The New Safety Net

8 Pages Posted: 29 Aug 2001

See all articles by George G. Kaufman

George G. Kaufman

Loyola University Chicago

Peter J. Wallison

American Enterprise Institute (AEI)


Following the costly banking and thrift crises of the 1980's and early '90s, the United States dramatically reformed the federal government safety net for depository institutions, which many blamed for the outbreak and high cost of the crises. The reforms, highlighted by the 1991 Federal Deposit Insurance Corporation Improvement Act, curtailed the public's liability for bank losses by increasing the portion that banks have to pay and the ability of the federal government to"bail out" uninsured depositors of large or politically well-connected banks and decreased abuse of Fedwire and Federal Reserve discount window lending. However, other reforms are still needed to improve the system further.

Suggested Citation

Kaufman, George G. and Wallison, Peter J., The New Safety Net. Available at SSRN: or

George G. Kaufman (Contact Author)

Loyola University Chicago ( email )

820 North Michigan Avenue
School of Business
Chicago, IL 60611
United States
312-915-7075 (Phone)
312-915-8508 (Fax)


Peter J. Wallison

American Enterprise Institute (AEI) ( email )

1789 Massachusetts Ave, NW
Washington, DC 20036
United States
202-862-5864 (Phone)
202-862-4875 (Fax)


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