Bloomberg reported that the FDIC wants greater oversight over investment banks.  Additionally, they want a orderly system in place to close them if they become insolvent.  Why?  The FDIC argues if these banks are given bridge loans from the Fed they should be subject to FDIC rules and regulations.  The FDIC position comes from the Fed bail out of Bear Stearns.

As a side note an analysist speaking on Bloomberg  yesterday stated that JP Morgan’s take over of Bear Stearns at $10.00 per share was probably over valued by $8.00 per share.  Thus, the Fed backed a bad deal, in-other-words the taxpayers backed a bad bail out.  The Fed and other pudets will argue that if the Fed had not taken action other investment banks would have failed.Â