In this way, the 1980 increase in the deposit insurance cap to $ exacerbated the fundamental thrift problem associated with concentration on long-term assets in a high and rising interest rate environment. Indeed, it significantly increased the taxpayer cost of the bail out of the bankrupt thrift deposit insurance fund.
Not withstanding this problematic episode, it is clear that deposit insurance has played a key--at times even critical--role in achieving the stability in banking and financial markets that has characterized the past almost seventy years.