Dollars and Jens
Wednesday, October 29, 2008
The U.S. government's $160 billion handout to banks from Niagara Falls to Beverly Hills is going mostly to lenders that need it least, putting weaker rivals at risk of being shut down or taken over, analysts say.
Good to hear it. Insofar as the government is solidifying banks that are fundamentally sound to assuage unfounded fears, it is more likely to generate positive returns on its (our) investments and is less likely to create long-term distortions in the financial system. It is good, especially in the short-to-intermediate term, for fundamentally sound financial institutions to stay around while the unsound get culled. I was afraid there would be too much political pressure on the treasury to prop up zombie banks, and I'm quite excited to see the suggestion that I might have been wrong.


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