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by Henderson on August 29th, 2009
I think it's better to have some really big banks, which are too big to fail. That is simply because FDIC is only covers up to 250000 dollars worth of money in an account if I remember correctly. So if you have more money than that then it is a disaster if the bank fails.
by CousinVinny on August 28th, 2009
Here we go again.
by puzzled on August 28th, 2009
Is "too big to fail",good,bad or indifferent?
Given a choice, my money would stay with a bank which could not fail.
If I wanted to gamble with that risk, I would become a shareholder. Those big banks have really failed their shareholders.
The shareholders, quite rightly, have made sure the executives have lost their jobs.
Were there is a problem is the mixing of speculative investment with more traditional retail banking and how those should be seperated. It was in this field of speculative investment that the banks failed, the cross-subsidising within the organization led to retail collapse. I'm fairly sure not absolutely certain that size actually helped in withstanding this.
The first banks to collapse were relatively small organizations and most of those were not allowed to fail completely.
The Government provides a limited guarantee to retail savers and has therefore the right to demand appropriate safeguards.
If being "too big" means that banks can't fail then as a taxpayer and a depositor, "too big", seems highly desireable.
How big was the crash of 1929?
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Comments
Thanks Henderson. +6
by Perryman on August 29th, 2009