Why "Too Big To Fail" Is A Government Subsidy For Mega Banks

zero hedge:

Even as Tim Geithner was boldly lying today on national TV, claiming that he abhors the concept of too big to fail, and condemns moral hazard, behind everybody's back he, together with the entire Obama administration, was trying to pass a law that would shift TBTF from a temporary program into officially canonized law. This is a scandal that has gotten little recognition in most of the MSM: in essence it guarantees that the massive mega banks like Goldman Sachs, BofA, and JPM will take on so much disproportionate risk the next time around (and with a moral-hazard encouraging Federal Reserve as risk regulator virtually guarantees their implosion) that not only will they blow up spectacularly once again, but that their bailout next time around will surely force America, already strapped with trillions of new upcoming debt courtesy of stimulus after stimulus, into sovereign insolvency.

Read the whole story: zero hedge

Comments

[Ventura Co California]

07:08 PM on 11/02/2009

IF they'd actually read the stimulus instead of fear mongering it through and used a tiny bit of common sense then it would of been obvious.

So much for the bang for your buck theory.

[StickMarket]

10:03 AM on 11/02/2009

need to stop the admixure of money & politics. Time 4 the peopel to get the reform they need. heath care, education, a stable well paying job, and housing.

good articles; http://financeopinionss.blogspot.com

Lets hope Obama will succeed .

[tweedledeedumb]

08:04 AM on 11/02/2009

Insolvency...that's one way to get rid of the national debt....or get a bail out from the Chinese!

[jane8877]

08:30 PM on 11/01/2009

Did I miss the part where Bush left office and all this promised change came in?

[jmpurser]

08:50 AM on 11/02/2009

I think we all miss that. We needed a change of course and we got Captain "Steady as she goes!"

[Harrier]

06:12 PM on 11/01/2009

It was he, Ruben, Greenspan, Summers that were instrumental in creating this mess despite numerous warnings. The fact that large companies are getting money is not part of a strategy, but an outdated ideology

[POSTANDCOMMENT]

12:48 PM on 11/01/2009

NO economic recovery. REAL unemployment is DOUBLE the 'official' statistics. Government has been playing major games with all stats for a while now - both parties are to blame.

good articles http://financeopinionss.blogspot.com

[CommunistUtopia]

06:40 PM on 10/31/2009

I cannot believe that Obama sold out to this tax cheat.

[jmpurser]

08:51 AM on 11/02/2009

I don't believe he "sold out". I think we're seeing Obama's real ideology put into practice. He's in office to serve wealth and the status quo.

[karen1p]

04:15 PM on 10/31/2009

GEITHNER'S HEAD ON A STICK IN THE MIDDLE OF TOWN SQUARE

[Ventura Co California]

07:01 PM on 11/02/2009

I'll go with that.

[blimie]

12:41 PM on 10/31/2009

So what was the name of this law and hopefully Obama was not successful in getting this passed? It was not really clear to me. But per other comments Geithner not only looks like, but he is a weasle and Obama is a complete tool for the bankers.

[PhilipTaylor]

06:50 AM on 10/31/2009

Why has our President who promised the people he would "PROTECT OUR INTERESTS" NOT DONE SO on Health Care, Regulations, and Foreclosures?

Could it be that this happened to him soon after the Election like it has to other Presidents in other countries?

In walks a representative of the Corporatocracy who says:

"Congratulations Mr. President!

(Quietly) And now I just want to tell you that in this pocket I have Several Hundred Million Dollars if you play the game our way.

(even more Quietly) And in this pocket I have a gu_n with a bu11et with your name on it in case you decide to keep your campaign promises."

Confessions of an Economic Hit Man (jump to 4:25 mark for above quote - but entire video is valuable):

http://www.youtube.com/watch?v=GAqG51uwzMI&feature=PlayList&p=CFC50000766B264E&index=10&playnext=2&playnext_from=PL

[msjimmied]

12:35 AM on 10/31/2009

Timmy, Paulson, Friedman and the squid...

http://trueslant.com/matttaibbi/2009/10/30/forget-galleon-what-about-goldmans-ex-boss/

[JPMorganEmp]

11:41 PM on 10/30/2009

This is bunch of hogwash. Good job Timmy, you were great in that hearing.

[Ventura Co California]

07:03 PM on 11/02/2009

He was a joke at best.

[sposton]

09:31 PM on 10/30/2009

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done."

from 'The General Theory of Employment, Interest and Money' by John Maynard Keynes

[balancedsolution]

05:55 PM on 10/30/2009

Why is it that America lies to itself about things.

Break up the banks please.

Stop the nonsense.

The wars are over. We lost! We broke it and they'll have to fix it.

We can't even take care of our problems at home so why are we wanting to nation build over there?

Get Geithner out of there and put in Elizabeth Warren.

[iwasblindtoletyougo]

05:48 PM on 10/30/2009

REAL unemployment is DOUBLE the 'official' statistics. Government has been playing major games with all stats for a while now - both parties are to blame.

good articles to http://financeopinionss.blogspot.com

Also Barney Frank sucks.

[Daniel Guffey]

06:24 PM on 10/31/2009

The web site you linked does not appear to stand out to me other than for its exceptionally poor layout; I do find your comment about Barney Frank to be interesting. Care to elaborate?