Why Congress Is Failing America

The financial catastrophe and the WaMu collapse reveal that Washington bureaucrats can handle an emergency but politicians can’t.

Read more about Wall Street’s ongoing crisis. 

House Minority Leader John Boehner 


It is a tale of two systems. One system, the one used to process failed and faltering banks, works really well. It’s been in place and evolving for 75 years, since the Federal Deposit Insurance Corp. was founded (over the opposition of bankers, it must be added). Since then, not a penny of depositors’ money has been lost, and the banks continue to insure themselves against their own incompetence. The FDIC insurance fund contains about $45 billion, and analysts had feared that the failure of a bank the size of WaMu (it had $188 billion in deposits) would swamp the fund. But the FDIC has a professional staff, run by a highly competent and intelligent manager, Sheila Bair. Having already handled a baker’s dozen of failures this year, the FDIC has the drill down. There are also, thankfully, a few competent bankers left in the world. Many of them work at J.P. Morgan Chase, which has agreed to acquire WaMu’s business. WaMu’s failure will cause real dislocation—stockholders and many bold-holders are likely to be wiped out. But WaMu’s depositors will be made whole. The FDIC won’t have to dip into the insurance fund. J.P. Morgan Chase is assuming WaMu’s troubled mortgage business. It will take a charge for those bad debts and raise new capital from the private sector to deal. It’s a big headline and a big story, but in the scheme of things, a blip. A large boat slipping silently below the sea while all the passengers escape with their lives. This system is a force for order.
