Vernon Hill's Viewpoints column, "Why It Feels Like 1991, All Over Again" [Feb. 1, page 11] was insightful. Of particular interest, but needing amendment, was this forecast: "Deposits will again become king. Those with stable funding will survive and thrive."

Deposits are not inherently stable. In fact, they are inherently unstable funding, generally held by totally uninformed creditors of the bank, who receive no disclosure about its financial condition or outlook, have only downside risk (no upside), and in the event of bad news are liable to panic, as financial history so abundantly shows.

It is only the government guarantee of deposits--an external, political factor--which makes them stable.

Thus the correct statement is: "Those with government-guaranteed funding will survive and thrive." This obviously includes Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Home Loan banks, and others using the government's credit, as well as depositories.

In times of crisis, everybody wants a government guarantee, and those who have one have a fundamental advantage.

Alex J. Pollock is a resident fellow at AEI.