by Chidem Kurdas
Some 829 commercial banks are at risk of failure, according to the Federal Deposit Insurance Corp. This year 118 banks already failed and were taken over by the FDIC. At this rate, more banks will fail in 2010 than in 2009. If bank regulators were a commercial bank, they too would have gone bust. But being government entities, they prosper as the industry they oversee declines.
Investment banks dominated the public discussion in the run-up to the gigantic new financial regulation law. Regulation advocates argued that investment banks took excessive risk and needed to be more heavily regulated. Commercial banks were not the focus of the discussion—-because they have been heavily regulated since the early 20th century.
In fact, commercial banks are about as regulated as possible for private enterprises. Further regulation would turn them into an arm of the government—along the lines of mortgage financer Fannie Mae, currently a black hole that sucks taxpayer money. Read the rest of this entry »