Wow, wow, wow. Deal: Merrill Sells Itself To Bank Of America For $44 Billion... Lehman Close To Bankruptcy... Insurance Giant AIG Scrambles For Cash... Stocks Expected To Be Sharply Down Monday... Banks Roll Out $70 Billion Loan Program... ------------- And Merrill Lynch is hardly the only troubled financial institution on the horizon. Administration officials acknowledged this week that more bank failures were inevitable, and the main protection for depositors the Federal Deposit Insurance Corporation is likely to exhaust the reserves it has built over the years from bank insurance premiums.
"What we need now is a systemic solution and to admit that this is an extraordinary situation," Mr. Meyer said. He said the government should go to the heart of the crisis the mortgage market and start buying mortgage-backed securities in a broad rescue. That is similar to an approach urged by Alan Greenspan, Mr. Bernanke's predecessor as chairman of the Federal Reserve. Mr. Greenspan, who has long been a staunch opponent of government intervention in the economy, said Sunday that the federal government might have to shore up some financial institutions. "This is a once-in-a-half-century, probably once-in-a-century type of event," Mr. Greenspan said in an interview on ABC. "I think the argument has got to be that there are certain types of institutions which are so fundamental to the functioning of the movement of savings into real investment in an economy that on very rare occasions and this is one of them it's desirable to prevent them from liquidating in a sharply disruptive manner." Most economists say that bailouts are often bad economic policy because each rescue tends to encourage "moral hazard" the tendency of institutions and investors to take even bigger risks because they assume the government will rescue them, too. Both Mr. Paulson and Mr. Bernanke worried that they had already gone much further than they had ever wanted, first by underwriting the takeover of Bear Stearns in March and by the far bigger bailout of Fannie Mae and Freddie Mac. ------------- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;203748912;27390454;j Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:269255 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
