Social Security benefits increase with Inflation.
So I am wondering what prevents law makers from making FDIC and SIPC limits increase with inflation as well?
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1If you have sufficient assets, what's so hard about opening multiple accounts?– Bob BaerkerCommented Feb 2, 2021 at 3:13
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@bob-baerker thanks, I meant to understand if congress(law makers) are thoughtful for Social Security, why not for other parts of the law. I should have asked on politics.stackexchange.com– puzzledCommented Feb 2, 2021 at 5:11
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Perhaps regulators want to limit bank and broker exposure. I dunno what their motivation is.– Bob BaerkerCommented Feb 2, 2021 at 5:27
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3The limits were increased pretty substantially pretty recently. The FDIC limit went from $100,000 to $250,000 in 2008 (with the increase made permanent in 2010). So it isn't like the limits are creating issues because they haven't kept up with recent inflation.– Justin CaveCommented Feb 3, 2021 at 14:06
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2Nothing prevents them. A better question is, what's the incentive to do so? Social security and deposit insurance are two wildly different things, and there is no particular reason to compare them directly.– chepnerCommented Feb 3, 2021 at 14:56
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1 Answer
"Why" questions like this are hard or impossible to answer, but I would argue that there is much more practicality in adjusting Social Security benefits and other items like IRA maximums, since those limits are continually relevant. When is the last time you heard about a bank or brokerage failure that triggered an FDIC or SIPC payout? And how many people do you think have enough in their bank accounts to even be concerned with the limit? It happens so rarely and is so high that the specific limit is irrelevant to the vast majority of citizens.
It's also easy to get around by opening multiple bank/brokerage accounts.
So perhaps the answer is because that no one has proposed an amendment or new law to tie these limits to inflation, since it doesn't really affect anything practical. I have no idea what the administrative burden would be to do so, but it's probably not worth it in any case.
My guess is that the next time there is a bank failure and there is public outcry that the limit is too low, then someone will make it part of a bill. Whether it's tied to inflation then is anybody's guess.
answered Feb 2, 2021 at 2:34
