pawntan

J.P. Morgan's 16 Picks in Troubled Times

Why can't the fed lets the sick bank fail, and capitalize only the good banks. The bank with good balance sheet will surely lend to businesses.
If the fed let the bad bank fail, the bank will:
1. File chapter 11
2. Stop interest payment to its creditor
3. Liquidate the mortgage asset, and sell it at deep discount. Somebody
will surely buy when the price is very attractive. Heck if nobody will buy, let the poor homeowner keep the house and erase the loans. At least the homeowner gets the benefit, not the banks.

OK the fed is afraid that if the bank is sick, then it wil not lend. So why can't fed find another bank and give them capital to lend to businesses.
A lot of regional banks are healthy.

Why can't fed do this ? WHY DO WE HAVE TO SUBSIDIZE THE BANKER ?