As the New York Times reported today, the F.D.I.C. , experiencing its own version of a possible cash-flow bottleneck, is considering plans that to borrow funds from some of the Banks it regulates.
While this may be somewhat of a relief for tax payers, lets cut through the clutter for a second here and consider what this really means: Massive potential conflicts of interest!
Can a regulator objectively regulate when it owes money to an institution it needs to oversee?
What about: Never bite the hand that feeds you?