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post #1 of 22 (permalink) Old 11-09-2009, 09:42 PM Thread Starter
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"Too Big to Fail" Bill introduced in Congress

I've been waiting anxiously for something like this to be proposed. I can see how priorities had to be on recovery first, but this would be a big step toward preventing another bailout situation as I see it. Hopefully this gains some serious traction and no more of our tax dollars will ever go to saving insolvent banks again.

UPDATE 2-Big bank break-up idea gains ground in Congress | Reuters

WASHINGTON, Nov 6 (Reuters) - An independent U.S. senator on Friday introduced a bill that would give the government the power to identify and break up financial firms that are "too big to fail," an idea that is catching on.

"If an institution is too big to fail, it is too big to exist," said Senator Bernie Sanders in a statement.

It would give a new government systemic risk council break-up power, with clearance from the president.

"It's the natural action of capital to grow and exceed. Now we're going to contain it," Kanjorski told CNBC television.

He said large banks oppose his amendment because it would threaten them. But, he said, mid-sized and smaller financial institutions would be helped by it because they would be better able to compete if mega-firms were downsized.
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post #2 of 22 (permalink) Old 11-09-2009, 10:35 PM
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Meanwhile in related news, special interests and lobbyists open up their wallets while Rush browbeats the Republicans into readying their 'nay' buttons.

"Never attribute to malice that which can be adequately explained by stupidity."

10/11 - 24, Smote on Feb 13
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post #3 of 22 (permalink) Old 11-10-2009, 02:57 PM
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How about a bill that says that the government doesn't have the authority to bail out private companies with taxpayer funds.
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post #4 of 22 (permalink) Old 11-10-2009, 05:49 PM
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A level playing field would mean more players. So having one big institution failing wouldn't have such a dramatic effect. And government regulations put on lending and trading could have stopped a lot of stuff. So a bill to not allow bail-outs wouldn't be needed if we don't rely on free market alone.
post #5 of 22 (permalink) Old 11-10-2009, 06:00 PM
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How about a bill that says companies can't grow to such a size that they NEED to be bailed out to prevent an economic collapse?

Oh wait...

"Never attribute to malice that which can be adequately explained by stupidity."

10/11 - 24, Smote on Feb 13
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post #6 of 22 (permalink) Old 11-10-2009, 07:08 PM Thread Starter
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Originally Posted by MunkySpunk View Post
How about a bill that says companies can't grow to such a size that they NEED to be bailed out to prevent an economic collapse?
Yup. If we're to believe what we were told at the time, letting these institutions fail would have been catastrophic. I'm no economist but it doesn't seem that unrealistic, and I'm not one to let my principles against things like this get in the way of preventing a full blown depression.

If you look at companies like the auto makers that also got bailed out, I'd like to think that they would have been allowed to fail if the economy had otherwise been sound and could have more easily absorbed that kind of loss.
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post #7 of 22 (permalink) Old 11-10-2009, 07:13 PM Thread Starter
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And government regulations put on lending and trading could have stopped a lot of stuff.
I'm still waiting for more of this to be introduced too...
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post #8 of 22 (permalink) Old 11-10-2009, 09:42 PM
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Why would they limit it to financial firms? What if other companies make bad choices and fail? Wouldn't we want to control that as well? Why just pick on the financial firms?

Lots of other companies would have a sever impact if they failed as well. The government should immediately take managerial control of all companies that are too big to fail and break them up.

Let's start with these:

1. General Electric
2. Wal-Mart
3. Exxon
4. GM
5. Ford
6. CVS
7. Kroger
8. Home Depot
9. Pepsico
10. Boeing

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post #9 of 22 (permalink) Old 11-11-2009, 10:40 AM
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Originally Posted by Brimstone View Post
Why would they limit it to financial firms? What if other companies make bad choices and fail? Wouldn't we want to control that as well? Why just pick on the financial firms?

Lots of other companies would have a sever impact if they failed as well. The government should immediately take managerial control of all companies that are too big to fail and break them up.

Let's start with these:

1. General Electric
2. Wal-Mart
3. Exxon
4. GM
5. Ford
6. CVS
7. Kroger
8. Home Depot
9. Pepsico
10. Boeing
Get a clue.

Those are all small-time companies with the possible exception of GE and Wal-Mart when compared to the companies this bill is dealing with. Half of those are regional companies and not very big to begin with. All of them have competitors waiting to swoop in and pick up the pieces of their business.

None of those are too big to fail on their own. And none of them are anywhere near the size and have their fingers in half the markets AIG does.

I don't shop at pretty much any of them and I do fine.

I'd like to see Wal-Mart collapse. We could watch the bottom fall out of the Asian child labor factories.

"Never attribute to malice that which can be adequately explained by stupidity."

10/11 - 24, Smote on Feb 13
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post #10 of 22 (permalink) Old 11-11-2009, 11:07 AM
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