'Too Big to Fail' Doctrine Must End: FDIC's Bair

Ending the idea that large financial institutions are “too big to fail” is a top priority under the Obama administration’s regulatory reform proposal, said Sheila Bair, chairman of the Federal Deposit Insurance Corp.

“Clearly, there has been moral hazard and lack of market discipline fed by the 'too big to fail' doctrine, and this in turn has been fed by the lack of resolution mechanism that really works for very large financial organizations and this has been a central focus of ours,” Bair said in an interview on CNBC.

President Barack Obama's sweeping plan to reform financial regulation, which was unveiled on Wednesday, included a proposal to make the FDIC the resolution authority responsible for unwinding troubled financial firms.

“[The FDIC] is guaranteeing over $6 trillion right now,” she said. “The FDIC has tremendous exposure to the system so we would like a real say on systemic risk issues. [Reform overhaul] is an institutional issue, not a turf issue or a personality issue.”

Misleading title.

“We suggest that for very large financial organizations including bank holding companies, Congress should consider creating a fund—just as we do with a deposit insurance fund–that could be set up [for firms] that have risk-based assessments," she said. "So if an institution is extremely large, interconnected or imposes a risk to the system—they would pay a higher assessment.”

The asinine "too big to fail" doctrine is in no way being threatened by BO et al. In fact, they are taking the TBTF doctrine to the next level, by enumerating the defining conditions and subsequently calling for the collection of funds to make the socialization of risk official policy. TBTF doctrine (bailouts only for the super high-value) will be chiseled into law, while conditions are put in place to prevent upstarts from ever getting TBTF. Goldman Sachs and the rest of the gang are gaining guaranteed future market share in return for a fee, all while the sheeple are led to believe it is being done for our own protection.

Goldman Sachs and the rest of the gang are gaining guaranteed future market share in return for a fee, all while the sheeple are led to believe it is being done for our own protection.

If the text books weren't rewritten by leftists this would be textbook fascism. But for the last 40 years fascism=right wing. The lemmings have no idea what's coming.

A financial institution that is “too big to fail”, should be considered too big to be allowed to continue, and ordered broken up into lots of little pieces.

If Uncle Sam is going to guarantee an institution, it should dictate the maximum size institution it will cover.

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