Federal Reserve BANK

SEPTEMBER 21, 2008 No to the Federal Bailout of the Financial Industry ___________________________________ That was my post almost two months ago. I was one of the first to oppose the bailout. In today's New York Times, the first paragraph in the lead story: The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers. Looks like I was correct. Let me expand. The Federal Reserve BANK should be our primary bank. It should deal directly with businesses and individuals, not just with private banks. It is a BANK. That word should always be used when referring to it. Personal savings accounts in the Federal Reserve BANK would be insured and implicitly regulated. Put these private institutions in the same boat as loan sharks. If individuals put their money in private institutions, then the individuals are on their own. No federal insurance much less a bailout. Same for loans. Borrow from the Federal Reserve BANK and be safe. Borrow from the others and you are on your own. That would be a much more efficient way to create capital and manage financing than throwing money around hoping that some of it does some good somehow.