Bank Failures: For Or Against?

Senator Richard Shelby (R-Ala.) and Congressman Barney Frank (D-Mass.) agreed that banks should be allowed to fail if they are underperforming.

"There are a lot of banks that are like the walking dead. A lot of them need to be closed now," Shelby said on CBS' Face The Nation.

Asked whether banks should be allowed to fail, Frank said, "Oh, of course. And we have allowed some to fail," citing IndyMac and Wachovia as recent examples.

The two members of Congress disagreed, however, on the performance of the Treasury Secretary this week in laying out the expectations for the second phase of Treasury's "700 billion Troubled Asset Relief Program (or TARP) and the administration's stimulus package.

"I think Secretary Geithner got off to a bad start last week," Shelby said. "He was unprepared as far as details were concerned … He wasted about four hours of the Senate's time," during his appearance before Congress. "We didn't learn a lot."

Shelby said that if Geithner's plan is a "son of Paulson," then it is going to be a big mistake following the Bush administration's initial disbursement of TARP funds.

Frank came to the defense of the Treasury Scretary: "I think Tim Geithner is doing a wonderful job moving forward. Maybe they should have told people, 'Don't be expecting too much.'"

Later in the interview, Shelby said that he did not trust the Federal Reserve: "We've got an awesome task on our hands. But what troubles me about all of it is the role of the Fed. I think the Fed's in uncharted waters. I'm not sure that we have a lot of confidence in them right now."

Also of note, Frank said that the $50 billion allotted for foreclosures will not be enough. "If in fact, by the time we've used $50 billion, it turns out we can use more, then I believe the Congress would be responsive," he said.


More from Face The Nation (2.15.09):

Gibbs: Obama Will Still Reach Out To GOP

Shelby, Frank Back Cap; Will Obama Balk?

Read the full "Face The Nation" transcript>

[regalstocs]

Fail AIG Fail!!!! Fed up with Bonuses for worthless Bank Execs!!!!! I think a three year old could do a better job for $50 a year. If they stay they should be working for free since they stole our money year after year!!!!!

[annaamed]

? The Banks have done well are only and should be helped if needed. Let Bank of America and Citi fail. Please do not give our tax money to those losers.

Mark my words they are loser and they will fail, the stupid Pundit will loot tax payer money and I am surprised that Obama is following Bush Polices.

[psj55dis]

Im not for or against it Im for bringing the Michael Phelps case to the us supreme court. I have for years tried to find a suitable case/ brief/argument similar to roe vs wade on Privacy to defend marijuana .I also believe this is the best way to approach this matter in the rights of persons who smoke marijuana Im paul jensen

[mattcat25]

The initial installment of George Bush and the Republican stimulus plan (to alleviate the economic conundrum created and perpetuate by the Conservative Agenda and Policy) was to hand out $Billions with no oversight to the top 1% again.

That%u2019s Conservatism, create a disaster, demand Governmental $pending, distribute funds to the good ol%u2019boys, and then cut the taxes on their windfall.

Remember Americans (real Americans) the nine worst words in the English (Americanish) Language:

1. I%u2019m
2. a
3. Republican
4. and
5. I
6. have
7. a
8. $pending
9. bill

America has had enough of Conservatism.

[Marie Zarankevich]

We would not be dealing with all this if our government weren''t riddled with thugs and thieves. -- If you don''t believe this, consider that this is the only country where PRISONERS are taken care of better than pensioners. -- Much better.

[deletedid]

Actually, if you READ first line - Rep & Dem agree.

The only ones who are whining are the ones who ALWAYS do!!!

[raflin0010]

Anyone notice how the Republicans are at their best when they are out of power? The only thing they can do well, is whine........

[likeitis5050]

Also all Banks that gave VA Guaranteed Loans which allowed ARM Loans to be used that failed...those banks should fail and become Federal Banks via the VA Certificates.

If you don''''t start putting bankers and Federal Reserve Board people whom had oversite in jail soon to quell the public...

They will fail anyways when people start keeping their money in jars.

The Fed''''s that approved of the ARM Loan program, should be in jail.

The lack of accountability in the banking system and by the Fed''''s having oversite is....disturbing.


--------------------------------------------------------------------------------

Posted by Beach671

These banks were pressured by Frank and others on the panel to make these loans. Banks need to stand or fail without government intervention...as Frank declared they would be allowed to do back in 2006...as he mocked Republicans who were ringing the warning bell on the banking system.

Frank is the one who should be doing time now.

[likeitis5050]

Frank came to the defense of the Treasury Scretary: "I think Tim Geithner is doing a wonderful job moving forward. Maybe they should have told people, ''Don%u2019t be expecting too much.''"



This from the guy sleeping with the head of Freddie at the time he was telling Republicans to stop being such haters when it comes to minorities owning homes...even if the loans are shaky...''it''s not like the govenment is going to bail out Fannie or Freddie''. Yeah...having him in your corner is like having Typhoid Mary in charge of clean water for the nation. Frank needs to be muzzled.

[beach671]

All banks that started in 2005 to give ARM Mortgages to illegal immigrants should fail.

Also all Banks that gave VA Guaranteed Loans which allowed ARM Loans to be used that failed...those banks should fail and become Federal Banks via the VA Certificates.

If you don''t start putting bankers and Federal Reserve Board people whom had oversite in jail soon to quell the public...

They will fail anyways when people start keeping their money in jars.

The Fed''s that approved of the ARM Loan program, should be in jail.

The lack of accountability in the banking system and by the Fed''s having oversite is....disturbing.