Taxpayers, and the government, appear to be focusting the vast majority of their attention on larger banks rather than smaller, more localized ones. However this only hurts smaller banks as, "larger banks percieved as "too big to fail" have a lower cost of capital, putting smaller banks at a competative disadvantage". On the other hand, should a massive bank fail, far more damage and loss would occur for the economy and individual consumers than if a smaller local bank collapsed. I really think that any and all banks should stay afloat at all costs, if one falls, then others tend to fall down with it, or at least lose the trust of potential consumers and investors. Perhaps another of FDR's policies should be employed here, a shut down and reevaluation of all banks to check for safe practices and proper conduct. However, it may be too extreme of a measure nowadays due to the size of companies and the chaos that would ensue if a major bank should be shut down even for a day.
Article Referenced:
Reuters. "Taxpayers to Rescue the Largest Banks". NYTimes. New York Times. 23 August 2010. Web. 29 August 2010.
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