March 9th, 2009
04:37 AM ET
6 years ago

Some banks should be allowed to fail, say two top Republicans

'We bury the small banks -- we've got to bury some big ones,' said Shelby Sunday.
'We bury the small banks - we've got to bury some big ones,' said Shelby Sunday.

WASHINGTON (CNN) - Two top Senate Republicans said Sunday that banks shouldn't be able to count on any more bailout money - and that the federal government should let some of them fail rather than distribute further funds to keep them afloat.

"Close them down, get them out of business. If they're dead, they ought to be buried," Sen. Richard Shelby, the Ranking Republican on the banking committee, told ABC's This Week. "We bury the small banks - we've got to bury some big ones, and send a strong message to the market." He did not mention any banks by name, although he responded to a question about Citigroup by noting that "Citi's always been a problem child."

Former GOP presidential candidate John McCain told Fox News Sunday that he did not think President Obama "made the hard decision, and that is to let these banks fail." He did not call for nationalization of troubled financial institutions, which many Republicans oppose, but said their assets should be sold. "Unfortunately, the shareholders and others will take a beating," he said.


Filed under: John McCain • Richard Shelby
soundoff (417 Responses)
  1. Edward Brumby

    The Republican leadership can go to Hades. They turn their back on the unemployed; they turn their back on small investors; they turn their back on those who would be saved by stem cell research. Thank goodness the Country has turned away from their small minded hatred.

    March 8, 2009 09:29 pm at 9:29 pm |
  2. dairy farmer

    By the way, I voted for Mc Cain

    March 8, 2009 09:29 pm at 9:29 pm |
  3. mark

    And by that logic Senater Shelby how many homeowners, small businesses, retired citizens, etc... do we also bury along with the dead banks. Replicans seem to be so big on big corporations, wall street and the top 2% of incomers and lowering their taxes so out of the goodness of their hearts they will in turn create jobs for the rest of us. Ya!!! Shelby, please tell me and the nation what the hell are you smoking? When did the rest of us in this country stop counting for anything with you repug neobots?

    March 8, 2009 09:29 pm at 9:29 pm |
  4. Dawn

    Welcome October 1929...They want to suspend spending to September. Welcome the Great Depression part 2.

    This is our wake-up call, if anyone remembers in the 90's and 2000 you could get in the mail pre-approved credit cards and how many fell into that trap, me included. It is a trap and everyone was feeling good about having credit and having two people working.

    Please think about that please!

    March 8, 2009 09:29 pm at 9:29 pm |
  5. Lance in PA

    Time to thin the herd.

    March 8, 2009 09:30 pm at 9:30 pm |
  6. Patsy Madison, TN

    What has happened to Shelby? He sounds almost like the crazy Ex-Senator from Georgia.

    March 8, 2009 09:31 pm at 9:31 pm |
  7. littlefishbigpond

    Richard Shelby has far outlived his usefulness in the U.S. senate . He should just retire from the senate, and take his ignorant butt somewhere and just " Sit Down "........

    P.S., ........ That fella` standin` behind Shelby, bares watching, that is David " the john " Vitter, from Louisiana ........

    March 8, 2009 09:32 pm at 9:32 pm |
  8. Daniel, Atlanta, GA, ex-republican

    YES, LET SOME FAIL. BUT, OBAMA IS DOING A GREAT JOB CONSIDERING WHAT HE INHERITED.

    March 8, 2009 09:33 pm at 9:33 pm |
  9. TXGB

    Good strategy Congressmen!! The one financial institution that the Bush administration should have saved was Lehman brothers (which they didn't, unfortunately). The investor confidence that was a whole lot better at that time just crashed and continues to crash since then even after spending (or agreeing to spent) over a trillion $$s!!! If things go south further, it won't be just the big banks the GOP will get t bury. It will be the savings, wealth and dreams of an entire generation of hard working americans!!! Good luck with that!!! Such opportunists!!!

    March 8, 2009 09:35 pm at 9:35 pm |
  10. tish

    CNN, I posted a comment earlier today and you chose not to post it.
    How biased you are. You have lost another reader online and on the air....

