EU bank wind-up good idea for US in modified form

According to the Ethiopian Review The European Union's considering an idea that would have banks pay for a future crisis by paying into an emergency wind-up fund. While the United States has the FDIC, lacking still is a permanent bailout fund for banks. But the rub is the notion that banks would use the fund as an excuse for the same reckless policies that in part created the climate for the bank bailout.

The idea's a good one, but in a modified form. Since one problem tied to bank failure is a reduction in lending, a fund should be created to give money to community banks that would be used for consumer lending.

What's missing in the evaluation of the American banking problem is that disinvestment in the economy due to offshoring of plant and offices caused bank failure; the need is to keep a reserve that assures money will be pumped into the economy even during a crisis.

Another step should be to have some kind of automatic taxpayer assistance program that kicks in whenever unemployment reaches levels over 10 percent. The consideration here is that consumer demand drives jobs growth and so must be maintained.