Let big banks fail - a new approach

[misterX]

I read a very interesting article on Bloomberg.com.

Thomas Hoenig, the Kansas City Fed president, will welcome Fed Chairman Ben S. Bernanke, European Central Bank President Jean-Claude Trichet and dozens of other central bankers to the annual symposium in Jackson Hole, Wyoming...

Hoenig said he hopes the gathering will serve as a model for handling crises in the future. Bernanke has urged Congress to back part of Hoenig’s proposal for dealing with faltering big banks, which would wipe out shareholder equity in any that receive government aid.

Alternative to Bailouts

Companies with weak capital or investor confidence shouldn’t be bailed out, Hoenig said in a private talk in Omaha, Nebraska, in March. He said the government instead should declare them insolvent, replace managers, remove the bad assets and require shareholders to take losses.


More at: Hoenig Stirs Debate on Bank Failures as Fed Forum Convenes - Bloomberg.com

[odie1kanobe]

Can this be merged into the other ad nauseum threads re allowing banks to fail that appear DAILY.