Some banks should be allowed to fail, say two top Republicans [McCain, Shelby] [Citigroup]

CNN - Political Ticker ^ | 2009-03-08

[rabscuttle385]

WASHINGTON (CNN) — Two top enate Republicans said Sunday that banks shouldn't be able to count on any more bailout money — and that the federal government should let some of them fail rather than distribute further funds to keep them afloat.

. . . . .

Former GOP presidential candidate John McCain told Fox News Sunday that he did not think President Obama "made the hard decision, and that is to let these banks fail." He did not call for nationalization of troubled financial institutions, which many Republicans oppose, but said their assets should be sold. "Unfortunately, the shareholders and others will take a beating," he said.

[rabscuttle385]

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[bill1952]

should let some of them fail rather than distribute further funds to keep them afloat.

Strangely, I have been saying those same words about McCain since last July or so...

[org.whodat]

Two top enate Republicans said Sunday that banks shouldn't be able to count on any more bailout money — and that the federal government should let some of them fail rather than distribute further funds to keep them afloat.

They damn sure should not be allowed to have a 100% payment that has been going on with AIG. But as usually mccain is late to the party, did he stop his campaign again?

[ex-snook]

Let’s see what McCain/Shelby want - everyone with deposits should stand in line Monday and take their money out of Citi. Are they for real?

[DTogo]

The Federal Government should be allowed to fail... wait... it already is!!

[rabscuttle385]

Let’s see what McCain/Shelby want - everyone with deposits should stand in line Monday and take their money out of Citi. Are they for real?

McLame's lap dog, Grahamnesty, was calling for nationalization of the money center banks just recently...so yes, they are for real.

[wmfights]

Would it be so bad?

Right now we are propping up all the banks that were poorly run, giving them an unfair advantage in the mkt place at the expense of well run banks.

[ex-snook]

"McLame's lap dog, Grahamnesty, was calling for nationalization of the money center banks just recently...so yes, they are for real. "

Don't know what you think but if Citi, et al, were not allowed to play PACMAN and acquire so many banks [with toxic loans, etc.] and get so large, we could have avoided today's crisis. A case of 'economy of scale' mergers having a negative effect.

[Arguendo]

The FDIC is now providing unlimited insurance on checking accounts and up to $250,000 on savings accounts, so most people are safe.

[Southack]

If you don’t kill the zombie banks, airlines, retailers, and car manufacturers first, then those zombies will suck the life out of all bailout and stimulus spending.

Sequence matters. Kill the zombies...then...and only then...engage fiscal stimulus and bailouts.

An easy-to-understand example is with airlines. Instead of being liquidated, zombie airlines are being allowed (by weak-minded bankruptcy judges) to operate under Chapter 11.

This gives those failed airlines a temporary, competitive edge, cost-wise, to compete against viable, well-run airlines (e.g. SouthWest). In this manner the zombie airlines steal seats/passengers/revenue that would otherwise be filling the aircraft of well-run airlines.

And the longer that you prop up those zombie airlines, the longer it takes to see any meaningful profits in the overall airline industry.

But if you kill the zombie airlines, the survivors will fill their planes and make a killing. Profits will zoom! You’ll get new hiring and solid dividends paid to shareholders.

So sequence matters. You can’t expect a quick, potent recovery while you are propping up zombies. Kill the zombies first, however, and then the recovery will be faster and more robust.

[Southack]

Yes. See post #12.

[ex-snook]

There is much temporary sense in what you post but I’m unable to see the long range advantage of a Darwinian view when the end result is the concentration into fewer and fewer organizations. I prefer breakups rather than growing a stream of ‘too big to fail’ in banking, airlines, automobiles, newspapers, TV, et al. Competition is good. Monopolies are bad.

[Krodg]

Two top enate

Are they talking about two senators actually being born human, as opposed to 'The One' who was spawned from his father?

[GOPJ]

Thanks for the ping.

[April Lexington]

With Citi trading at less than a buck, I think it has already failed! What difference would bankruptcy make? The equity is gone!

[Random-American]

Hey politicians and leftists....

[Ernest_at_the_Beach]

Bernanke answers ....FR Thread:

Big banks will not be allowed to fail, Bernanke says