This is another area that would benefit from both an exchange of views with the industry and more sophisticated analysis. The United States is unique among countries in that for more than half a century it has maintained significant deposit insurance funds. The presence of a strong fund makes it less likely that banking problems will meet with delay, thereby increasing the costs. Big enough to do the job. To a significant degree the answer will be a matter of judgment.
Bank failures occur infrequently and irregularly - and sometimes in large numbers.
Deposit insurance is not like life insurance - it is not amenable to precise actuarial calculations. It would be adjusted on an ongoing basis to reflect changes in economic conditions, structural changes in the industry, and other developments, just as we expect bank capital to be adjusted for such factors. To help sort out the issues I have raised with you this morning, we need to do two things. The first is to clarify the public policy purposes that are served by a deposit insurance fund. The second is to improve the analysis of fund exposure.