golfgal, I read the link you provided. I realize that there are different types of banks. But in this thread, you were talking about how the demise of BSC could lead to a run on our banks and us waiting for the FDIC to pay out. The FDIC insures commercial banks, not investment banks.
The FDIC insures commercial banks on the condition that these banks are heavily regulated. The Federal Reserve is authorized to be the lender of last resort to these commercial banks.
On the other hand, investment banks are not insured by the FDIC and are not regulated by the Fed. Under normal circumstances, the Fed is not supposed to lend money to investment banks. The bail out of BSC required a special vote.
I still haven’t seen a decent analysis of how failures in the investment banking industry will lead to the failure of the commercial banks. I agree that there are many ways the financial system could fail. But you could use the same argument to justify bailing out anything or anyone.
