this post was submitted on 22 Dec 2024
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With banks this is also true if they do not have enough liquid assets to meet the legal requirements. So the bank might not be able to count all bank accounts as assets but the FDIC is. Also they can then restructure the bank and force creditors to take a haircut.
This is why investment banks should be separate from banks that have consumer accounts that are insured by the government.
Then you can just let the investment bank fail. This was the whole premise of glass steagall that was repealed under clinton..