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A Dallas Fed plan to cap assets at FDIC-insured banks at $250B would force most of the TBTFs to...

A Dallas Fed plan to cap assets at FDIC-insured banks at $250B would force most of the TBTFs to more than halve their consumer and business-lending units. Such a limit, says Dallas Fed EVP Rosenblum, is required to allow the FDIC to shut them down without using taxpayer funds. The Dallas proposal isn't becoming law anytime soon, but it is driving the debate in D.C.
Comments (6)
  • BlueOkie
    , contributor
    Comments (5560) | Send Message
     
    The FDIC isn't a player in the TBTF! Not even invited to the table of the Sec of Treasury during discussons
    14 Mar 2013, 09:09 AM Reply Like
  • gayestathis
    , contributor
    Comment (1) | Send Message
     
    $250 billion is an arbitrary number with no real logic behind it. I love it when the government puts limits on the so-called TBTFs but can't put any limits on itself. Do as I say, Not as I do - the real mantra of the Obama administration.
    14 Mar 2013, 09:34 AM Reply Like
  • Mayank Rasu
    , contributor
    Comments (23) | Send Message
     
    If the father has as addiction problem doesn't mean he can not cut his son's allowance who has developed a liking for weed :) Bigger banks help the shareholders but smaller banks reduce the risk to overall economy. I would anyday chose the latter.
    14 Mar 2013, 09:47 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2443) | Send Message
     
    USER
    We all know the clowns in Wash DC could not find their way out of the closet in financial terms and now Obama doesn't really see a debt crisis. Well from my point of view he's in a contest with harry reid for village idiot of the year. Actually 250B is a good starting number for debate which will rise to 500B the whisper number amongst bankers. Buffet may lose a little but most will gain. The next real step is winding down fannie and making mandatory a 10% down minimum on mortgages. It would also help if the mortgage lendor had to keep 25% of the loan on the books
    14 Mar 2013, 02:15 PM Reply Like
  • spamsuck8
    , contributor
    Comment (1) | Send Message
     
    Rosenblum joined the Dallas fed in 1985 under Reagan, and became Executive Vice President (his current position) in 2005 under George W Bush. The idea has merit as it limits the exposure of the FDIC while not limiting the size of the investment side of the banks. This idea still needs to be combined with some form of reintroduction of Glass-Steagall to stop the downside risks of the big investment banks from being bankrolled by the american people.
    14 Mar 2013, 11:16 AM Reply Like
  • WayneSic
    , contributor
    Comment (1) | Send Message
     
    The FDIC should price the risks associated with bank asset size just as banks do for credits granted to their commercial and consumer customer applicants. As in the "great depression" of 1929 it would not be wise to limit banks ability to grant loan credits because that was a major cause of that depression. If a bank is charged money for its risk tolerance, management will respond.
    15 Mar 2013, 02:12 AM Reply Like
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