. Privatization or greater reliance on market discipline are two alternatives.
Two former FDIC chairmen - Mr. Seidman and William M. Isaac - advocated scaling back deposit insurance. But in a luncheon speech, the current FDIC chairman, Ricki Helfer, threw cold water on that argument.
The government guarantee on deposits proved expensive in the 1980s and early 1990s, she said, but "deposit insurance was extremely successful in maintaining stability in the banking system during the crisis." Only eight of 32 private or state insurance funds survived the crisis.
"We know federal deposit insurance works to stabilize the banking system in times of great stress," Ms. Helfer said. "Can we be sure that another approach will work as well?"