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Obama Backs FDIC Expansion

John McCain made his move early in the game -- and now Barack Obama is seeking to make a major splash in the bailout debate following Black Monday.

Adopting a proposal backed by some House Republicans, he wants to hike the FDIC insurance limits from $100,000 to $250,000, which would, presumably, restore faith in banks while giving small business owners a place to park their cash.

It's not clear precisely how this would work or what the fiscal implications would be, but he's planning on taking it up with Congressional leaders this morning.

The next big question: Will Obama lobby the Congressional Black Caucus, which defected to the nays, to vote for the package when it comes to the floor again?

Bits of his statement (full text here):

"While I, like others, am outraged that the reign of irresponsibility on Wall Street and in Washington has created the current crisis, I also know that continued inaction in the face of the gathering storm in our financial markets would be catastrophic for our economy and our families.

The majority of American families should rest assured that the deposits they have in our banks are safe. Thanks to measures put in place during the Great Depression, deposits of up to $100,000 are guaranteed by the federal government.

While that guarantee is more than adequate for most families, it is insufficient for many small businesses that maintain bank accounts to meet their payroll, buy their supplies, and invest in expanding and creating jobs. The current insurance limit of $100,000 was set 28 years ago and has not been adjusted for inflation. "

“That is why today, I am proposing that we also raise the FDIC limit to $250,000 as part of the economic rescue package – a step that would boost small businesses, make our banking system more secure, and help restore public confidence in our financial system."


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