Wednesday, February 18, 2009

They Write Letters

Dear Congressman Childers,

Now that the stimulus package has been passed (and thank you again for your vote), it is time the country addressed what got us into this mess in the first place. A good place to start is with the banks.

Currently the deposits of the nation's largest bank, Bank of America, are somewhere around $950 billion, yet the FDIC only has roughly $50 billion in reserves to cover deposits for all the banks in the nation. If Bank of America were to fail, it would wipe out FDIC 14 times over. Covering the deposits of the Bank of America would dwarf the economic stimulus bill that was just passed, but would do nothing to help the economy. This situation is known as the bank being "too big to fail."

When a bank, or any other institution or corporation like General Motors, is too big to fail, this constitutes a direct threat to our national security far greater than any terrorist plot. That institution can (and to date, has) held our nation hostage, demanding taxpayer money to keep them afloat, lest the economy suffer a crash of unimaginable proportions.

It is time to end this threat to our nation once and for all, beginning with the banks. I suggest that you present a bill to Congress which limits the deposits of any single bank or other FDIC insured financial institution to the standard reserves held by the FDIC. In other words, Bank of America would not be allowed to accept more than roughly $50 billion in deposits, after which they would be required, by law, to turn new customers away.

This would have a triple benefit:
  • by preventing any single bank from growing too large to fail
  • by encouraging free market competition among banks, which can only benefit the customers
  • by forcing the breakup of existing massive banking institutions like Bank of America, who currently have the power to hold our nation hostage
A Banking National Security Act will not solve our current problems – not all by itself. But it will help prevent future economic disasters like the one we are currently experiencing.

Epstein's Mother

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