What I have not seen is the cost of doing nothing. Certainly some (many?) banks will go out of business when their capital is eroded by bad debt write offs. At that point, the FDIC picks up the pieces for the account holders. But, the FDIC is not anywhere close to having sufficient assets to cover even one large bank failure. In this case, the FDIC “borrows” from the treasury. Since the treasury doesn’t have a vault full of spare money, as in Scrooge McDuck fashion, the treasury will get it the same place the $700B will come from — borrowing.
I’m not at all happy about the deal that up before Congress, but before I can form an opinion, I need to see a reasonable estimate of the alternative.
Jack
Yup well We better save tax payer money for the FDIC. They are going to need it. This money is mostly to bail out the investment banks....Not the so much the commercial banks IMO.
That is where Paulson comes from. It is for his buddies.
How do you like the setup with Goldman Sach’s. I am guessing that they are being put in a position to buy up a bunch of the failing commercial banks. After the government takes on all of the debt of course. Goldman gets the banks dirt cheap. Same thing for Morgan Stanley is my guess. They will probably get rich quick as well. This is how Paulson is setting them up to be “Big” again. I am just guessing, but if you think like a greedy banker then you will usually be right about what is going to happen. Oh in a few days Goldman and Morgan Stanley deposits will be FDIC insured.