So, a bank failed this weekend, IndyMac. I found some of the press interesting. Here we have someone that learned a hard lesson from the failure, you are responsible for your money, nobody else:
"We have money we are afraid we are going to lose, I wish we were a little more savvy."
Right on! That is the attitude!
This is what happens when we turn to the government to protect us from everything. We become complacent, and we forget that in the end we are ones responsible for our success or failure.
You might say, hey, how were they supposed to know the bank would fail? Thats a good question. Some economics might have given you a clue. Generally the return on an investment is indicative of it's risk. One school teacher indicated he used IndyMac bank because of the "High interest rates it offered on deposits". One might wonder WHY the bank pays higher interest rates than other banks. This might well be a clear indication that you are taking more risk. It's not full-proof, but it's a good start.
In the end, I'd never put more than 100k in any bank (250k for retirement accounts). It's just bad business.
No doubt we will hear calls for more regulation and controls instead of calls for people educating themselves and understanding some simple economic facts. I'm all for regulation in the form of disclosure, by the way. We need to see all the facts, and then we need to be allowed the opportunity to make our own choices. This is true with banking, mortgages and anything else in this country. I don't need the government to protect me, just to make sure I have the information I need to make informed choices.