Instead of going away, “Too Big To Fail” is expanding:
It was no surprise that the Financial Stability Oversight Council (FSOC) decided last week to cite a number of nonbank firms as systemically significant, placing them in line for greater regulatory scrutiny by the Federal Reserve. What was a surprise is that — in the midst of a huge outcry in Congress about banks that are too big to fail (TBTF) — neither Congress nor the administration asked the FSOC to stop the designation process until the too-big-to-fail issue had been fully thought through. After all, by designating some nonbanks firms as TBTF — GE Capital, AIG, and Prudential Insurance are in the group — the FSOC has created a whole new set of institutions that will now be considered TBTF. [via The American]
America move from entrepreneurial capitalism to state crony capitalism continues step-by-step.