Bernanke: Shut down banks if they threaten system

[madmom]

Source: The Associated Press

Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
"If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved," Bernanke said Thursday while testifying before the Financial Crisis Inquiry Commission.
Bernanke also said it was impossible for the Fed to rescue Lehman Brothers from bankruptcy in 2008 because the Wall Street firm lacked sufficient collateral to secure a loan. Lehman's former chief executive told the panel a day earlier that the firm could have been saved, but regulators refused to provide help.
The Fed chief presented his analysis of the crisis and views on potential systemwide risks as the panel approaches the end of its yearlong investigation into the Wall Street meltdown.

Read more: http://www.google.com/hostednews/ap/article/ALeqM5io3ztcVwOdY1cpzhpdo_pspNNZoAD9HVU7Q00

[DJ13]

1. Its easy to say that after shoveling trillions into saving the big banks

Its kind of late to think about that now.

[truedelphi]

5. My thoughts on this exactly.

Bernanke knows better than anyone that the largest banks are not the ones that would necessarily fail first off.

In fact, the same people that have allowed for the big banks to receive so much of the taxpayer monies, and further tax breaks, are now the people that "encourage" the change in regulations that are responsible for so many community banks going belly up.

Among the provisions harmful to small banks - the small banks must now cover their FDIC insurance months if not years in advance. This means that capital they have on hand to cover loans to community people are taken away and put off in the FDIC insurance accounts.

With fewer dollars to loan out, small bank customers go and become customers at larger banks.

Then the smaller banks fail, and the larger banks can buy up the smaller banks.

And get this, the second the larger banks take possession, they are credited the "future" FDIC payments ythat are sitting in the small banks FDIC accounts.

So the regulations force money out of the small banks account, that sits in the FDIC accounts, those payments ruin the small banks, the larger bank eliminates its competition, and then gets access to the small banks' FDIC payments to have as their own...

[TexanRudeBoy]

2. They must have left off something

You know the part where he said shut down any of them that aren't named JP Morgan or Goldman Sachs........oh he left that out? How convenient........

[truedelphi]

6. + 1. And welcome to DU. n/t

[KansDem]

3. This must be "Bernanke Post-TARP"

"Bernanke Pre-TARP" would never have said "...must be ready to shutter the largest institutions if they threaten to bring down the financial system."

Would've he...?

[Recursion]

9. He probably means before they get to the stage they were at

Shut them down when the creditors can still get some reasonable part of what they are owed.

[wordpix]

4. after drinking the kool aid, the effects have worn off & Bernanke's getting sober

:eyes:

[Raschel]

7. Why is this guy still around? He's been there since Bush. Isn't he part of the problem?

[Iowa]

10. He's around because Obama wanted him...

http://www.cbsnews.com/stories/2010/01/26/politics/main6141737.shtml

[harun]

18. He is part of the problem. He and anyone else who says "entitlement programs"

are the real problem need to be kept as far as possible from the Gov't and Financial Governance.

[superconnected]

8. I really believe Bernanke should be walked out

in handcuffs.

[lib2DaBone]

11. Bennie Baby.. there are $4 Quadrillion worth of derivatives out there...

You know.. the ones you and your buddies at Goldman Sachs sold in secret over-the-counter and told everyone they were AAA Bonds?

All you have to do is stiff a few countries in the Euro-zone. Then grab the Social Security Cash from the suckers.. er.. I mean "workers". Then you can give yourself a bonus and keep the scheme going another 6 months at least!

Say hello to Bernie Madoff when you see him.

[SpeechlessDem]

12. Say what???

What is this guy saying??
What a complete bafoon!!!

He is an economic terrorist, in the very REAL sense of the word!

Someone send alan grayson to him!

[aquart]

13. NOW he says it?

Locking the barn door after the horse has bolted with all the damn straw?

[florida08]

14. oh he's testifying

umm Ben..how about that audit?

[Xipe Totec]

15. That's like blowing up a ship to stop it from sinking n/t

[metapunditedgy]

16. Shouldn't that be "shut down banks if they threaten *MAIN-STREET AMERICANS*?"

Who gives a crap about "the system," which is just code for a criminal network of crony-capitalists?

Edit: close quote.

[femrap]

17. Lehman was Goldboy Sucks

biggest competitor....it had to go.

Gee maybe we can end up with just ONE BIG WORLD BANK someday....fun, huh?

Serfing, USA!

[unkachuck]

19. "If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved,"

....don't you feel better now knowing bennie's on the job?

[Javaman]

20. shoulda woulda coulda. nt

[Doctor_J]

21. Why don't we shut down the system that's killing banks?

this would be hilarious if not for the millions of lives at stake.