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Time to Pull Plug on 'Too Big to Fail'

Former Fed chair wants mechanisms to let 'em fail

By Polly Davis Doig,  Newser Staff

Posted Jan 31, 2010 12:53 PM CST

(Newser) – It's more than a year after Americans learned the definition of "too big to fail," and it's time to push through the reform that will save having to re-learn that painful lesson, writes Paul Volcker in the New York Times. "As things stand," writes the chair of the president’s Economic Recovery Advisory Board, big banks now know that the taxpayers will bail them out, resulting in enhanced "incentives to risk-taking and leverage, with the implication of an even more fragile financial system."

Even though many "long to return to 'business as usual,' " there "is no substitute for structural change," Volcker contends, and the government must write a "living will" for the very banks labeled too big to fail. Under the regulatory agency President Obama is seeking, "these capital market institutions would be free to innovate, to trade, to speculate—and as ordinary businesses in a capitalist economy, to fail."

White House economic adviser Paul Volcker testifies on Capitol Hill in Washington, Thursday, Sept. 24, 2009.
White House economic adviser Paul Volcker testifies on Capitol Hill in Washington, Thursday, Sept. 24, 2009.   (AP Photo/Susan Walsh)
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COMMENTS
Showing 3 of 28 comments
Fondue
Feb 1, 2010 12:38 PM CST
If it does what you would like it to do, why must it be bi-partisan?
Big_D
Feb 1, 2010 5:45 AM CST
Mixed economies are the best thing going. These countries support big and small business yet have strong consumer protections. They also have health insurance and jobs for just about everyone. This 100% free market ideal has been tried in Bolivia, Russia, Poland, Argentina etc. Chicago Boys acting on the ideals of their God Friedman turned countries into massive slums with job losses and starvation out of control. Big faceless Corporations will never reign themselves in. Never!!! It is their job to make as much money as possible and the best way to accomplish this is privatize everything, stop all government aid , end all gov. jobs and allow a country's treasures to be plundered by multinational corporations. We have done this in other countries and it is what we're doing in Iraq and soon to be doing in Haiti. I know you are not an economics major by the way you speak and don't seem to understand the very basics in Economic study. Arguing with someone that truly does not understand how a country's monetary, tax and trade systems workings is like arguing with a lamp post. I would rather my tax payer dollars go to public healthcare than in the pockets of big business in the form of corporate welfare. Why do conservatives try to dictate to everyone else how to live their lives? Really, to change the subject, why are people who are generally less educated than myself try to tell me which God to pray to and what I can't do to and with my own body? Why do you hate gays or blacks or Mexicans so much? Is it fear? All that comes from conservatives these days is really crazy talk of how much yall hate the same things and all the gay affairs your representatives get caught having with school boys and meth. ? By the way "what tha" Big Dick is absolutely correct. All things being equal that is what I'd rather be doing..------It's good to rant.-----BigD's wife
Big_D
Feb 1, 2010 5:11 AM CST
@whatthe.....Everyone reading this knows that what I have posted is true, we lived through this shit. It only upsets you so much because you know it's true and you are so angry because you know that you are trying to defend a lie. Now you are trying the ole “Are you going to believe me or are you going to believe your lying eyes”... Just because you say that BUSHCO was not in bed with ENRON and their CEO, don’t change the fact that; "Kenny Boy Lay", BTW, a knick name given to Lay by G. W. Bush some 20 or so years earlier when he, G.W. was a lobbyist (maybe not registered, but a lobbyist all the same, when his father was President) for ENRON. As for this: "Your childish rant about ordinary people taking advantage of a company if only the Bush administration didn't intervene"….. You made that shit up! This is what I said "If you want to deregulate business, then the laws that protect business should then be lifted and the public should be able to, rob, steal, scam, and extort money in what ever way they see fit from corporations with no retribution, just as business will surly do if there are no regulations on them." Your deliberate misquote shows that you have a problem with the truth or your reading skills are sub par. I’ll be gracious and give you the benefit of the doubt and just assume that you have a limited command of the written word. In case you can't understand what is written it means; If the citizens of our nation should not have protection from business the business should get no protection from our citizens, in other words "If it's good for the goose then it's good for the gander" I hope I cleared that up for you. Now if you noticed I didn't put this all on the Bushes and Reagan, Clinton had a lot to do with it too. Even the champion of the "free market" Alan Greenspan had to admit that the free market does not work, and it (deregulation) was the major contributor to the financial problems we now face. The Free Market is a license to steal for business......P.S. Not even close on my finances.

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