Why The Fed Is Afraid Of An Audit

From Paul Kasriel of Northern Trust, via Clusterstock:

 Today, we have federal deposit insurance. Therefore, the probabilities and magnitude of depositor runs on banks are much reduced compared with 1933. Yet, we can see “runs” by stockholders and other creditors of banks if there is a suspicion of financial problems. If the Fed is required to  publish the names of financial institutions to which it has extended credit and this publication

induces financial institutions to refrain from borrowing from the Fed, one can only speculate if this would be the tinder for another liquidity conflagration in the coming months.

And even in a worst-case scenario, letting insolvent banks fail would be a bad thing, why?

[Via http://13oclock.wordpress.com]