In an effort to shrink the size of the federal government, Donald Trump’s transition team is considering different plans to abolish a crucial financial regulatory agency—a move that could have far-reaching effects on the economy.
While interviewing potential nominees for positions heading up government financial agencies, Trump advisers have floated whether it would be worth dissolving some agencies, like the Federal Deposit Insurance Corporation, or FDIC, according to The Wall Street Journal.
The team is considering moving the responsibilities of the FDIC, which include providing deposit insurance for banks, to the Treasury Department, some people familiar with the matter told the Journal.
Potential nominees have also been meeting with DOGE co-chairs technocrat troll Elon Musk and failed presidential candidate Vivek Ramaswamy, as well as hedge fund manager Scott Bessent, the major Trump donor tapped to lead the Treasury, according to sources.
The FDIC is key to financial stability and security because it insures funds in depositors’ checking and savings accounts. To threaten that insurance would almost certainly cause customers to fear that their money is no longer safe. It could potentially lead to a run on the banks, which might result in banks failing in a major financial collapse.
But if a cut makes the wiley DOGE czars feel like they’re reducing bureaucratic redundancies, it must be worth it, right?
Sheila Bair, who previously served as chair of the FDIC, warned about the plan to dissolve the essential regulator.
“Eliminating the FDIC is so out there, not sure it needs response,” Bair wrote in a post on X Friday. “FDIC has a perfect record of protecting insured deposits for over 90 years. Strong consumer confidence in the brand, providing stability during crises. During the [Great Financial Crisis], money was running INTO banks.”
Bair, who also served as the former assistant secretary for financial institutions, explained that the Treasury Department was not well suited to take on the responsibilities of the FDIC.
“As a former Treasury official, big supporter of the Department, but it would not be a good home for deposit insurance. Deposit insurance is funded by bank premiums, not taxpayers. Treasury has no expertise in handling bank failures. Changing the guarantor would create confusion among depositors who are comforted by the ‘FDIC Insured’ sign at their banks,” she added in a separate post.