Because they have immediate consequences, the last two problems might seem to warrant higher priorities than the first. This conclusion is incorrect. Regulators and legislators have become paralyzed when large or visible institutions insured by a grossly weakened fund began to falter. Fear of runs on deposits has inhibited action. Because of the insurance fund's weak financial condition, failed institutions are handled in a manner that minimizes or defers cash outlays, but ultimately increases costs.
Stronger institutions look for greener pastures untainted by the collapsing regulatory edifice.
The failure to take corrective actions allows the problems to worsen. The SAIF, the BIF, and the FDIC are distinguishable to only a small segment of the population. The failure of the SAIF would undermine the confidence Americans have in the FDIC as a source of stability for the financial system and would call into question the government safety net for financial institutions. Bankers benefit from this safety net and, therefore, have a direct stake in the effort to find a solution to the SAIF's weak condition. It is only natural for bankers to approach a solution to the SAIF's problem with the same question that Pandora asked herself, before she opened the box that has since been linked to her name.