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A Floyd Waterson Production

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"The known is finite,
the unknown infinite;
intellectually we stand on an islet
in the midst of an
illimitable ocean of inexplicability. 
Our business in every

generation is to
relcaim a little more land." 

--T.H. Huxley

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Thursday, November 05, 2009

 

Politics as Usual

Elected officials are pressuring the FDIC to go slow in closing small community banks. As Calculated Risk points out, politics as usual doesn't cut it in this financial crisis.

This is backwards. By moving slowly, the FDIC is tainting all small banks
and making it more difficult for them to raise capital (ht Pat). In addition,
healthy banks are holding on to capital to try to buy assets from the FDIC at a
discount, compared to the cost of a similar new loan.

The sooner the FDIC completes the process of closing failed banks, the better for the remaining banks and the economy.


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