Fundamentally there's no problem in letting a bank fail when you have depositors insurance ~ unless your government has a debt problem.
Still, only the really rich who keep more than $250,000 on deposit in a bank will lose their shirts ~ and so will the illegal aliens. FDIC only insures citizens!
Interesting that the bank the federales chose to defend at all costs was Bank of America ~ a California creation that's metastisized across the country and now holds almost everybody's credit card debt and a vast number of nonperforming mortgages.
That wouldn't have happened if banks had been allowed to fail on their own. Bet you could get a loan easier today though.
Indeed. Canada's banks made out better than America's, despite the fact that Canada's answer to Glass-Steagall was repealed in 1988. But...
One of the standard complaints in Canada's social-democratic Left revolves around "stingy banks." That's one of the reasons why the old-style soc-dems want to nationalize them.
And they're not the only ones, either. Canada's small-business lobby group, the Canadian Federation of Independent Business, has been alleging for years that Canadian banks discriminate against small business when it comes to loans.
These two little vignettes from my own country should tip everyone off about what kind of complaints will emerge from America should American banks shy away from risky loan categories.
Like high-risk borrowers who'll yell "discrimination" if they don't get a loan from a "predatory lender."
Here's a secret for you - not real inside info, but a plausible guess: businesses stuck in a damned-if-you-do-damned-if-you-don't situation actually want to be regulated more tightly. It's the perfect way to say "no" without offending the other party.
"We'd love to sign, but regulations prevent us...Yeah, I know, those damned regulators like to control everything..."
I'd get flayed on a libertarian forum for saying this, but FR isn't - so here goes: Real deregulation will likely open up a real can of worms, because self-regulation means saying "no" on your own and taking the blame that goes with it. That means resigning oneself to losing business because hearing the "no" will offend some people, who'll badmouth in retaliation. Being tightly regulated means never having to say a real "no."
If you think the banks are hated now, it's a pale shadow of the hate they'll have to live with if they're dumped into a genuinely free-market environment. As Hayek said about inflation, it's a tiger by the tail.