Choosing the Road to Prosperity

April 2, 2012 8:48 PM

One of the more conservative of the Fed's regional banks, the Dallas Federal Reserve, says "too-big-to-fail" banks must be broken up. Now. An interesting and important essay(pdf) from a most unlikely source.(via)
posted by AElfwine Evenstar (12 comments total)

People think of the Fed as a monolithic inside-baseball organization, but as the essay illustrates there are real and honest debates going on behind the scenes by technocrats with dramatically different viewpoints. Comparing this to the decision-making process in Congress, it's no surprise that the fiscal response to both the recession and most real social problems has been unorganized, impotent, and partisan.

This is also why we need the regional banks. This wouldn't fly in New York or the board.
posted by The Ted at 9:22 PM on April 2, 2012 [2 favorites]

Interesting report. I would have liked a bit more discussion on how they propose the TBTF banks would be broken up - would it be geographically, or would they be split into different business types?
posted by Kris10_b at 9:35 PM on April 2, 2012

Breaking up the TBTF banks would probably be as simple as reinstating the central provisions of the Glass Steagal Act-- seperate Investment Banking from Commercial Banking. I have no problem with an Investment Banker gampling with his money for his own profit. I do have a problem when he gambles with my money and I'm not seeing any of that profit.
posted by KingEdRa at 9:45 PM on April 2, 2012 [3 favorites]

Taibbi's analysis of this report: Push To End Too-Big-To-Fail Goes Mainstream
posted by mek at 10:01 PM on April 2, 2012 [1 favorite]

This is also why we need the regional banks. This wouldn't fly in New York or the board.

Yeah, I was about to say. No way would this happen in the NY Fed.
posted by delmoi at 10:24 PM on April 2, 2012

"Too Big To Fail" used to be called "Antitrust", from 1890.
posted by caclwmr4 at 11:07 PM on April 2, 2012

Well, antitrust is literally "Too Big To Fail", whereas these banks are "Too Big to Allow To Fail". Standard Oil didn't exactly need the government bailing it out.
posted by smackfu at 6:02 AM on April 3, 2012

Didn't we actually have this before. Or am I confusing Bank of America with Banc of America again?
posted by Blue_Villain at 6:58 AM on April 3, 2012

So what politician will this line benefit?
posted by bystander at 7:26 AM on April 3, 2012

Wonder how this could be effected. The idea is to do it in such a way as to not disrupt everything. You'd need legislation. Part one would require all banks to carry FDIC insurance to X amount. Part two would prohibit giving more than Y amount of FDIC insurance to any one corporate entity.
posted by Ironmouth at 7:46 AM on April 3, 2012

Fuck "not disrupting everything"! Like the fucking banks didn't disrupt EVERYTHING about our lives, finances and plans when they fucked up so badly that we all lot our jobs and they took all of our tax money? Fix the goddamned system or face the fucking guillotine.
posted by vibrotronica at 9:03 AM on April 3, 2012 [2 favorites]

So what politician will this line benefit?

I realize you may mean to ask which politician commissioned it for their benefit, but I'm going to answer what you actually asked instead.

Maybe Elisabeth Warren, if she decides to use it? She's the leading contender for the Democratic nomination against Scott Brown in .ma.us.
posted by atbash at 9:04 AM on April 3, 2012