WASHINGTON (Reuters) - Congress should consider if it is time to step in and stop American banks from becoming too large to fail, the head of the Federal Deposit Insurance Corp. told “60 Minutes” in an interview to be broadcast on Sunday.
“I think taxpayers rightfully should ask, that if an institution has become so large that there is no alternative except for the taxpayers to provide support, should we allow so many institutions to exceed that kind of threshold?” FDIC Chairman Sheila Bair said, according to excerpts of the program released on Friday.
Bair declined to comment on specific big banks like Citigroup that have received tens of billions of dollars in taxpayer bailouts, saying only that such large institutions are “more than a bank” with vast broker-dealer and offshore operations.
The U.S. Treasury Department is running a $700 billion bailout program to help financial institutions, with the ultimate goal of unfreezing the credit markets.
Bair, whose agency has overseen 17 bank failures so far in 2009, was interviewed for a program profiling the FDIC’s recent seizure of Heritage Community Bank in Glenwood, Illinois. Before it failed, Heritage was a relatively small bank with assets of $232.9 million.
Within the last hour U.S. regulators announced another bank closure, Freedom Bank of Georgia. Freedom Bank of Georgia had $173 million assets.
In 2008, the FDIC oversaw 25 bank failures. More than 100, mostly small banks could close their doors this year, according to industry experts.