The push back and forth between the Federal Deposit Insurance Corp. and private-equity businesses reveals a lot about the underlying problems associated with the use of taxpayer funds to bailout banks in the first place.
Those who read me know I oppose the use of taxpayer funds to bailout any private business, and to do always brings unintended consequences, which in many cases ends up being more of a problem than the original one. For example, the extraordinary inflation that will be unleashed from the irresponsible actions of the Obama administration and Congress to bailout numerous banks and businesses in the private sector.
The whole idea of a free market is for people to take chances, and those that gather the best data and act upon it in the most efficient way will win. In the case of banks, every bad one should have been allowed to fail and be taken over by those that were well run. If that would have happened, very little cost to the American taxpayer would have resulted, in comparison to what we all now face.
One of the arguments I’ve heard on behalf of the FDIC is they need to balance the interests of taxpayers with those of the investors. But this wouldn’t be a problem if the misguided idea of using taxpayer dollars to bail out the banks in the first place hadn’t been initiated.
It’s amazing to see that some say that while investment from private capital would help to decrease the number of banks failing and thus liquidations, while cutting back on the losses to taxpayers, then turn around and say the private-equity firms need to be closely reined in so they don’t get great terms.
In other words, the government already did this for the huge banks and businesses, but now that private capital is involved, they’re supposedly interested in protecting taxpayers money, after committing billions of taxpayer dollars to the huge corporations themselves, while bringing the threat of inflation like we never have experienced before in American history.
