Report | Economic Growth

No More Bank Bailouts

Briefing Paper #21

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The U.S. Government’ role as a financial guarantor poses an
unprecedented threat to the taxpayer. The President’ 1991 budget proposal
noted that the total amount of all deposits held in U.S. banks, thrifts, and credit
unions — approximately $3 trillion — is a contingent liability of the federal
government. With this admission of its liability, the Administration
acknowledged its concern about the escalating costs of financial failures and the
fact that it does not know how to stop either the rising costs or the rising number
of failures. In fact, taxpayer exposure may be as high as $5 trillion if other
financial guarantee and credit programs are taken into account.

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