Bankruptcy, not bailout, is the right answer

Re:Bankruptcy, not bailout, is the right answer by BrandonM on Wednesday October 01, 2008 @12:32AM (#320377)

"However, this should not continue into the institutions that hold the savings of the people who didn't want to play economic make-believe."

How are these savings going to provide any interest if they are not redistributed as loans? The whole point of a bank is to allow your money to work for you while also providing loan capital to those who have a good use for it. It's impossible to have a non-negative (due to administrative costs) savings account without loaning the money to someone.

Or am I completely missing your point?

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Re:Bankruptcy, not bailout, is the right answer by mindslight on Wednesday October 01, 2008 @01:08AM (#320398)

Home/business loans made by a savings bank are subject to the reserve requirements. If these loans turn out to be bad and cause bank insolvency, the amount isn't huge because we're dealing with first-order numbers mostly backed by collateral. When the FDIC steps in to repay depositors, no money is lost (besides the bank's investors).

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Re:Bankruptcy, not bailout, is the right answer by BrandonM on Wednesday October 01, 2008 @01:31AM (#320409)

Okay, I hoped that's what you meant, and not that savings banks should not be allowed to invest or loan money at all.

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