Glass-Steagall

[bill fancher]

> Enrique Diaz-Alvarez wrote:
> 
>>What I had in mind was Bank One merging with Goldman Sachs, say, then
>>the ball falling on red when GS has bet the house on black, thus
>>activating an FDIC bailout of the whole structure.
>
> We already effectively have that. The Fed thought it important to
> bail out Long-Term Capital Management, meaning that the safety net
> extends even to hedge funds.
>
> Doug
>

I have no problem with the Fed forcing players to keep the financial
system stable as long as the public isn't absorbing the losses for
failed gambles.

From
<http://www.cnnfn.com/hotstories/economy/9810/01/greenspan/index.htm>:

 But Greenspan, along with New York Fed President William McDonough,
stressed that LTCM's rescue was not a government bailout because public
funds were not involved in the effort.

 "The Federal Reserve Bank of New York's efforts were designed solely to
enhance the probability of an orderly private-sector adjustment,"
Greenspan said. "No Federal Reserve funds were put at risk, no promises
were made by the Federal Reserve and no individual firms were pressured
to participate."

--
bill