$700 Billion Dollar Overdraft

As with any bank overdraft, there are always excessive fees attached. If the average overdraft fee is $33 per OD, then what will the fee be on $700B? Neel Kashkari pulled the trigger hard and fast as the first head of the Office of Financial Stability. With $250B gone, he established himself as a true product of his Goldman Sachs upbringings. Never known for their timidity, GS associates love the big kill and Kashkari shows that he is no exception by dropping greater than 35% of the $700B total in his first 72 hours as Chief. The problem was not its boldness; it was its incompleteness.

Sure we are not privy to all the financial information or the hours of conversations that were held between Treasury staff and Wall Street CEOs, but if $125B needed to be dumped into nine leading banks, then we can guess that Hank and the Boys are not giving the American people full-disclosure. With another $125B being parceled out to more than 8,000 banks, it seems that the tumor has indeed spread and it cancerous. This brings up the issue of treatment.

Hank and Neel think that radiation will kill the cancer or at very least stop the spreading and shrink the tumor. The other side of the coin is to cut the tumor out to ensure; a)It is gone and b)It does not come back. Many banks in America need to fail or be acquired by bigger stronger banks. In the “Go Go” 90s and early 2000s, hundreds of banks with thousands of branches sprang up like weeds to the delight of consumers. Now when a customer service rep does not give you the answer you want or a bank manager won’t give you a loan, you threaten them with leaving. If that does not work, then you actually leave because the quantity of banks in your neighborhood is immense. Not all of these banks were started by competent managers so they deserve to fail if they over-extended themselves. Although this method is more drastic and emotional than the former, it is scientifically more effective. However, the American people were not allowed to benefit from a second opinion.

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