Arthur Levitt: We Need An Orderly Way To Let Companies Fail

ft.com:

Financial policymakers focused on rewriting the rulebook for financial markets have spent months debating issues related to consumer protections, systemic risk regulation and regulatory co-ordination. But none of these is as important as what to do when a large financial institution is failing.

Read the whole story: ft.com

Comments

[GreyWolfSC]

Just stand out of the way and let them fall over. It's not that hard.

[research]

Easy, Nationalize, reorganize, privatize.

But nothing will help as long as CDS insurance is legal.

The derivatives market grew from 10% of the market, to 10 times the market in just ten years since the unregulated of CDS.

CDS's are investment insurance on assets you don't even own.

Really, read up. Off track betting. Backed by the TARP taxpayers.

Outlaw derivatives, force the Banksters to invest in main street,

Prosecute the Bankster for Fraud, FBI?

See my profile for details and links.

[sonofsamphm1c]

When it comes to companies posing systemic risk, nationalizing would cost significantly more than bailing them out.

Bailing them out is a much better approach than some seem to realize.

The FDIC effectively nationalizes small banks - nationalize, organize (taking on deal breaker assets), privatize. They're broke after 100, and they have, in their desperate search for private buyers, made some "too big to fail" financial institutions bigger yet. According to the theory of failure being good, the best way, the FDIC should be in the graveyard - busted.

CDS are very useful and the economy would seize if they were eliminated. They need to be better regulated, but all reports are that Geithner's reforms while at the NY Fed have resulted in a problem-free CDS market this year.

[research]

Berneke, is that you?

You are blind.

You have fallen for a mirage.

CDS lack reserves, you know this, you probably love it, and use it as additional leverage.

I want to take your toys away, and leave you no choice but to invest in main street.

[Gernuser]

Congratulations to to Obama for winning the Nobel Peace Prize

If you like finance & econ news you'll like: http://pie.im/af30

Obama needs to carry out actual heath care & financial reform. Needs to get things done instead of just talking and planning.

[dadw5boys]

We had 70 years of Financial Laws that protected Americans but Republicans could not let Americans enjoy Financial Secuirty they had to rob them .

[MyTalkRadiou]

Obama needs to do actual reform instead of just talk & plan

good articles: http://br.st/tU

~~

[dadw5boys]

Did you miss the fact that Obama is the President not Congress. He signs laws or vetoes them past that recommending actions is all he cal do.

Call up the RNC and tell them to stop the lobbyist from fighting the banking reform .

Also thell the Republicans to stop nlocking appointments.

[Philclock]

It's called bankruptcy...

[blueken]

It's really very simple. The government comes in, fires all the executives, takes over thier portfolio and opens for business the next day. That's it. The sky ain't going to fall. We take the hit on the toxic assets, we would anyway. Government bean counters look for any evidence of wrong doing and turn it over to the attorny general. They do it to banks all the time. No credit melt down. The Fed has been conned by fat cat CEO's into thinking we can't do without them. I'm pretty sure we can. I for one would like to give it a try.

[sonofsamphm1c]

Except, there was a credit meltdown, and a stunning loss of 13 trillion in wealth.

The FDIC is broke after 100 piddling banks. That would be like the equivalent of cleaning up the ashtrays at Citigroup.

[Tyler-Durden]

screw this guy. the people pushed out of their homes aren't getting an orderly way out. someone comes and locks the door.

the same should apply here.

[isolow]

1. Lock doors

2. Sell assets

pretty orderly...

[Artos]

By orderly I think what they mean is controllable, the ability to pick and choose who gets help and who doesn't and depending on the point of view of those with the power to make those choices. Isn't that what they did already with Lehman versus Goldman. Isn't that what they did in choosing to help Wall Street versus Main Street. Even now the declined of the Mortgage market is continuing. It is more gradual now than earlier but still happening. When you are staring failure in the face it's always nice to know you can slow it down to a pace that still allows you room to win another election. This isn't just a jab at our Present
Administration because the last one actually set up these parameters. I think this is just how Politicians operate as a matter of course.

[sonofsamphm1c]

Orderly means doing it in a way that does not detonate a nuke in the financial system.

[ibsteve2u]

Why do I think that "orderly way" primarily means "no tearing of golden parachutes"?

[spinns17]

what do they want ? to let crooks on wall street pick them.lol

[lightningbolt]

We already have an orderly process for companies to fail. It's called bankruptcy.

[Spiritgirl2]

The author is right there does need to be a process in place to allow these people to fail! However, wasn't this approach put into place after Enron, WorldComm and Adelphia? All of these were billed as "isolated" incidents, and the public was assured that the others would maintain because of their own "healthy self interests"?!

Sorry, can't swallow that anymore! These people need to fail, be forced to pay back the money personally, and their property needs to be seized - maybe after a couple of real examples they might tamp down on their avarice - until then you haven't said anything!!!!

[Artos]

I think so too, let them fail and let the chips fall where they may. They made their own beds, let them lie in them. When the little people fall by the wayside they are never so compassionate. They have always preached the sink of swim philosophy to us saying that we have to take responsibility for our own actions.What happened to that, Why is it always a case of what's good for us doesn't apply to them.

[sonofsamphm1c]

At the personal level, there is nobody at AIG who can pay back 181 billion. Not individually or all added up in a group.