U.S. should let some big banks fail – Republicans

WASHINGTON, (Reuters) – The United States should  let some big troubled banks fail rather than commit more  federal funds to prop them up, two key congressional  Republicans said yesterday.

Richard Shelby
Richard Shelby

Senator Richard Shelby, top Republican on the Banking  Committee, said the United States should not mimic Japan, which  in the 1990s propped up failing banks and prolonged its  economic downturn.

“Close them down, get them out of business. If they’re  dead, they ought to be buried,” Shelby told ABC’s “This Week”  program. “We bury the small banks. We’ve got to bury some big  ones and send a strong message to the market.”

Financial authorities have been under increasing fire as  hundreds of billions of dollars of loans and capital infusions  into distressed institutions have failed to halt the economic  downturn, which has only accelerated in recent weeks.

Senator John McCain, who remains a Republican leader after  losing the 2008 White House race to President Barack Obama,  criticized the new administration’s response to the banks.

“I don’t think they made the hard decision and that is to  let these banks fail,” McCain told “Fox News Sunday.”

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