To Big To Fail banks should not be downsized

[Indy]

[Kane]

[Sazari]

[Indy]

[Indy]

The fundamental problem is that the banks own the agencies/regulators that are supposed to watch over them, and had their cronies in congress repeal laws that had served us well since the 30s.

That means nobody is watching over them, which was more than apparent if you watched 60 MInutes last night telling the story about all the fraud at Lehman (which started this whole thing) that went absolutely unpunished.

Politicians can squawk all they want about how there will be no more bailouts but it's just talk--when the next crash comes they will fold like lawn chairs, as "conservative" George W. Bush did.

TBTF isn't even the best term, a better one is "too big to exist."

The banks are using their TBTF to force taxpayer backing of them, because they know they will be bailed out rather than us risk taking the entire economy down with them, even worse than before. It is, quite simply, a hostage situation. It's also putting all your economic eggs in one basket, so to speak, and do I even need to explain why that's a bad idea? Because they're TBTF, this encourages any crazy risk they want to take because they know the Fed will save them.

This socialist scheme has served them well since 2008 while we all got hosed. Removing taxpayer backing means they would have to play by the rules of "capitalism," where if you tank your business, you're done.

When you break them up you make them small enough that if one of them does something crazy, like borrow 44 dollars for every one you actually have (as reported last night) to invest in bubble schemes or, in the case of Jamie Dimon, manage to erase $7 billion dollars worth of assets because of one trader--they can do what any business would do: fail. This is called CAPITALISM.

Instead, these monstrosities hold a gun to our head every day they're allowed to exist, because when their next insane gambling scheme goes bust they must be bailed out or else everybody goes down with them. Why? Because they're... TBTF. Hence the term. NOTHING upon which our country is so dependent should be in such a state. It would be like having your entire air force at one base in the midwest--all of the planes. I assume I don't have to explain why that's a bad idea.

It's really a simple, simple concept.

[jurupa]

[jurupa]

[The dane]

There is no need to break them up, as long as the rules are changed, so we stop encouraging extreme risk.

The first such change is simple: Reinstate Glass-Steagall.

[PPark]