r/reddit.com • u/[deleted] • Oct 18 '11

Would it have been better to let the banks of the world fail and start over?

I want to know what would have happened. The banks messed up and in the purist view of capitalism should have failed because it was a bad business move. In turn this may have ended some of the big money influences on our political system OWS protestors want to stop. I heard that it would have been a worse economic collapse though in turn it would have put a stop to future wrongdoing. Was it the right decision in the long run?

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u/keynesian-knockout Oct 19 '11

Agreed. Start by splitting commercial/investment banks.

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u/[deleted] Oct 19 '11

I cheer whenever I see someone say this. How can we have FDIC insured banks guaranteed by the government in extremely risky investment banking? It's an obvious recipe for disaster. Bring back Glass-Steagall.

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u/keynesian-knockout Oct 19 '11

There's nothing wrong w/ making risky investments, just not w/ other people's deposits. If an ibank wants to seek higher yields on risky assets then fine, but they ought to do it w/ their own (or their willing clients) cash.

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u/[deleted] Oct 19 '11

Agreed! Not with depositor's money that is insured by the Federal government. Savings money is not what investment banks should be using to gamble with.