Are Big Banks "too Big to Fail" or "too Big to Control and Regulate?" – You Decide

Did you know that Andrew Jackson, you know that guy with the wild hair on the $20.00 bill, who supposedly “Caught the bloody British in the Town of New Orleans,” and supposedly won the war and pissed off the Indians later by taking their land and removing them from it into reservations – never wanted to wait around to see if the banks would become too big to fail?

Did he know something then that we fail to understand now?

Indeed, I bet Adam Smith would have seen what we refuse to see in Washington DC with banking lobbyists today. And now our “Too Big to Fail Doctrine” is a going to be a huge future challenge. Not long ago, Mr. Paul Krugman wrote the book “The Return to Depression Economics,” and he explained that because we have this doctrine is too big to fail, the largest banks are working very hard to grow bigger and bigger.

As they get bigger, they have an advantage over all the other banks in the market place, and they can take bigger risks knowing they are too big to fail, and the regulators have to back off, when and if they get into trouble. Paul Krugman says that this is akin to your teenage son or daughter borrowing your credit card and charging up a storm, and then not having the ability to pay. Instead of taking the credit card away from them, you simply pay the bill, and let them keep the card – telling them to “please don’t do that again.”

Well if you did this with your teenage son or daughter, do you think they will have learned their lesson? Of course not, nine times out of 10 they’ll go back and do it again knowing there are no repercussions, or penalty for charging up a storm using someone else’s money. If there is no responsibility, no punishment, or no monetary problems after, or why would they stop such behavior. You don’t have to answer, it’s a rhetorical question, but think about it for a minute.

If we allow banks to become “too big to fail” and if we continually bail them out, then eventually they will become too big to control, something that Andrew Jackson inherently understood. It is nice to know that Mr. Paul Krugman in his book makes light of this obvious fact. The notion of too big to fail doesn’t sit well with the American public, and I’m sure you’ll agree that the whole thing sounds utterly ridiculous. One might ask what happened to common sense? Please consider all this.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes in borrowing only the money you really need when constructing a new business building or home; http://www.yakimabuilders.com.

Note: All of Lance Winslow’s articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers.