Additionally, discretion may result in an ample range of distortions and system inefficiency. While preferable, a rules-based approach, if too severe, potentially limits the number of trades and transactions, curtailing total financial activity and making it too standardized. Another danger is that if rules are countercyclical, in downturns, they may potentially lead to irresponsible behavior, and possibly, to instability.
As another measure to improve confidence, the act also temporarily raised the limit on the deposit insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration from $ to $ per account, effective immediately. Unfortunately, the loss of confidence in financial institutions became so severe in recent weeks that additional steps in this direction proved necessary.