The solution for US and European banks is the same: Government deposit insurance should only be available for banks that manage their own loans and do not trade on their own behalf.
The FDIC has released a document that purports to show how it could have successfully resolved Lehman Brothers using its new Title II resolution authority granted under Dodd Frank.
All I can say is that this is an interesting piece of creative writing. The Lehman counterfactual rests on a series of assumptions, which as I will discuss shortly, look pretty questionable.
The banking has not reached the halfway point, maybe not even the midpoint of the first quarter. The FDIC has recorded 307 bank failures. The total could reach 1,800 – 3,000.