Reforming Deposit Insurance for Stronger Banking Regulations.

The former vice chairman of the FDIC, Thomas Hoenig, argues against raising deposit insurance coverage, stating that it would create moral hazard issues and incentivize poorly managed banks to engage in risky activities. He believes that uninsured depositors have the strongest motive to monitor and discipline bank management, and expanding coverage would benefit the least well-managed banks at the expense of the best banks. Hoenig emphasizes the importance of market discipline and due diligence in promoting a safer and more stable banking system.