Still Too Big To Fail

April 27th, 2010

By Tom Carter

Financial regulatory reform is struggling in Congress, like most everything else this constipated institution deals with.  A big issue is whether the proposed legislation will prevent future massive bailouts of financial institutions.  Supporters say it will; opponents say it won’t.  Naturally.

Now we have President Obama promoting the bill and saying “…a vote for reform is a vote to put a stop to taxpayer-funded bailouts.  That’s the truth.  End of story.  And nobody should be fooled in this debate.”

But wait.  In the days following that statement, two paragons of mainstream media liberalism stated the exact opposite.

Adam Davidson of NPR said:

A vote for reform is a vote to put a stop to taxpayer-funded bailouts,” Obama said in his speech in New York on Thursday.

I cannot find any experts — of any party — who are willing to agree with Obama on this one.

And The New York Times reported:

Too big to fail is alive and well, alas. Indeed, several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important. Instead of reducing the number of behemoth firms assigned this special status, the bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet.

In commenting on this absurd situation, Tom Bevan at Real Clear Politics wrote:

Two points worth making. First, as a policy matter, this is no small discrepancy between the President of the United States and two news organizations. …

Someone is clearly wrong. Why hasn’t anyone from the White House press corps followed up and asked the President to address the issues raised by NPR and the NYT and to either lay out evidence supporting his claim or force him to retract it?

Point two: as a political matter, this is where we end up when we have a President who relies so heavily on rhetorical tricks and demagoguery to make his case — as Obama did Thursday by declaring any opposing viewpoint to his as “illegitimate.” …

The President used this tactic repeatedly during the year long health care debate.  And we’re now learning that at least some of the criticisms of his plan, which he dismissed at the time as “illegitimate,” were well grounded in reality (See here, here, here, here, and here for a recent sampling of stories).

Bevan is too hard on the President.  He’s a politician selling a policy, like they all do.  George W. Bush and his predecessors were no different.  It seems that even those who don’t support Obama have at least subconsciously bought into the idea that he’s some kind of messiah who shouldn’t behave like a politician.

I have no idea what the truth is, and I suspect most other people don’t, either.  The one thing I’m sure of is that I don’t want to see my tax dollars thrown away in future bailouts.  There’s a lot of conflicting opinion on whether the bailouts of financial institutions and other businesses actually accomplished much.  I’d prefer to see the classic free market approach — businesses that fail die out, and other, more efficient businesses replace them.  But that’s just me.

One thing is for sure:  Exhausted as we may be after the health care reform debate, it ain’t over.  Now it’s financial regulatory reform, and pretty soon it’s going to be immigration reform.  Hunker down and hold on to your wallets!

Articles written by
Tags: , , ,
Categories: Economics, Media, News, Politics | Comments (1) | Home

Bookmark and Share

One Response to “Still Too Big To Fail”

  1. Brianna |

    The problem with the idea of “too big to fail” is that in the end, relying on the government to bail out the bad banks turns the only entity that is truly “too big to fail” into Washington D.C. The reason government is supposed to let businesses fail on their own is because it is better to lose a business enterprise, even a big one like GM or AIG, than it is to lose the government to excessive bailing out of such institutions. Let the government try to bail out industry too many times, and eventually it will run out of money, which it has to get from either taxes, borrowing, or printing. Taking too much in taxes eventually lowers net revenue taken in, borrowing can only be carried on for so long (I’m looking at you, Greece) and printing only works temporarily, because the purchasing power of the money printed eventually declines as the economy adjusts to the change in the currency supply. Once these solutions have been exhausted, not only will the firms once deemed “too big to fail” fail anyway, but Washington will simply fail right along with them.

Leave a Comment

(To avoid spam, comments with three or more links will be held for moderation and approval.)


Recent Posts





Creative Commons License;   

The work on Opinion Forum   
is licensed under a   
Creative Commons Attribution   
3.0 Unported License

Support Military Families 

   Political Blogs - BlogCatalog Blog Directory

Listed in LS Blogs the Blog Directory and Blog Search Engine  

Demand Media

Copyright 2024 Opinion Forum