Silence on bank closures is deafening 

“I want to talk for a few minutes with the people of the United States about banking…”

These don’t seem to be the most inspiring words one could use to open a major political speech.

But this is indeed the first sentence in Franklin Roosevelt’s famous first “Fireside Chat” in 1933, where he spoke frankly and directly via radio with the public about the Depression-era problems facing the US banking system, and described how he proposed to fight those problems.

This radio speech attracted an audience of about 60 million listeners. Despite the passage of time, it stands out as a masterpiece of clear communication on a complex topic (i.e., finance) that elected officials often fear discussing in public.

The speech is exceptional in another respect. Considering how politicians are today very happy to leave all serious discussions of economic policy to pointy-headed Federal Reserve bigwigs, there’s an admirable courage to FDR deciding to deliver the speech himself, and not farm it out to someone else.

Re-reading FDR’s speech, it’s impossible of course not think about the current state of the US banking system.

This being Friday, we will learn later today if any additional banks have been closed down by the Federal Deposit Insurance Corporation (FDIC). Friday after 5pm is when the FDIC announces the latest bank closures.

The total number of closures for this year reached 110 as of last Friday. Losses related to real estate-related loans gone bad, you can be sure, caused the vast majority of the bank closures.

These “FDIC Fridays” are usually noted only by a scattering of financial reporters and blogs.

Surprisingly (or perhaps not so surprisingly), elected officials at all levels of government seem to go mute at the thought of making any comment on the latest bank closures -- even to express regret that the closures are necessary.

This silence also extends to the question of whether more can be done to keep banks open, particularly smaller community banks.

Instead of FDR-style straight talk, the preferred approach in Washington for Republicans and Democrats alike seems to be to say nothing about bank closures.

But since when did not talking about a problem ever make it go away?

Is it a fear of speaking about financial issues generally that is holding members of Congress back from speaking out about bank closures?

If so, they ought to remember another famous FDR speech - the one where he talked about how “the only thing we have to fear is fear itself.”

The time to start speaking out about bank closures and identifying ways to keep more banks open is now.

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Neil Hrab

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