Wednesday, September 17, 2008

"Too big to fail"

I wish I had a dollar for each time I heard the phrase that phrase recently. Well, if a bank (or now an insurance company) is "too big to fail" then it was too big. As one who hates the idea of the government getting involved in the economy I'm forced to admit that if the government is going to underwrite these big companies then it would probably be a better idea if they were forced to remain small by law.

I'm way short of an expert on banking law, but it's clear as day that legislation is a better than simply using $85bn of taxpayers' money to bail out these financial behemoths. So, I don't know how they're going to do it, but Congress has to find a way to insure that in future no company is "too big to fail". And/or at the very least the management team of a company that's "too big to fail" should be criminally negligent if they allow their company to get into such a situation.