Does “Too Big To Fail” also mean Too Big To Regulate?
Gretchen Morgenson talks with Neil Barofsky, former special inspector general for TARP (the Troubled Asset Relief Program) about his new book, Bailout:
“So much of what’s wrong with Dodd-Frank is it trusts the regulators to be completely immune to the corrupting influences of the banks,” he said in the interview. “That’s so unrealistic. Congress has to take a meat cleaver to these banks and not trust regulators to do the job with a scalpel.”
Finally, Mr. Barofsky joins the ranks of those who believe that another crisis is likely because of the failed response to this one. “Incentives are baked into the system to take advantage of it for short-term profit,” he said. “The incentives are to cheat, and cheating is profitable because there are no consequences.”
Read her piece here.
Meanwhile Gar Alperovitz finds a surprising source of support for nationalization of banks that are TBTF and TBTR:
Most liberals in Washington — President Obama included — keep hoping the banks can be more tightly controlled but otherwise left as is. That’s the theory behind the two-year-old Dodd-Frank law, which Republicans and Wall Street are still working to eviscerate.
Some economists in and around the University of Chicago, who founded the modern conservative tradition, had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was to nationalize the largest ones, which defied regulation.
Read his column here.
A trillion here, a trillion there… pretty soon you’re talking real money. The London Observer reports new estimates of the world’s offshore wealth:
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.
Read more here.
In “Capitalism Unmasked,” Econ4′s joint project with AlterNet, Edward Harrison writes on the peril to democracy posed by out-of-control credit markets:
“Corporatism masquerading as Liberty” … is a sort of crony capitalism steeped in the language of liberty that some are using to remove the protections we have built up to uphold and safeguard our individual rights. The goal of this corporatism is to give corporations the sorts of liberties that permit them to use their size, influence and money to tilt the playing field to their advantage. Absent any kind of regulatory oversight, these behemoths can run roughshod over individuals, trampling their rights and liberties in the process.
Read his piece here.
Yves Smith of Naked Capitalism and Matt Taibbi of Rolling Stone dissect the corrupt nexus between our financial system and our political system:
From the same issue of the Times, Gretchen Morgenson’s excellent piece on TBTF (too big to fail):
Reducing the perils of gargantuan institutions — and the threat to taxpayers — is an idea that seems to be taking hold in Washington. To be sure, the army arguing for change is far outgunned by the battalions of bankers and lobbyists working to maintain the status quo. But some combatants seeking reform believe they are making headway.
Read it here.