Analysis of global economic and financial conditions
The Fed and the FDIC will not allow the largest banks and their branches to fail in terms of the banks' depositors, but the stockholoders' equity may be reduced or eliminated.Banks "safety nets" performed for many years beyond their legal obligations in protecting the public's savings and deposits.The insuring institutions chose mergers rather than liquidation of failing institutions, even though this alternative was generally more expensive.As a conseqence, depositors received total protection, not a limited legal protection. Because of recent bank failures hasn't the FDIC has increased their annual insurance levy?
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The FED's solution to our financial institution's liquidity and solvency issues has been to convert our financial intermediaries into commercial banks. The large number of commercial banks in the U.S. banking system makes monetary policy that much more difficult to monitor and control.One of the fallouts will exacerbate the problem in which the money supply is now, and probably endlessly, unknown and unknowable.