Quote:WASHINGTON (Reuters) – The United States should let some big troubled banks fail rather than commit more federal funds to prop them up, two key congressional Republicans said on Sunday.
Senator Richard Shelby, top Republican on the banking committee, said the United States should not mimic Japan, which in the 1990s propped up failing banks and prolonged its economic downturn.
"Close them down, get them out of business. If they're dead, they ought to be buried," Shelby told ABC's "This Week" program. "We bury the small banks. We've got to bury some big ones and send a strong message to the market."
Financial authorities have been under increasing fire as hundreds of billions of dollars of loans and capital infusions into distressed institutions have failed to halt the economic downturn, which has only accelerated in recent weeks.
Senator John McCain, who remains a Republican leader after losing the 2008 White House race to President Barack Obama, criticized the new administration's response to the banks.
"I don't think they made the hard decision and that is to let these banks fail," McCain told "Fox News Sunday."
As the U.S. government boosts its stakes in major banks such as Citigroup Inc, talk of nationalization has stirred a debate over how far regulators will go to help the ailing financial system.
Shelby did not mention any banks by name but, when asked about Citigroup, he said: "Citi's always been a problem child."
McCain echoed Shelby's criticism of U.S. banks but both senators avoided the term "nationalization" -- a concept typically derided by Republicans as a move toward socialism.
Asked what should be done, McCain said: "You'd sell off their assets and you have the -- unfortunately, the shareholders and others will take a beating."
Tom Donohue, president of the U.S. Chamber of Commerce, the nation's biggest business group, said it was "not practical to talk about closing a bank that is integrated throughout the whole global economy."
"It is practical to talk about buying some of those assets away from those banks and holding them in an institution that would have both public and private money," Donohue said on ABC's "This Week."
On Friday, Kansas City Federal Reserve President Thomas Hoenig criticized as piecemeal the approach taken by the government in handling of the banking upheaval.
"We understandably would prefer not to 'nationalize' these businesses but, reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis," Hoenig said in remarks to a local group.
CALL FOR PATIENCE
A key Democratic senator called for patience as the Obama administration takes stock of the current state of ailing banks, announced last month as a series of "stress tests."
The Treasury department said it would provide the 20 largest banks with sufficient capital if the exams find they need more funding to withstand a worse-than-predicted recession.
"Once these evaluations occur, there may be some banks -- and we don't know which ones, and I'm not going to name any -- that will never make it," Democratic Senator Charles Schumer said on NBC's "Meet the Press." "You don't just keep putting money in, money in, money in -- and the bank never solves it self."
Schumer, also on the banking committee, said there is a type of "good nationalization" modeled on what the Federal Deposit Insurance Corp. already does when it unwinds a bank.
(Additional reporting by Mark Felsenthal; Editing by Cynthia Osterman)

http://news.yahoo.com/s/nm/20090308/pl_n...epublicans

Absolutely, positively agree.

Allowing failure is allowing healthy competition and healthy competition is the life force of a completely free market. That's why I will be the first to say that the administration that I helped vote in is disappointing me by how they haven't made those difficult decisions yet. One of these days the government is just going to have to say no to bailouts and just leave it up to the FDIC to do it's job in making sure the people with savings accounts get their money out before the bank actually closes takes place.

Yup, it's time to thin the herd, the weak and the sick only slow down the healthy and make them more vulnerable. The only problem is that democrats care not about the future of the herd, but rather the weak and the sick. We can learn a lot from those antelopes and gazelles. In nature it's survival of the fittest. In Liberal Land the fittest pay for the survival of the weak. A liberal could never survive in the jungle without help.

(03-08-2009 09:20 PM)nomad2u2001 Wrote:  Allowing failure is allowing healthy competition and healthy competition is the life force of a completely free market. That's why I will be the first to say that the administration that I helped vote in is disappointing me by how they haven't made those difficult decisions yet.

I guess the main reason they are not the administration I voted for is because what we've seen is pretty much what I expected.

After their election became certain, I had "hope" for a while that they might be different. But they show no signs of that, and my hope is pretty much gone.

(03-08-2009 09:20 PM)nomad2u2001 Wrote:  Allowing failure is allowing healthy competition and healthy competition is the life force of a completely free market. That's why I will be the first to say that the administration that I helped vote in is disappointing me by how they haven't made those difficult decisions yet. One of these days the government is just going to have to say no to bailouts and just leave it up to the FDIC to do it's job in making sure the people with savings accounts get their money out before the bank actually closes takes place.

You know, this entire situation is why they have Bankruptcy Courts, chapter 7, chapter 11, US Bankruptcy Trustees, Creditor's Committees, etc.

File Chapter 11 and lets see what happens.

GM CAN reorganize. Dodge/Chrysler.. well, let the Indians buy what is worth something.

As for the Banks... there will be consolidation.

As for AIG and the other insurers.. I don't know. I don't think AIG Execs know how bad they are off. But if a Bankruptcy Court can sort out ENRON and figure where the money went and who owes what, it should work on AIG.

Back in the mid 80's in Houston you had First City, Bank of the Southwest, Texas Commerce Bank (the Big 3 of Houston) go under and the assets were bought by other banks. Life went on.

Hell in 1987 you had Bank Names on Houston Skyscrapers changing every 3 months.

Rack em up and lets get going.

You may need some more Bankruptcy Judges assigned to the Southern District of New York and the District of Delaware though.