    March 8, 2009 09:35 pm at 9:35 pm |
  11. Ken

    The basic problem Japan had when their real estate bubble burst is banks which were not viable were kept running with government support. This proved to be a huge drag on the economy and it prevented their moving into a full recovery mode for close to 10 years, as these "zombie" banks drained time and resources from the economy. It would be far better to have some of these banks fail, in a government supervised manner, rather than have them hang around for year after year with their poor management, bad business practices, and bad decision making employees.

    The government should move to declare them insolvevent under the FDIC, take them over, and then run them to sell the pieces off once things get better. There are many aspects of these banks that could be saved and would be valuable to others even right now (such as selling off all the credit card accounts). Basically the better pieces would go to stronger companies who can give them the time and resources needed to grow and support the economy, while the rest is left in a stinking pile, controlled by the government, to be spun off once the economy improves.

    March 8, 2009 09:36 pm at 9:36 pm |
  12. Paul

    Of course, as the election showed, John McCain is capable of making many hard and entirely contadictory decisions in the space of a couple of days. Phew. I have never been so relieved to not have someone as president.

    March 8, 2009 09:37 pm at 9:37 pm |
  13. A Real American

    So, the GOP is now in favor of nationalizing the banks?

    Because don't kid yourselves. If a bank goes belly up, who steps in? The Federal Government, that's who!

    Now, frankly, I think these zombie banks should have been nationalized long ago, but let's not pretend that by "letting them fail" that that's somehow not what we'll be doing.

    Nationalize 'em? Hell yes! But let's be honest about what we're doing.

    March 8, 2009 09:40 pm at 9:40 pm |
  14. Phil Sandifer

    It is worth noting that one of the major causes of the credit crisis, and the primary reason AIG required bailing out was the decision to let Lehman Brothers fail. I'm disgusted and frustrated at the bailouts. But the alternatives still seem worse.

    March 8, 2009 09:41 pm at 9:41 pm |
  15. Mike

    I'm more concerned about the loan modification program. This program to bail out homeowners is just a subsidy for the reckless. I have a neighbor who refinanced a couple of years ago to take out money to buy a BMW and Audi. His debts to income went up from the 30's to close to 50%. Now he may be able to get back down to 31%. Unbelievable! He will basically get those two cars for free. I have a co worker who purchased a home knowing his debts to income was 45%. We were responsible and purchased a smaller home keeping our debts to income at below 31%. Now this Obama plan will reward someone who was financially reckless a bigger home than someone who was fiscally responsible. Most economist (even Paul Krugman) say that this subsidy will not revive the housing market or end the bank's problems. The housing market needs to get back to historical price to income/rent norms for the market to recover. People who are financially reckless should not be rewarded. The majority of people in trouble either refinanced to take money out to buy luxuries or bought houses they shouldn't have. This is sending the wrong message to a society that was intoxicated by easy money and leaving beyond their means.

    March 8, 2009 09:41 pm at 9:41 pm |
  16. proud army navy mom

    Minority WIMP Cantor talks out of both sides of his mouth.....His spectular inability to do anything while Bush and Cheney tried their best to destroy this country's economy is a shame.

    Shelby has the most earmarks, but he practically faints with indignation over gov't spending.

    Is this what Rush told them to say while they were bowed down to him?

    Republicans = stupid hypocrites.

    March 8, 2009 09:43 pm at 9:43 pm |
  17. Ernie in LA

    Yes, Let them fail and all of those others who keep asking for Billions to keep afloat.

    March 8, 2009 09:43 pm at 9:43 pm |
  18. I Am The Great And Powerful Rush Of Oz

    Wow, CNN, back to back posts about shelby and mccain, two totally irrelevant senators. Thanks for the non-story

    March 8, 2009 09:45 pm at 9:45 pm |
  19. reb

    Let the companies fail... The automakers, The banks, all of them!!! The government should not be running these businesses for them. If they can't make money, then get out! It's a capitalist country and that is what it should stay!!!

