Friday, October 16, 2009

Greenspan says break up the Banksters

One might ask where the hell Alan was when they were passing out the TARP money, but still this is significant.
U.S. regulators should consider breaking up large financial institutions considered “too big to fail,” former Federal Reserve Chairman Alan Greenspan said.

Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York.

“If they’re too big to fail, they’re too big,” Greenspan said today. “In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”
Of course, Greenspan is late to the party. Lots of people have said this already, but they were mostly those *unserious* DFH types who were so irritatingly right about Bushenomics all along. So if somebody in power actually listens to Greenspan now and acts on it, I'm willing to say, better late than never.

[More posts daily at The Detroit News]

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Blogger James' Muse said...

I whole heartedly agree with this. I mean, they broke up Microsoft for being too big. Why not the banks, who could cause a collapse of our system. Oh wait, that already happened...

6:55:00 PM  
Blogger Libby Spencer said...

I've been calling for a breakup of the banks for a long time James. I thought we should have broken them up when we bailed them out.

8:10:00 AM  
Blogger Ruth said...

Greenspan admits he let the AAA ratings go unregulated to keep from drawing attention to the problem, and believed that the ultimate disaster would be too dispersed to be really serious. So anything he says now is coming from the same sense of judgment that gave us the financial collapse. I wouldn't take his advice.

but Libby is spot on.

6:19:00 PM  
Blogger Libby Spencer said...

Remember when Greenspan was the *genius* of the Beltway. Those were good times.

9:33:00 AM  

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