Most Popular Choices
Share on Facebook 10 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 3/19/09

Financial Giants Are Too Big to Bail, But Not Too Big to Jail

By       (Page 1 of 2 pages)   2 comments
Message George Washington
Become a Fan
  (5 fans)

Too Big Has Failed

The head of the FDIC says that the "too big to fail' strategy must end.

Similarly, Senator Leahy said "If a company is too big to fail, it is too big to exist."

And Kansas City Fed President and veteran Fed official Thomas Hoenig says:

Too big has failed....
Many of the [government's current policy revolves around the idea of] "too big to fail" .... History, however, may show us a different experience. When examining previous financial crises, both in other countries as well as the United States, large institutions have been allowed to fail. Banking authorities have been successful in placing new and more responsible managers and directions in charge and then reprivatizing them. There is also evidence suggesting that countries that have tried to avoid taking such steps have been much slower to recover, and the ultimate cost to taxpayers has been larger. ...

Even large banks can be dealt with in a way in a manner which imposes market discipline on management and stockholders, while controlling taxpayer losses....

Banking regulators need to be willing to write down losses, bring in new managers and sell off businesses if institutions can’t survive on their own, no matter what their size.
So it should be obvious that the "too big to fail" idea is wrong.

Too Big To Bail

Instead of too big to fail, the proper concept is "too big to bail".

Financial giants that are so big that bailing them out would impoverish taxpayers or bankrupt America should be allowed to go bankrupt.

Not Too Big To Jail

Moreover, a lot of the top guys at the giant financial companies should be in jail.

It is clear that many of these guys cooked their books and made fraudulent promises to investors.

And "at least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes". These guys should be in jail for non-payment of taxes (that's how they got Al Capone).

And remember that - in certain cases - too big can itself be illegal.
Specifically, criminal penalties can be imposed on companies which have violated anti-trust laws, and used their size and power to manipulate the market.

Corporations engaging in unlawful restraints of trade by price fixing, bid rigging, customer and territorial allocation agreements or other blatantly anti-competitive acts can be prosecuted for criminal violations of the Sherman Act, and can be punished by up to a $100 million dollar fine. Indeed, individuals found guilty of criminal violations under the Sherman Act can be sentenced to up to 10 years in jail and up to a $1 million dollar fine.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

George Washington Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

George Washington

As a political activist for decades, I have rejoiced in victories for the people and mourned in defeats. I chose the pen name "George Washington" because - as Washington's biographies show - he wasn't a (more...)
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Top Financial Experts Say World War 3 Is Coming -- Unless We Stop It

Indonesian Health Minister Says Swine Flu Might Have Been Man-Made | Epidemiologists and Virologists Need to Weigh In

Obama Is Considering Doing Something Even Bush Didn't Try: "Preventive Detention" of People Who Will Never Get a Trial

How To Solve the Economic Crisis

The Four Reasons the Mainstream Media Is Worthless

5 Reasons that Corporate Media Coverage is Pro-War

To View Comments or Join the Conversation:

Tell A Friend