Did The Fed Help Banks While Ignoring The Risks?


Terrific NPR interview with Jesse Eisinger, whose column we referenced on Monday, Why the Fed Overruled FDIC on Dividends Post-Crisis.

The head of the FDIC warned the Fed that banks were not able to “withstand stress in an uncertain economic environment,” just as the Fed was looking at whether banks could pay dividends to their shareholders, Eisinger says.

Even though banks passed the Fed’s “stress test,” Eisinger tells Fresh Air’s Terry Gross, many regulators and Fed employees believed that the banks were not as strong as the tests might indicate.

“This was a very generous decision for the banks,” Eisinger says. “They were able to pay millions to shareholders amid huge uncertainties.”

Well worth the 20 minutes to listen to it:

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Did The Fed Help Banks While Ignoring The Risks?
NPR, March 6, 2012

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