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The Corner

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Re: Who Will Stop Sheila Bair?



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The FDIC has never had enough assets to handle a major run on the banks.  The taxpayer is the insurer of last resort and has been since the New Deal.  I can think of many reasons why this is troublesome.  However, it is also far different from the taxpayer stepping in and insuring or bailing out (or whatever) virtually any kind of bad loan issued by a private business, including when the government itself promoted such practices as part of a political agenda.  The person depositing his money in a savings account, checking account, and the like is not engaged in knowingly risky behavior with his or anyone else’s money.  Indeed, he is involved in among the most conservative uses of his own money that exists.  I am uncomfortable with the government taking an equity interest in banks.  That equity interest should be sold back to the private sector wherever possible and as soon as possible. 



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