FDIC Chair - Reject the notion of Too Big to Fail

Federal Deposit Insurance Corp. Chairwoman Sheila Bair said today that government and the American people need to reject the notion that a bank is simply "too big to fail" -- a 25-year-old idea that she said "ought to be tossed into the dustbin."

Instead -- noting that bankruptcy isn't a viable option either -- Bair called for Congress to give her agency more power to close "systemically important" financial firms, expanding on the FDIC's current ability to close commercial banks.

"The past 25 years have seen vast changes in how credit is provided and in the types of firms which provide financial intermediation," Bair said this afternoon at a luncheon at the Economic Club of New York. "Unfortunately, our laws for dealing with financial crises have not kept pace with these changes."

So far this year, the FDIC has closed down 29 commercial banks. That's more than the 25 closed for all of 2008 and there are still eight months to go this year. - ABC News