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As the Great Recession of 2007-08 grows more distant in the rear view mirror we are reminded that Dodd-Frank is still with us.

The Federal Reserve made big news by raising interest rates just before the end of 2015 but there was another agreement about a month earlier that didn’t get much press.

No More Bailouts

Yes the Fed decided that one bailout of big banks and insurance companies was enough. In a Reuters article by Howard Schneider it was reported that the decision to bail out the American International Group (AIG.N) and others was a bad move on their part.

You might remember that JP Morgan Chase, Citigroup and others got a $710 billion dollar gift in loans and guarantees from the Federal Reserve to keep them afloat during the crisis.

The 2010 Dodd-Frank Bill

The Dodd-Frank Bill passed in 2010 says that the Federal Reserve can no longer pick and choose who to bailout and who to let sink in future dealings.

Companies must show solvency before the Fed will be permitted to “lend” a hand.

The Federal Reserve has always been the “Lender of Last Resort” for many big companies but it would seem that with this ruling those days are coming to a swift conclusion.

Looking At 2016

As the next financial crisis rears its ugly head it will be interesting to see if the Fed will conform to these new guidelines.

Oil and the markets are slowly tanking as of this writing and it gives us pause as to the future of jobs, potential layoffs, more overseas migration of companies.

Will the Fed be able to perform its two main functions — Interest rates and control the unemployment rate?

Some Final Thoughts

I guess only time will tell. If Goldman-Sachs comes calling with their hand out we’ll quickly know the Fed’s position.

While an argument could be made for the incredible damage to rank and file depositors failing banks could cause, there is no debate that Mom and Pop on Main Street are “To Small To Save.”

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