Criminal defense in Austin Texas.

Too Big To Fail

Posted By on February 11, 2009

NYT says that the so-called “stress tests” the Feds are considering, “could be used not only to determine which large banks would receive additional aid but also to help weed out small, unhealthy banks, hastening consolidation in the industry.”

It goes on to speculate about the vast sums of money the most poorly-run, biggest banks are about to receive.

Salman Khan (whose videos on the banking system are well-worth watching), suggested getting rid of the insolvent banks altogether, and using the money we’re currently using to prop them up to start new ones.

I think he’s on to something.  Entirely aside from the moral hazard issue, which nobody cares about anymore, I don’t understand why anybody would want to make the big banks bigger.  Isn’t it the size of those behemoths that got us here in the first place?

Why make the banks that are “too big to fail” even bigger?


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