If It’s Too Big to Fail, Is It Too Big to Exist?


[via The Nation – If It’s Too Big to Fail, Is It Too Big to Exist? – NYTimes.com by Eric Dash]

“But how big is too big to fail? And how would you measure it anyway? In the case of banks and giants like A.I.G. and Fannie Mae, policy makers argue that the interconnectedness of modern finance, as much as the size of the players, is the real issue. The collapse of one big financial company could cascade through the industry. In the case of General Motors and Chrysler, a failure could mean that thousands of jobs — not only at those companies, but at their suppliers as well — could evaporate.

The too-big-to-fail doctrine, sometimes called T.B.T.F., goes back at least as far as Brandeis’ time, when, in 1914, the Treasury stepped in to provide financial aid to New York City. In the 1980s, when the government rescued Continental Illinois Bank, Stewart B. McKinney, a Connecticut Congressman, declared that the government had created a new class of banks, those too big to fail. The phrase returned and stuck.”


Yes, we should find companies too big to fail, and force them to rescale: break them into smaller pieces. Enact laws to limit the size of companies.