    March 8, 2009 09:45 pm at 9:45 pm |
  20. RM in CO

    I usually do no agree with Republicans, but I do on this. Let them fail. It didn't bother the government for Americans to fail individually. Look at the jobless and homeless rate. It is a shame when the government would rather help failing banks who can't manage their affairs than the average citizen..............

    March 8, 2009 09:48 pm at 9:48 pm |
  21. Anonymous

    Wrong, Nevada dude. The damage was already done to the economy during the boom. Way too many houses were built because interest rates were set too low by Greenspan. This is a misallocation of capital. Same thing happened during the Clinton administration in the dot-com bubble. Trying to prop up the failed banks with low interest rates and bailouts only shifts money from hardworking honest people, and sound banks to the bad ones.

    Let them go under and pay out depositors with FDIC insurance. Bank investors should loose their shirts. When the FDIC runs out of money investors in the FDIC (a GSE) should loose their shirts too, since it failed to raise insurance rates on these bad banks. Investors in Fannie and Freddy should loose their shirts.

    The government should then step in take over the FDIC and pay off all deposits on all other failed banks with newly printed cash. This will inject tons of money into the economy which will be deposited in sound banks.

    Then the government should got after criminals like Frank Raines who ran these scams on the backs of the taxpayers. This Democratic insider should have to pay back every cent of the 90 million he got for his short stay at Fannie Mae.

    Likewise every bank that ran these fraudulent scams.

    The economy would recover much more quickly this way than with these endless bailouts propping up failed companies. Let the rich take their losses and stop sticking the bill to the taxpayer.

    March 8, 2009 09:48 pm at 9:48 pm |
  22. Brian in VA

    Are you kidding me? The republicans are behind "the sky is falling on the banks, let's save them" and now they try to pen this on Obama and the dems? Horseshesh!

    March 8, 2009 09:50 pm at 9:50 pm |
  23. Dee

    The Last Patriot March 8th, 2009 2:59 pm ET

    Uh, excuse me, but Bush started the bailout mania in 2008 before the election.

    March 8, 2009 09:50 pm at 9:50 pm |
  24. Brian Macker

    Wrong, Nevada dude. The damage was already done to the economy during the boom. Way too many houses were built because interest rates were set too low by Greenspan. This is a misallocation of capital. Same thing happened during the Clinton administration in the dot-com bubble. Trying to prop up the failed banks with low interest rates and bailouts only shifts money from hardworking honest people, and sound banks to the bad ones.

    Let them go under and pay out depositors with FDIC insurance. Bank investors should loose their shirts. When the FDIC runs out of money investors in the FDIC (a GSE) should loose their shirts too, since it failed to raise insurance rates on these bad banks. Investors in Fannie and Freddy should loose their shirts.

    The government should then step in take over the FDIC and pay off all deposits on all other failed banks with newly printed cash. This will inject tons of money into the economy which will be deposited in sound banks.

    Then the government should got after criminals like Frank Raines who ran these scams on the backs of the taxpayers. This Democratic insider should have to pay back every cent of the 90 million he got for his short stay at Fannie Mae.

    Likewise every bank that ran these fraudulent scams.

    The economy would recover much more quickly this way than with these endless bailouts propping up failed companies. Let the rich take their losses and stop sticking the bill to the taxpayer.

    More than 1000 banks failed during the Savings and Loan crisis and hardly a blip. Same can happen here. Down with AIG, down with GM, down with Citibank. Let the successfully run companies take their places. Toyota, Honda, and Subaru all build their cars here in the US. Why punish them by taxing them to support their competitors?

    March 8, 2009 09:51 pm at 9:51 pm |
  25. gerry

    So we have a lawyer ( Shelby ) and a military pilot who got shot down giving us financial advice and suggesting banks should fail.

    McCain can't even count how many homes he has and the only finance Shelby knows about is the Bush tax cuts, cause they saved him so much money.

    These two guys should maybe be seeen, but never ever heard and for sure never listened to.

    Pathetic

    March 8, 2009 09:52 pm at 9:52 pm |
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