Paul Volker: Failing US banks must fear government closure

[cal04]

http://news.yahoo.com/s/afp/20100330/pl_afp/usgovernmentregulatebankingvolcker_20100330181050

Failing US financial institutions must face the credible threat of government closure if reforms are to succeed, a key adviser to President Barack Obama said Tuesday.

Paul Volcker, a former Federal Reserve chairman, said reforms being discussed by Congress hit on the "essential elements" of financial reform, but that a strong government arbitrator must emerge with the power to wind down firms.

"There is a clear need for a so-called resolution authority," Volcker told members of the Peterson Institute for International Economics, a Washington-based think tank.

Volcker said that massive government bailouts of a host of banks and insurance giant AIG over the past two years must not be allowed to convince others they can expect a government safety net, and so encourage risky practices, creating a so-called "moral hazard."


Volcker: Commercial banks must be commercial banks
http://www.marketwatch.com/story/volcker-commercial-banks-must-be-commercial-banks-2010-03-30-161300

[Winterblues]

1. must not be allowed to convince others they can expect a government safety net,

I think it is way too late for that...They know beyond a shadow of doubt they will not be allowed to fail..:shrug: Obama believes in trickle down economics, at least his actions suggest that..

[stray cat]

2. we can't close down failing organizations because of failure....

competent people may lose their jobs since not everyone may be responsible for the failure to perform.