No Company Should Be Too Big to Fail
According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just "too big to fail." Fed Chairman Ben Bernanke uses a different euphemism: he calls them "systemically critical." The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up.
We're hearing the same argument elsewhere in Washington for saving General Motors. It's just "too big to fail." So members of Congress are considering a bailout that would keep GM afloat and sweeten a merger between GM and Chrysler.
Pardon me for asking, but if a company is too big to fail, maybe just maybe it's too big, period.
We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? They were used on behemoths like the Standard Oil Trust at the start of the last century, and subsequently AT&T. They broke up giant concentrations of economic and political power.
But somewhere along the line antitrust laws started to narrow. Policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.
We seem to have forgotten that the original purpose of antitrust was also to prevent companies from becoming too powerful -- not just in the narrow sense of keeping consumer prices too high, but too powerful in a larger sense. Too powerful in that so many other companies depended on them, so many jobs turned on them, and so many consumers or investors or depositors needed them that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence of a sort that might gain them extra favors from Washington.
Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies. They've prodded Bank of America to take over Merrill-Lynch and Countrywide. They've pushed JP Morgan to acquire Washington Mutual and Bear Stearns. And now they're quietly urging General Motors to absorb
Chrysler.
Policymakers assume that these moves will make the consolidated companies less susceptible to economic stresses. They don't seem to see the consolidated companies will become even more powerful.
We're ending up with even bigger giants, with even more power over the economy and politics. They're already subsidized by taxpayers, and they'll continue to get taxpayer help whenever they get into trouble. In short, they're guaranteed never to fail because they're just ... too big!
We are at a crossroads
This country and this world are at a monumental crossroads. In a few short weeks, US voters will have an opportunity to beat back the forces of fascism and confront the billionaires who are rigging the economy, our media system, and our democracy, making it increasingly impossible for ordinary people to get by. We’re not just talking about the election. We’re talking about what must be done once these fascist elements are vanquished from power. We need a bolder set of solutions than what either major party has so far been willing to offer and a working-class movement ready to fight like hell for it. Trump didn't emerge from nowhere. The conditions that fueled MAGA authoritarianism were created by decades of radical neoliberal economic policies and a corrupt political system dominated by corporate interests. They slashed taxes on the super-rich, promising that the benefits would trickle down. They said giveaways to the corporate titans would make life more affordable for the rest of us. It was all bullshit. And when a bitter, betrayed populace searches for someone to blame, right-wing demagogues have little trouble finding scapegoats. People know when they're being lied to, but you won't hear any of this from the corporate media. Only independent journalism—powered and funded by people who believe in building a better world—can deliver truly trustworthy daily news. Our Fall Campaign is underway, and we need your help. To power our newsroom through the rest of the year, we need to raise $125,000 by midnight on October 31. So if you share our vision, please contribute whatever you can to sustain our work. |
According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just "too big to fail." Fed Chairman Ben Bernanke uses a different euphemism: he calls them "systemically critical." The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up.
We're hearing the same argument elsewhere in Washington for saving General Motors. It's just "too big to fail." So members of Congress are considering a bailout that would keep GM afloat and sweeten a merger between GM and Chrysler.
Pardon me for asking, but if a company is too big to fail, maybe just maybe it's too big, period.
We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? They were used on behemoths like the Standard Oil Trust at the start of the last century, and subsequently AT&T. They broke up giant concentrations of economic and political power.
But somewhere along the line antitrust laws started to narrow. Policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.
We seem to have forgotten that the original purpose of antitrust was also to prevent companies from becoming too powerful -- not just in the narrow sense of keeping consumer prices too high, but too powerful in a larger sense. Too powerful in that so many other companies depended on them, so many jobs turned on them, and so many consumers or investors or depositors needed them that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence of a sort that might gain them extra favors from Washington.
Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies. They've prodded Bank of America to take over Merrill-Lynch and Countrywide. They've pushed JP Morgan to acquire Washington Mutual and Bear Stearns. And now they're quietly urging General Motors to absorb
Chrysler.
Policymakers assume that these moves will make the consolidated companies less susceptible to economic stresses. They don't seem to see the consolidated companies will become even more powerful.
We're ending up with even bigger giants, with even more power over the economy and politics. They're already subsidized by taxpayers, and they'll continue to get taxpayer help whenever they get into trouble. In short, they're guaranteed never to fail because they're just ... too big!
According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just "too big to fail." Fed Chairman Ben Bernanke uses a different euphemism: he calls them "systemically critical." The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up.
We're hearing the same argument elsewhere in Washington for saving General Motors. It's just "too big to fail." So members of Congress are considering a bailout that would keep GM afloat and sweeten a merger between GM and Chrysler.
Pardon me for asking, but if a company is too big to fail, maybe just maybe it's too big, period.
We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? They were used on behemoths like the Standard Oil Trust at the start of the last century, and subsequently AT&T. They broke up giant concentrations of economic and political power.
But somewhere along the line antitrust laws started to narrow. Policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.
We seem to have forgotten that the original purpose of antitrust was also to prevent companies from becoming too powerful -- not just in the narrow sense of keeping consumer prices too high, but too powerful in a larger sense. Too powerful in that so many other companies depended on them, so many jobs turned on them, and so many consumers or investors or depositors needed them that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence of a sort that might gain them extra favors from Washington.
Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies. They've prodded Bank of America to take over Merrill-Lynch and Countrywide. They've pushed JP Morgan to acquire Washington Mutual and Bear Stearns. And now they're quietly urging General Motors to absorb
Chrysler.
Policymakers assume that these moves will make the consolidated companies less susceptible to economic stresses. They don't seem to see the consolidated companies will become even more powerful.
We're ending up with even bigger giants, with even more power over the economy and politics. They're already subsidized by taxpayers, and they'll continue to get taxpayer help whenever they get into trouble. In short, they're guaranteed never to fail because they're just ... too big!