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Ear to the Ground

Bernanke Signals Possible End to ‘Too Big to Fail’ Era

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Posted on Nov 16, 2009
Flickr / eflon

Too big, didn’t fail: AIG was spared by last year’s bailout, but other financial giants may not share the same fate if they pose a threat to the economy.

Those financial institutions that viewed last year’s bailout as an object lesson that they can carry on as they wish so long as they’re “too big to fail” may have to adopt another approach. At least, that was the message Monday from Federal Reserve Chairman Ben Bernanke, if he makes good on words of warning to big banks.  —KA

Bloomberg:

Federal Reserve Chairman Ben S. Bernanke said regulators should have the power to shrink banks that poses risks to markets, signaling support for proposals in Congress that let the U.S. cut the size of financial companies.

“The supervisors should be allowed by law to insist that the company divest itself or shrink its activities,” Bernanke said today in response to a question after a speech to the Economic Club of New York.

Congress is considering legislation giving government the power to force the breakup of a firm that has become so large that its failure in bankruptcy could threaten the economy. Lawmakers are seeking to avoid ad hoc actions such as last year’s $700 billion bailout of large firms, including New York-based insurer American International Group Inc.

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By Howie Bledsoe, November 17, 2009 at 1:49 am Link to this comment
(Unregistered commenter)

Thanks for the lip service, Ben.

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G.Anderson's avatar

By G.Anderson, November 16, 2009 at 6:00 pm Link to this comment

It this point, what is clear, if it wasn’t clear before, is that except for a few symbolic arrests, Wall Street is in control, of the government, just as it was under Bush.

They control congress, they control the media, they control what will happen, and that means nothing will really happen to benefit the people.

The macabre, rebound of the stock market, even as more and more Americans sink into finanical destitution, amid the jubliation of the right wing republican stock borkers,(yes borkers), who continue their deviant defiance of reform.

They have hollowed out this country, and fear no retribution from the now hollowed out citizens, who wait patiently to be filled anew, with larger, and larger amounts of faux pharmiceuticals, and faux consumer products imported from our new best friend
Communist China.

But that filling is a long way off….maybe never, people may just have to get used to being hollow…

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By samosamo, November 16, 2009 at 3:13 pm Link to this comment

The reason it is a ‘possible’ way to end ‘too big to fail’ means the word has just
been put out that it just might be but probably won’t be a way to bring this
financial terrorist attack against this country under control because benanke just
needs to make it SEEM like his group are doing what is necessary to stop this
‘financial terrorist attack’ on the good ‘ole usa’ by some of the most criminally
minded traitors to this country.

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