Tuesday, May 15, 2012

Even the right is calling for the breakup of the too big to fail banks

I have read two articles now by conservatives calling for the break up of the too big to fail banks - Charlie Gasparino of the New York Post, and Arnold Kling of the National Review.  In the past, almost all of the calls to break them up have come from the left side of the isle, so this is interesting to me that the right is joining in as a result of the massive losses of Jamie Dimon's JPMorgan Chase.

I think the most persuasive argument for breaking up these behemoth banks is that if even Jamie Dimon can't catch his own company in the act of taking excessive risks in the derivatives markets, then there is no chance of regulators catching them - they aren't as smart as Dimon and don't have his resources. 

The point is that these organizations are way too big to regulate, but beyond that they are even too big to manage.  If the much admired Dimon can't do it, it can't be done.  

And, we all know what happens if one of these Titanic financial institutions go down, they are too big to fail and have to be bailed out by our taxpayer dollars.

Regulation will be inadequate to the task of protecting the financial industry and our tax dollars.  They won't be able to see what these labyrinthine giants  don't want them to see.  For goodness sake, the very management of these institutions aren't able to see what others in the organization don't want to be seen.  

Maybe the time has finally come to actually do it - break up the too big to fail financial institutions.