The Problem With the FDIC's Powers: Simon Johnson

Economix:

Under the Dodd-Frank financial regulation legislation (in Title II of that act), the Federal Deposit Insurance Corporation is granted expanded powers to intervene and manage the closure of any failing bank or other financial institution. There are two strongly held views of this legal authority: that it substantially solves the problem of how to handle failing megabanks and therefore serves as an effective constraint on their future behavior, and that it is largely irrelevant.

Read the whole story: Economix

Comments

[Natems86]

02:22 PM on 04/28/2011

Truth about Lehman:

were there any other bailouts?

yes. during the financial crisis, ben bernank loaned trillons of dollars to companies like the barclays.

Who is the barclays?

the barclays is a european bank.

why would ben bernank lend money to a European bank?

so they could buy lehman after it went bankrupt.

and why did lehman go bankrupt?

because ben bernank refused to lend them any money.

but why would the fed refuse to lend the american people’s money to an american bank, but then lend the money to a european bank?

________________________

waiting for answer....

[cassie reinara]

02:10 PM on 04/28/2011

First of all, Lehman nor a Goldman Sachs (investment banks) should be bailed out by the FDIC. The SIPC is responsible for firms that fall into this category, so the headline and the premise of this article is poor at best. Secondly, the government should not be in the business of bailing out failed businesses. If a corporation is too big to fail it should also be marked as too big to exist. It needs to be broken down into smaller non-conflicting pieces which do not pose a systemic risk to the financial system when it fails.

[cassie reinara]

02:13 PM on 04/28/2011

Correction:

First of all, Lehman nor a Goldman Sachs (investmen­t banks) should NOT be bailed out by the FDIC.

[blueken]

12:04 PM on 04/28/2011

I like the analogy found on the comments when you read the whole article. It likens the Financial secotr to a person who spreads financial desease around the world, and then refueses to wear protection, because it limits the amount that can be charged for interaction. Get my drift?

[Superspidey25]

11:43 AM on 04/28/2011

They couldn't save Lehman, because then there would be no excuse to bail out all the other financial miscreants. Yet, now that the tax payer has had to buy all the toxic assets from these companies, watch how fast they will try to profit from the few good investments that Lehmans had.
http://gomestic.com/personal-finance/five-great-tips-for-saving-money/