Even if perhaps tighter regulations might have meant that the bank wouldn't have failed, it also might have meant the bank wouldn't have succeeded as a bank. There's a tradeoff between too much regulations stifling competition and risk of bank failure. If there's not enough competition you have monopolies which causes higher costs to people despite no bank failures. It isn't necessarily the best result.
I work for a credit union that has been forced to increase its regulatory burden and this might actually destroy the credit union because the credit union is simply too small to properly meet the standards. A lot of customers are going to the big banks now. Arguably, this is why big banks like high regulations because they can more easily meet them and put smaller banks/CUs out of business.
This is the case with all regulations. When they raise minimum wage, small and local businesses are always the first to go. Companies like Amazon and Walmart love costly new regs because they put competitors out of business first. Then, when the reaper comes for the big fish, the regulations are magically relaxed because everyone sees the pile of dead bodies and comes to free market Jesus.
I kind of defy the original supposition that the government failed here, on second thought. Aren't they supposed to let banks fail? They insure some depositor accounts. Nothing else. The rest of the bank going bye bye is not the government's problem.
And that's exactly what appears to be happening. We'll have to wait for the dust to settle to see if they went beyond this. But yes, if you believe in Free Enterprise then failure must be as possible as success. Only communists believe failure is not an option.
Even if perhaps tighter regulations might have meant that the bank wouldn't have failed, it also might have meant the bank wouldn't have succeeded as a bank. There's a tradeoff between too much regulations stifling competition and risk of bank failure. If there's not enough competition you have monopolies which causes higher costs to people despite no bank failures. It isn't necessarily the best result.
I work for a credit union that has been forced to increase its regulatory burden and this might actually destroy the credit union because the credit union is simply too small to properly meet the standards. A lot of customers are going to the big banks now. Arguably, this is why big banks like high regulations because they can more easily meet them and put smaller banks/CUs out of business.
This is the case with all regulations. When they raise minimum wage, small and local businesses are always the first to go. Companies like Amazon and Walmart love costly new regs because they put competitors out of business first. Then, when the reaper comes for the big fish, the regulations are magically relaxed because everyone sees the pile of dead bodies and comes to free market Jesus.
For now. ;)
glass steagall
I kind of defy the original supposition that the government failed here, on second thought. Aren't they supposed to let banks fail? They insure some depositor accounts. Nothing else. The rest of the bank going bye bye is not the government's problem.
And that's exactly what appears to be happening. We'll have to wait for the dust to settle to see if they went beyond this. But yes, if you believe in Free Enterprise then failure must be as possible as success. Only communists believe failure is not an option.