To put the blame on shareholders is typical for Washington. Their argument is that's not Congress's fault if these companies believed that the US would stand behind the promises they made.
If this rule passes, these companies will find it harder to remain profitable.
* * * * * J B K * * * * *
San Francisco
March 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said any mechanism to dismantle firms deemed too big to fail must avoid disruptions to the financial system while imposing costs on shareholders and creditors, not taxpayers.
"Market participants must be convinced that if one of these firms is unable to meet its obligations, its shareholders, creditors and counterparties will not be protected from losses by government action," he said two days ago in a speech in Orlando, Florida. "We need an alternative for resolving failing firms that is neither a disorderly bankruptcy nor a bailout."
Congress is considering a resolution mechanism for large, complex firms as part of the most sweeping overhaul of the financial regulatory system since the Great Depression. The changes are intended to prevent a repeat of the crisis that prompted bailouts such as the $182.3 billion rescue of insurer American International Group Inc., in which the Fed took part.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aOok1960967g
