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Originally Posted by Dan.Linehan  Sarcasm aside, I think most people do assume that the Fed has the ability to bail out banks when they go under. This is not the case. The Fed does not have enough assets to bail out large banks.
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And Citigroup is just one bank among many that could fail. |
The Fed can print money but the question is "Should they and would they?"
Lets not forget that the Fed is owned by privately held banks that can swoop in and buy out the failed banks for pennys on the dollar and then roll the banks into their personal portofolios.
Theoretically the Fed is the backer of our currency and the shareholder banks are supposed to have the backing to support the USD. I don't see these private banks selling off their assets to prop up the US Currency.
And before you doubt the Fed is not private. Look up the Federal Reserve Act of 1913 and also on the Fed's website. They are private.