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The institutions that are deemed “too big to fail” will always be bailed out. In his book, “Conspiracy of the Rich: The 8 New Rules of Money,” Robert Kiyosaki wrote that “bailouts are the name of the game.”
This week, the Fed bailed out two regional banks that collapsed. As depositors of those banks feared money in their accounts was gone, the Fed stepped in to replenish any of the money depositors would have lost – including accounts holding over $250,000.
Janet Yellen, Treasury Secretary, told senators that this guarantee will not be extended to smaller regional banks in the future. Lawmakers are concerned these backstops could become a new norm for big banks, giving “too big to fail” banks an unfair advantage over community lenders.
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