11/11/09

Another example

News. Nov. 10 (Bloomberg) -- At least three U.S. banks failed in the past year after the Federal Deposit Insurance Corp. deemed them healthy enough to qualify for a program that reduced the time examiners spent on reviews by at least 20 percent.

The three lenders -- FirstCity Bank in Stockbridge, Georgia, Security Pacific Bank in Los Angeles and 1st Centennial Bank in Redlands, California -- were among the banks included in the agency’s Merit program, designed to increase efficiency by focusing examiners’ attention on weaker firms. The program, launched in 2002, was terminated in March 2008 after examiners complained that the guidelines usurped their judgment.

My point. This is another example of how the government protects us. The bigger the government, the more numerous the regulations, the more complex the task of enforcing them becomes. Unfortunately command economies do not last, cannot exist in real life. They are bound to collapse. The outcome is bubbles. But we will never learn.

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George Dagnino, PhD
Editor, since 1977
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