Bank Stability Quotes
4 years after the Great Recession where major banks of America needed government bailouts to prevent failure the Administration and Federal Reserve board wanted to increase the capital requirements to increase the safety of the Banks. Essentially the banks would speculate and gamble with depositors’ money. If their investment paid off, there were large profits and bonuses for the executives. If it did not, they ran out of capital as they had very little of their own at risk. The government bailed them out and the executives got their bonuses anyway. The efforts to make the banks speculate with more of their own money were strongly opposed by the banks and bank executives.
Biddle and President Andrew Jackson were in a major struggle about banking in the United States in general a Bank of the United States in particular.
Banks often lie. The system encourages them to do so. In a crisis, if a bank honestly says that it is not sure that it has enough cash and other liquid assets, others will not lend it any more money and depositors will rush to withdraw their money, thereby almost insuring a failure. The bank that lies, might weather the storm and survive.
