Perils of Gargantuan Banks
Not persuaded by my myriad argument(s) on these pages for breaking up Too Big to Fail (“TBTF”) banks?
See, “Drug Dealers vs. Bankers: Top Ten Differences”; “Number of the Week: $600 Trillion”; “THAT’S Returning to the Private Sector?!?“; “The Scorpion and the Tortoise Defense“; “Who Pardoned Wall Street?”; “A Financial Gettysburg Address“; and many, many others.
Read George Will’s case for doing just that.
That’s right: lefty-sympathizing, socialist George Will. 🙂
Capitalism ” which is, as Milton Friedman tirelessly insisted, a profit and loss system ” is subverted by TBTF, which socializes losses while leaving profits private. And which enhances the profits of those whose losses it socializes. TBTF is a double moral disaster: It creates moral hazard by encouraging risky behavior, and it delegitimizes capitalism by validating public cynicism about its risk-reward ratios.
–George Will, “Too Big to Maintain?”; The Washington Post (10/12/2012).
Will’s conversion — if you can call it that — now aligns him with former Ronald Reagan Cabinet member George Schultz (“if they’re too big to fail . . . make ’em smaller“); centrist Michigan Senator Carl Levin; and many, many other influential economists, policy wonks, and government experts.
In fact, with pundits on the left, right, and center in agreement that TBTF poses a mortal threat to our economy and democracy, exactly who’s left defending them?
Unfortunately, it would seem, just the big banks themselves — and their army of (well-paid) proxies including lobbyists, trade groups, politicians, etc.