Friday, October 10, 2008

Lender of Last Resort: US Treasury

I just read in today's Wall Street Journal that the US Treasury is considering having the FDIC insure all US bank deposits and guaranteeing all bank debt, I assume inter-bank debt. This policy is very consistent with my previous posts on the value of the CDARS program to unlock the liquidity crisis in the banking community.

The proposal is only in the discussion phases, but I feel there is a strong possibility that this will come to fruition.

My vote is that they enact this policy today!

We need to restore confidence in the markets. The current liquidity crisis is more of a crisis of confidence than a cash crunch.
Sooner or later comes a crisis in our affairs, and how we meet it determines our future happiness and success. Since the beginning of time, every form of life has been called upon to meet such crisis.
Robert Collier
American Motivational Author

Suggested Reading for our Leadership

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