Buddy,
You and I just remember history differently. Where I grew up, fat cats were not the depositors in S&Ls. Fat cats were the management (that used S&Ls to fund their land development companies) of the S&Ls.
Where I grew up, fat cats do their banking thru the trust departments of large banks. If they wanted more interest income, they bought some AA corporate bonds and add them to their portfolio of municipal (insured of course) and treasury bonds (or maybe put some money into a junk bond fund). Those "wealthy" people who had their money (over the $100k limit) in S&Ls, looked to me, more like retired people, who deposited money in the S&L after selling their small business or homes. Or widows trying to get a few more dollars of interest from moneys left to them from their husbands.
The idea of making all depositors whole is to prevent "runs on the Bank" or if panic sets in, a cascade of bank runs against the system as rumors fly from one institution to another.
The implication, (If the Fed didn't protect all depositors of Savings and Loans) is that large accounts in money center banks weren't safe either - I seem to remember that around this time, Bank of America was also teetering.
To punish your "FAT CAT depositors" you would also jepordize: municipalities, school districts, churches, non profits, charitable foundations, and anyone else who might have an account > $100K. |
