No Special Treatment

In response to the Caretaker's remarks below about William Greider's reform plan, a few thoughts.

I think Greider's basic point is that the big investment and commercial banks, along with the other non-banking institutions like hedge funds, insurance companies, etc. were operating free of effective regulation and taking enormous risks over the past 10-20 years, primarily to make boatloads of money which they did in almost mindboggling ways. That is what they wanted, and we're all paying the price in a tanking stock market, housing market, and economy. It has rightly been called casino capitalism. Those risks went bad, and now instead of them and their shareholders/investors taking the hit, and effectively going bankrupt, as they deserve, they want the taxpayer to bail them out.

This doesn't affect all banks. Many banks are healthy, especially at the medium and smaller sizes. They did it right. (A good example that I know about is BB&T, here in North Carolina, ranked as the 11th largest bank in the U.S.) But the bigger ones like Citigroup, Bank of America, and the insurance company AIG, really blew it, and now expect to be bailed out. Well, why shouldn't they be treated like any other bank that is insolvent: be taken over by the government, and sold off to private investors. That's the way capitalism is supposed to work. Otherwise, we privatize the profit, and socialize the loss, and that is a corrupt and immoral form of economy, certainly not capitalism.

It seems to me that the big boys want special treatment, and they shouldn't get it. Otherwise, you send the wrong message to those who are tempted to engage in the same behavior in the future (so called 'moral hazard').

And from now on, no company should be allowed to get 'too big to fail.' Use anti-trust laws to keep them small enough. And the financial sector needs to be seriously regulated, to protect all consumers. Not by the bank-owned Fed, which cannot reasonably be expected to oversee the very organizations that own the Fed, but by the Treasury department and other regulatory agencies which are accountable to Congress and the President.