Ben Bernanke: No more bailouts for failing banks

22 March 2010

Ben Bernanke, the chairman of the Federal Reserve, has said that the US taxpayer must not be made liable for the costs of bailing out a large financial institution in future.

Speaking in Florida to the Independent Community Bankers of America, Mr Bernanke stated that the costs associated with saving banks deemed too big to fail should instead rest with shareholders, creditors and counterparties.

"If, in the end, funds must be injected to resolve a systemically critical institution safely, the ultimate cost must not fall on taxpayers or small financial institutions," he said.

He added that the current system in which the fate of the global economy is closely linked to the success of a small number of giant financial firms is "unconscionable".

Last week, Mr Bernanke said that changes are set to take place inside the Federal Reserve to ensure that the regulator can do a better job of stopping any future financial crisis.

By Asim Shah

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development