Bankruptcy For Big Banks?

Hundreds of billions of bailout dollars later, the government

is saying sure, let the big banks go bust, Chapter 7 bankruptcy,

like any other failed business.

Federal Reserve Bank of Richmond President Jeffrey Lacker said bankruptcy without government support is “the first and most preferable option” in the event of a failure by a big financial institution. (from “bankruptcy fest for failing banks”  Times Dispatch)

Our blog has been a scream, uh, voice in the wilderness of big banks and mortgage companies ripping off America.

Mr. Lacker goes on in the same article:

Lacker has called for lenders to hold more capital if they own a brokerage, and has repeatedly said this year that the best way to overcome the too-big-to-fail challenge is by drawing up detailed plans for the wind-down of failing institutions.

WHY WILL THINGS BE DIFFERENT THIS TIME?

It says here:  they won’t be.

The government won’t stick to its guns and force, or even stand by, while the big boys file bankruptcy.

This is not a legal-regulatory question, it is a political one.

The politicians, our ruling class, did not stand by and let the crooks go belly up in 2008, as they so richly deserved.

They were all bankrupt, by any definition.  They could not meet their operating expenses, the ongoing cost of doing business.

The same as if you or I do not take in enough to pay the bills.

Furthermore, their liabilities exceeded their assets, that is, the stuff they owned, was worth less than how much they owed.

And they were NOT going to make more money going forward, because of all the crap mortgages they wrote and bought.

Not without the government bailing them out with our money.

There was, and remains, neither Constitutional nor legal basis for that bailout.

So, juggling the regulatory language a little bit, and making a few speeches, won’t change a thing.

Both parties bailed them out last time, first Bush and Paulson then Obama and Geithner.

Being that the banking industry has bought enough of the ruling elite in both parties, I am sure they feel safe that the next time they gamble too much, we will be compelled to cover their losses.