Will New Bank Regulations Protect Your Savings Account? If So, How?

Treasury Secretary Timothy Geithner testified before Congress this morning on the topic of new bank regulations being discussed by the Democrat-controlled Congress, led by Barney Frank of Massachussetts.

Conservative investors who are seeking to protect retirement savings are understandably interested in the outcomes of these discussions. When you have spent your life saving money in savings accounts, CDs, and money market accounts, you want that money respected and protected.

To the extent that new bank laws achieve that end, conservative investors seeking to protect retirement savings can see the point of all this.

However, it is quite unclear whether or not–and, perhaps more importantly, how exactly–the new bank regulations being proposed by Congressman Frank, et. al will protect your hard-earned savings.

The latest proposal seems to focus rather too broadly on the needs of the “financial system” overall.

But the “financial system” is merely a collection of individuals who need to know that their money is safe when they put it in a conservative location such as a savings account, CD, or money market account.

Focusing on the needs of the “end user” (the bank customer) is why the FDIC is so incredibly popular, relative to other government institutions. By protecting the above accounts up to $250,000 per depositor per account, the FDIC directly and simply addresses the saver’s need for safety.

How will the new regulations protect your money?

That’s the question Congress should be asking.

And the answer shouldn’t be 1,000 pages long.