Behemoths Born of the Bailout Reduce Consumer Choice, Tempt Corporate Moral Hazard.
"To favor one class of financial institutions over another class skews the market. You don't have a free market; you have a government-favored market," (Camden Fine, president of the Independent Community Bankers of America) said. "We will never have free markets again if you have the government picking winners and losers...
The federal bailouts only reinforced the thought that government would save big banks, no matter how horrible their decisions."
That's the 'moral hazard' part - playing fast n loose with other people's money because Uncle will bail 'em out.
That's fine, if the rest of the foundation is otherwise sound. But, right now, there are too many cracks to maintain integrity. The unicorn forest is mostly sand.
Bank Losses Drain Deposit Fund, F.D.I.C. Reports.
"So far, 81 banks have failed this year, including 45 in the second quarter. That, in turn, has put enormous stress on the government’s deposit insurance fund, which is supported by fees charged to the banks regulated by the F.D.I.C. Its second-quarter reserve of $10.4 billion compares with $45.2 billion a year earlier.
Most of the decline comes from money that the agency has set aside to cover the cost of bank failures, and Ms. Bair said the fund had ample resources to cover all insured depositors.
But the levels are so low that F.D.I.C. officials said Thursday that they would consider imposing a special assessment on the banks, on top of elevated insurance fees, toward the end of the third quarter. Through similar actions, it added about $9.1 billion. It also will begin to recover some money by selling the assets of banks that it seized."
Meanwhile, the U.S. Gub'mint is actually $14 TRILLION dollars in debt??
The behemouth banks maybe too big to fail, but we should seriously consider that our gargantuan federal gub'mint is too big to succeed.
God save the Republic.
