Bah. There are several issues with this concept.
1) The article suggests we'd be better off without the FDIC (let failing banks
fail! the depositors were stupid enough to invest with them, well then so be
it. free market!). The problem here is that nothing has changed for the
non-stupid investor. One should still invest in banks that you feel are using
best practices, FDIC or not. Both the bank failing and the FDIC failing still
fit in fine for this model.
2) What you suggest is effectively Bank Runs. Historically those are a very bad
idea (and what the FDIC has slowed significantly!) In fact, I'd say that bank
runs themselves hurt us during the Great Depression as much as the stock crash
itself. History shows us that we didn't have major bank runs even during the
savings and loan crisis of 1980's and 90's, because of the FDIC. So -- before
FDIC bank runs that made a bad situation worse, after FDIC no bank runs.
and of course (3) the FDIC has actually added some extra fees for member banks
to bring their reserve percentage back up to a safe standard by the end of the
year. So yes they know that their reserve is low and it needs to be higher, and
they're trying to fix it. There was a recent bill that lets the FDIC borrow
from the treasury (up to 100billion I believe). That would hold them over until
their higher-fees (and the fees _should_ be higher in this economy) bring the
reserve rate back up.
I know the situation is more complicated than I paint it... but I also know
it's more complicated than you (or the article) paint it too... the simplistic
"pull your money out" is just as foolhearty as my simplistic "have faith!".