Hypothetical question: what happens if a major retail bank like WaMu fails and the FDIC is undercapitalized (as is being suspected)? That would almost necessitate printing more money in order to fund the FDIC, leading to an inflationary spiral. Or taxes would be raised to exorbitant levels. Or do you have another option?

Hypothetical question: what happens if a major retail bank like WaMu fails and the FDIC is undercapitalized (as is being suspected)? That would almost necessitate printing more money in order to fund the FDIC, leading to an inflationary spiral. Or taxes would be raised to exorbitant levels. Or do you have another option?

 

WaMu has lots of assets that could be divested to cover any FDIC shortfall.

Hypothetical question: what happens if a major retail bank like WaMu fails and the FDIC is undercapitalized (as is being suspected)? That would almost necessitate printing more money in order to fund the FDIC, leading to an inflationary spiral. Or taxes would be raised to exorbitant levels. Or do you have another option?

I'm not 100% sure of this, but I believe that solvent banks are ultimately required to pay FDIC claims. which magnifies the problem and could cause the mother of all collapses. A solid bank may be forced to go under under a serious crisis. Our money is not 100% safe

You know, it's interesting... there are now accusations that Greenspan himself started this mess. (London Financial Times)

 

And there's some saying the Democrats are at fault, for enabling the policies that led to the collapse of Fannie Mae and Freddie Mac. (Bloomberg) (This one also points out the large contributions both made to Democrats, including Clinton, Dodd and Barack Obama himself.)

 

There's just a lot of mud-slinging going around on this whole mess.

Fair to say there's plenty of blame to go around.