“Too big to fail.” That’s what we heard from a lot of Wall Street and Washington money-changers when the economy started a precipitous nose-dive last year, and certain failed institutions were bailed out with an IOU from our grandchildren.
A few days ago the President gave Wall Street a modest tongue-lashing about executive pay, bonuses, and excessive risk-taking. He’s hinting that “the fed” - the Federal Reserve - may begin taking a more active role in looking over the bankers’ shoulders.
Heaven forbid the federal money regulators should ever have to actually REGULATE something.
Whether it’s the biggest of the big, in the “too big to fail” category (the farther down the road we get, the more it’s looking to me like we should have let them fail) or the small local bank that “buys” money from us at less than one percent (savings account) and “sells” it to us at six percent (personal loan), there’s plenty to be leery about these days.
The problem of high risk-taking has very little to do with small, local banks. And we don’t have to worry too much about local bankers taking home gazillions of dollars in bonuses. The overwhelming majority of the local banks are vital community elements that loan money to buy cars and build homes and expand businesses.
The fed doesn’t have to stick its nose too far into the business of local banks that still have things like “tellers” and “vaults” and “safe-deposit boxes”. But an Associate Press poll taken just a few days ago says 7 in 10 Americans lack confidence that the federal government has taken safeguards to prevent another financial industry melt-down.
The big outfits - the ones “too big to fail” - are still handing out bonus money hand over fist, and we still don’t have anywhere near a clear picture of exactly what they did with those billions we gave them a few months ago.
One of the main problems now associated with the fed actually starting to regulate something, is the current climate of anti-government noise being made by the tea-baggers and their ilk. Should, God forbid, President Obama suggest that the fed should actually police the pay and bonus policies of these “too big to fail” financial behemoths, the sloganeers will wail about “big government” interfering with private enterprise.
Never mind that while these “too big to fail” outfits are showing strong signs of prosperity again, millions of regular folks are still dealing with extremely high unemployment rates, record numbers of home foreclosures, medical-bill bankruptcy, and retirement portfolios that went down the drain when the financial house of cards collapsed.
It’s been just over a year since the Lehman Brothers financial firm failed, and didn’t get bailed out - the largest bankruptcy in US history. I’m beginning to be convinced we should have let nature take its course with a few other “too big to fail” financial houses.