Economy Rockford: Politicizing Policies

The banking industry has been the springboard for government intervention since the recession began. But is all this federal involvement a good thing? Rick Bastian explains one of the biggest mistakes being made.

Rick Bastian says that there are too many bad choices and bad loans being made and traditional clearing methods don’t work, partially due to lack of clarity. One of Bastian’s biggest concerns is that the FDIC is going to guarantee the toxic assets when they really should focus on guaranteeing deposits.

“There are still tremendous issues to resolve and there are still challenges ahead of us and not just behind us. Two thousand nine is going to be a challenging year for the banking industry in general. I think there would have been a lot more banks that would have failed if the FDIC resources weren't totally strained, and as the summer comes that may happen.”

Bastian doesn’t know what first quarter earning will bring for banks, but believes the numbers will reflect concern over credit card and commercial loan portfolios.

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