Who's Watching the Bankers?

One bank overseer, the Federal Deposit Insurance Corp., used to have a program qualifying supposedly stronger banks for reduced scrutiny. On the FDIC's list of failed banks -- along with IndyMac, Washington Mutual (now part of JPMorgan Chase (NYSE: JPM  ) , and many others in the past two years -- you'll find at least three lenders that qualified for this so-called Merit exam.

In its story, Bloomberg has this quote from Colleen Kelley, president of the union representing the examiners:  

Substituting Merit exams for full-scope examinations made it less likely that FDIC employees would be in a position to see if a previously strong bank was beginning to slide in the wrong direction.

How should the government use its discretion in keeping watch over banks? The Merit exams were directed at smaller banks, but regulation is increasingly top of mind as bank mergers have made the previously too-big-to-fail JPMorgan Chase, Bank of America (NYSE: BAC  ) , and Wells Fargo (NYSE: WFC  ) even bigger.

Scroll down and sound off in the comments box below about what the best way is to match the wants and needs of the public and the banks with limited government resources.