Those of you whose institutions are insured by the SAIF are the immediate beneficiaries of the newly-sound fund. You are not the only beneficiaries, however. The SAIF's problems were not only an issue of interest to the FDIC as insurer of all banks and thrifts in this country and to SAIF-member institutions, the SAIF's problems, in fact, were a matter of importance to the entire financial system and to the nation. In the end, many participants in the financial system worked together to find a constructive solution to a problem that no financial institution operating today created, and from whose ill effects everyone would have suffered. As I said to you at your annual convention last year, confidence in government's backing for the safety net was a major reason that the financial troubles of the 1980s and early 1990s did not lead to widespread panic and economic disarray.
Deposit insurance is essential to the fabric of that safety net.
The failure of the SAIF would have undermined the confidence Americans have in the FDIC as a source of stability for the financial system and would have called into question the government safety net for financial institutions. Had the public come to doubt that certainty, the effect could have spread throughout the financial system. It will be critical for all of us to keep this linkage in mind while considering a new banking charter, which the Deposit Insurance Funds Act of 1996 sets as the next significant area for legislative consideration. Like an architect, we must concern ourselves with the environment in which a structure will be placed, as well as with the details of its design. The resulting product will be judged by whether it effectively functions as an element of the financial system that benefits the marketplace.