WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan said Thursday policy-makers should proceed with caution as they explore overhauling a Depression-era system that insures deposits in banks and thrifts.
The Federal Deposit Insurance Corp. has proposed some changes to the system, which was established in 1933.
The FDIC last month recommended to Congress that all banks pay for deposit insurance according to their risk of failure, and proposed that the $100,000 limit on account coverage be pegged to inflation.
The insurance system and other federal programs that aim to keep banks safe are often referred to as the "safety net." Any changes to this safety net, Greenspan said, must be balanced against potential costs.
"I believe this means being very cautious about purposefully or inadvertently extending the scope and reach of the safety net," Greenspan said in a speech to a banking conference in Chicago.
His speech did not touch on interest-rate policy or the state of the economy.
The central bank has slashed interest rates four times this year in an effort to shore up economic growth.
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