Republicans vote to repeal alternative to bank bailouts!

Discussion in 'Politics' started by starcraftzzz, Apr 20, 2012.

  1. starcraftzzz
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    starcraftzzz Senior Member

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    When the crisis hit, the government bailed out many financial firms -- shadow banks as they are known. That's not what it does when an ordinary bank fails. When ordinary banks fail, the government takes over the bank, puts the good assets in one pile, the bad assets in another, then repackages the good assets into a new bank. This has many advantages, including the ability to replace managers of failed firms instead of rewarding them with a bailout.
    If it[the treasury] had resolution authority -- the ability to step in take over when banks fail -- the rewards to management could have been avoided, and taxpayers could have been better protected in other ways, but limits on legal authority gave regulators only two bad options. Do nothing, or bail the banks out.
    The resolution authority in Dodd-Frank is intended to fix this problem by putting into place a procedure [that provides an alternative to government bailouts
    Economist's View: Republicans Want to Repeal Resolution Authority
     

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