"Too Big To Fail" No More?

Sheila Bair, head of the FDIC, has some interesting things to say here about how we should regulate and insure the various financial institutions that have become "too big to fail." As she says, nothing should ever be too big and unregulated to fail. Here's hoping a system can be devised that closely approaches "the end of 'too big to fail,'" which is probably a phrase we'll have to retire all too soon in any case, as the expense of continually bailing out the rich and powerful very likely will become too high to sustain, especially as the needs of the increasingly poor and dispossessed populace will require greater attention to prevent vast instability . . .

Also, I encourage you to listen to this interview of Elizabeth Warren (MP3), who is one of my favorite economists. She's currently heading up the Congressional Oversight Panel (WikiP) that's supposed to expose what's done with the TARP monies. It's a fascinating listen. The most significant thing I gleened from this is that (1) we overpaid for the preferred stock (which has since been converted to common stock in such a way that even more money was lost) that was bought with TARP funds and (2) we overpaid more for the stock of banks that were in bigger trouble (like Citibank and Bank of America) than we overpaid for banks that are relatively sound for the moment. Basically, the "capitol injection" plan that was implemented by the purchase of preferred stock (since converted to common stock) in banks was actually used as a back-door way to hand more "free" money to the banks in the most trouble, but to do it in such a way that no one could tell from the purchase (without careful analysis that couldn't be done quickly) which banks were getting the most money from the deal and which were getting the least, presumably to conceal from nervous investors that some banks were in a lot more trouble than others.

How long will vast amounts of taxpayer funds be given away to the largest and most irresponsible corporations (supposedly to "save the economy")? How much more of our public assets must be handed to the wealthiest before we downsize and break-up these corporate interests so as to really begin to salvage the economy and help average people in helping us all to rebuild it on a firmer foundation? The current tempest in a teapot is actually small potatoes compared to the real scandal of overpayment going on here . . .