Headlines on Bloomberg: â¢Obama Urges Bank CEOs to Show Restraint; Banker Expresses Concern on TARP â¢Bank of America May Boost Investment-Banker Pay 70% After Merrill Takeover â¢Goldman Sachs Pays Executives $49.6 Million on Investments as Stock Falls Looks like they really took Obama's talk to heart
In 1907, JP Morgan triaged the banks into those that were hopeless, those that with help could survive, and those that were fine. When done, he told the ones that were fine to help those who needed some help to survive, and let the bankrupt ones die. In 1913, the Federal Reserve was created with a mission to do what Morgan did in 1907. In the Depression, it failed miserably. So in 1933, the FDIC was created to do, on a BAU basis, what Morgan did in 1907 and the Fed failed to do in the years just before. It was and is a huge success. In this crisis, the only reason the FDIC didn't step into the really big failing banks is that they were too big for it to handle. The simple, efficient thing to do would have been, and still is, to back the FDIC with enough money to take the bankrupt ones over and do what needs to be done to wind them down without causing a panic. The FDIC nationalizes and disposes all the time. If that had been allowed to happen with the big ones that we all know are bankrupt, we'd be much further along towards ending this madness. And it would be a lot cheaper.