At least in Baccarat you have the choice to bet with the bank or against it.
As a depositor, that is not the case and if some members of Congress have their way, taxpayers may soon be â€œbetting on the bankâ€ as the government considers taking equity positions to help buttress unstable financial institutions.
Ask anyone who has ever invested in the stock market and they will confirm that Wall Street is a lot like Las Vegas Boulevard.
Although there are similarities between banks and casinos, I canâ€™t recall the government ever offering to step in and subsidize a casino.
I am reluctant to see government get involved in privately owned businesses. In a free marketplace, competition breeds winners. Those who canâ€™t find the formula for success simply go out of business. It is sad, but I donâ€™t expect the government to bail out private companies because they were poor managers, followed an ineffective business plan or otherwise couldnâ€™t afford to keep their doors open.
The government says that they are afraid of another run on commercial banks on the scale of 1929. The fear is founded on the fact that the banks donâ€™t have enough money to sustain such a run.
Casinos, on the other hand, donâ€™t ever fear a run on the cashierâ€™s cage since they are required to have enough cash on hand to purchase every chip (check) in circulation. Before 1971, our government circulated currency that was a â€œcertificateâ€ representing gold or silver on hand in the United States Bullion Depository.
Casinos issue credit to established customers, just like banks. If a casino doesnâ€™t collect on the markers it issues, the casino takes the loss. If casinos become overly greedy to make windfall profits by extending credit to customers who are not creditworthy, like so many banks that are failing today, the casino would find themselves closing their doors for good â€“ no appeals to the FDIC or the Congress for a financial bailout.
Banks are private companies owned by stockholders; just like casinos. When they purchase their shares, bankers understand they are accepting risks. Why should they have special protection courtesy of the government?
100 year old Washington Mutual (WaMu) closed their office at Cobblestone Village earlier this year — poor lending practices finally led to their recent demise. First National Bank became The Exchange Bank which I saw acquired by Atlantic National Bank and then acquired by First Union and acquired by Wachovia. Now Wachovia admits they are in trouble and the government feels compelled to stick their noses in.
So, what is the governmentâ€™s idea for our tax dollars? Break Wachovia into pieces and let another private behemoth like Citigroup buy it for pennies on the dollar — while we guarantee their dubious sub-prime loans.
Once the offer was exposed to public scrutiny, Wells Fargo, another privately owned bank, saw the value, entered a winning bid several times the trifling offer of Citigroup; accomplishing the transaction without government subsidies. Thatâ€™s the way business transactions should be transacted.
I say let the gamblers on Wall Street be as accountable for their bad decisions as the gamblers on Las Vegas Boulevard. If they win â€“ pay the taxes on their winnings. If they lose â€“ best of luck next time.