Financial Institutions Need to Fail

Federal Officials say they must let financial institutions fail for the sake of the economy. Thomas M. Hoenig, the President of the Federal Reserve Bank of Kansas City reportedly said for economies to work best institutions must be allowed to fail.

There has been an ongoing debate as to whether the federal government should step in to save financial institutes such as Freddie Mac and Fannie Mae following the sub-prime mortgage crisis that has swept the nation.

Mr. Hoenig, explained that financial crises will happen despite any efforts to prevent them from happening. Although it is agreed that one cannot have control over everything. Many also agree that there were many things, which could have been handled differently in order to prevent the sub prime mortgage crisis. Which is why it may be wise for the federal government to step in before it worsens.