Why the Government Is Good at Helping Banks but Not People
We are really very good at helping banks. Last month, in no time at all, the federal government calmed a crisis that began at just a few institutions but threatened to spread throughout the financial system.
According to CNBC, within four days, banks had borrowed roughly $12 billion from a fund set up to give financial institutions access to favorable loans. Through more traditional borrowing routes, banks were able to acquire more than $300 billion. All this without endless political hemming and hawing from Congress, without the president’s signature, without action by state legislatures or governors, and without need for city councils or mayors to weigh in.
This wasn’t a fluke, as the economist and lawyer Natasha Sarin told me recently: When a bank is on the verge of failure, “the FDIC is incredibly efficient—we come in on a Friday afternoon and shutter the bank, and by Monday morning, the bank is sold to someone else.”
[Michael Grundwall: What people still don’t get about bailouts]
