Earlier today, a number of money-related government agencies made it very clear that the U.S. banking system will be protected. The Treasury, Federal Reserve, FDIC and others all joined together to emphasize that a program will soon be in place to ensure that banks have the capital they need to keep moving with their operations. Stock Market Fund reports on this upcoming program:
this program, which will be initiated on February 25, the capital needs
of the major U.S. banking institutions will be evaluated under a more
challenging economic environment. Should that assessment indicate that
an additional capital buffer is warranted, institutions will have an
opportunity to turn first to private sources of capital. Otherwise, the
temporary capital buffer will be made available from the government.
While this doesn’t mean complete nationalization of the banks, it does point to some degree of government ownership — especially if the government buys up stocks for banks that appear to be ready to head into completely insolvency.
Unfortunately for us citizens, however, this sort of plan isn’t available for us. We can’t even file bankruptcy as easily. To some degree, it makes sense to let some of the worst banks fail. Indeed, what would have happened if, months ago, the government just let the weak banks fold, and then paid the obligations to account holders through FDIC insurance? Chances are, it would have been less expensive than all the trillions of money thrown at banks has been.