'This is so bad': Experts rip Trump advisors’ 'cartoonishly evil' proposal to abolish FDIC
Some advisors to President-elect Donald Trump have reportedly floated several ideas to gut regulations on banks, including one proposal to eliminate the Federal Deposit Insurance Corporation (FDIC).
The Wall Street Journal reported Thursday that several unnamed advisors and officials close to Trump — including some who part of the "Department of Government Efficiency" (which is not yet an actual federal agency authorized by Congress) — are mulling several major changes to government oversight of the banking sector. The Officer of the Comptroller of the Currency (OCC) and the Federal Reserve have also been eyed for "restructuring," according to the Journal.
Under the plan, the FDIC would be eliminated, but deposit insurance would be rolled into the Department of the Treasury. Still, the proposal set off alarm bells among various experts on social media. Historian Kevin Kruse wrote on Bluesky that past major reforms to financial regulators sometimes led to catastrophe.
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"When I lecture about New Deal banking reforms, I note that some of the key measures — like Glass Steagall — were repealed by the right with disastrous results like the 2008 financial meltdown, but ha ha, no one will ever be stupid enough to kill FDIC and bring back the old bank runs," Kruse wrote.
Journalist Walker Bragman further elaborated on why the FDIC was established in the first place in the wake of the 1929 financial crisis and subsequent bank failures of the 1930s. President Franklin Delano Roosevelt had explicitly sought to create more stability in the financial sector by guaranteeing all Americans' bank deposits would be insured up to $2,500 (the FDIC now insures deposits up to $250,000).
"This is so bad," Bragman lamented. "FDR created the FDIC amid The Great Depression in order to restore faith in American banking. People were basically losing everything when their banks failed. The FDIC was meant to prevent so-called 'bank runs' where people would pull their money out to save what the could get."
MSNBC host Chris Hayes sarcastically wrote that he would "love to have to re learn all the lessons of the New Deal again." Writer Karl Folk responded to the Journal's report by arguing that Americans "are all about to get robbed by the wealth class in a way that really can not be described." Civil rights lawyer Joshua Erlich was more blunt: "[G]etting rid of the FDIC is so cartoonishly evil that it’s hard to even process."
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Click here to read the Journal's report in full (subscription required).
