Stop Too Big To Fail
... if you want to stop the next crisis.
12:05 PM, Feb 12, 2010 • By MATTHEW CONTINETTI
"It was not so much deregulation that caused the crisis," Niall Ferguson wrote in his 2009 report "Too Big To Live," "as excessive concentration, combined with regulatory capture or regulatory arbitrage as the big banks schmoozed their supposed supervisors or shopped around for the softest touch."
More than a year after the global financial system stood on the edge of collapse, what has been done to break apart the major banks? Who is following Paul Volcker's recent recommendations in the New York Times? Financial regulatory reform is at an impasse; Barney Frank's legislation passed the House on a party-line vote in December; in the Senate, Chris Dodd hit a roadblock in negotiations with Richard Shelby, and is now trying to negotiate a bipartisan agreement with Bob Corker instead. Even if Dodd and Corker's bill passes in committee, however, there is no guarantee it will pass the Senate -- Harry Reid could always decide to replace it with his own legislation!
Step one in reforming the financial system is ending the explicit and implicit taxpayer guarantees that give banks the incentive to grow to dangerous size. Sam Zamarippa, who heads the new group Stop Too Big to Fail, shares his thoughts on the subject at the Daily Caller. Quote:
The opportunity exists for a left-right coalition to break the mega-banks and separate investment banking from commercial banking. John McCain and Maria Cantwell have taken the first step. The next is for conservatives to seek out other center-left populists in the Congress on this and similar legislation. It would be nice if the president helped, too.