Kevin Walmsley

Year-End Buyouts: Big Challenges for the Big Banks

Too big to fail probably means they're also too big to succeed. Now that the taxpayer is on the hook for future losses, why should the banks lend? Would you?
Suppose you were a banking executive at the new, federally funded Bank of America, and have before you a loan application from a large retailer. Or a big commercial developer. Or an aircraft leasing company. Or a heavy equipment manufacturer. And you know that in the event of default, not only might you lose your job, but you might have to testify before Barney Frank's goons on the House Financial Services Committee, followed by the possibility of incarceration. Would such a prospect make you more inclined to lend? Or less so?
As soon as the United States Congress became part of their board of directors, Wall Street became Amtrak. Too big to fail, yes. Too politically connected to officially go bankrupt, yes.

But no sane person would invest money in it.