A New Insurance Fund for Depositors is on the Horizon

Aldo Salazar

The establishment of a Deposit Insurance Corporation, as well as a Deposit Insurance Fund, was also brought before parliament for second reading.  The purpose of that piece of legislation is to provide protection for insured deposits against the risk of loss within an insured limit.  Senator Aldo Salazar explains that the new scheme is not another tax being levied.

Aldo Salazar, U.D.P. Senator

“This is simply, financial institutions are going to put money aside into an institution, are going to put money aside into an insurance fund.  The intent, the purport of that fund is to benefit the small depositor.  How can that be a tax?  I don’t understand how that can be a tax.  The small depositor, and why I say small depositor is because the coverage is only up to twenty thousand dollars per deposit.  So the idea is to benefit that small depositor.  That’s how it is in the United States.  We look at the U.S. as a bastion of economics.  This could never have been intended to cover a bank failure, an entire bank failure.  That’s not the way it works.  That’s not the way it works in the United States.  In 2008, I believe, when the big banks were failing, they have one of the best federal deposit insurance schemes.  They cover up to two hundred and fifty thousand dollars, I believe, and the government had to come in and bail out the big banks because the insurance can’t cover it.  That’s how it works.”