Simple solution to the banking problem

Discussion in 'Economics' started by kxvid, Feb 7, 2009.

  1. kxvid


    This is what they should've done from the beginning:

    If a bank is insolvent and needs capital take it over. The government would assume all the banks assets' and liabilities, which they would be required to liquidate by a certain date. The bank's customers would be given one year to withdraw their money from the failed institution and put it in another bank.

    This would solve the problem of banks becoming black holes of taxpayer money. Yes it would be inflationary, but likely much less than the TARP which gave money to many different banks; many of which didn't need it. It is actually somewhat free market since the failed banks would cease to exist, while rewarding the strong prudent banks. I don't know why the FDIC didn't do this from the beginning.
  2. I always thought that's how the system was supposed to work. Boy was I wrong.