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Too Big For What?

March 9, 2010

from Baseline:

Geithner insists, according to John Cassidy, that the Obama administration has “proposed the biggest regulatory overhaul in seventy-five years.”  This is the worst conceit.  The sad and unfortunate truth is quite the opposite – because Mr. Geithner and his colleagues refused to seize the moment and didn’t break the economic and political power of anyone who mattered, they have doomed us to re-run the same horrible credit loop as before.  Legislation may tweak the details, but the regulation and control of systemic risk remains just as weak as before.

Is the Secretary of the Treasury completely unaware that our biggest banks have become even bigger?  Why does he send out Herb Allison, long-time Merrill Lynch executive, and now an Assistant Secretary to say the US government has “no too big to fail bailout policy,” when this is patently not true?  Why has he reshaped the details of the “Volcker Rules” so they are now meaningless?

In truth, “too big to fail” is not the worst thing we should fear – our financial institutions are now on their way to becoming “too big to save”.

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