The government is to take over not only defaulting financial companies but those “in danger of default”. Five conditions are listed to define default and in-danger-of-default. Two are straightforward—the company will be filing for bankruptcy shortly or its board or shareholders agree to a government takeover.
The other three conditions allow the government to take over even when a company is not filing for bankruptcy and its board/shareholders do not consent. What it means is that the secretary of the Treasury can decide that a company is about to collapse even if it does not look that way to other people.
Wrap your arms around that. The Secretary of Treasury can take over any company they deem "too big to fail" and do with it as they please.
Maybe if the government stops summarily approving mergers and acquisitions we wouldn't have this problem.
ReplyDeleteWe have an anti-trust act, use it.
mark it down, AG. I agree. Also, though, I'd say the more I think about it, the more I think that Glass Steagall must also be put back in.
ReplyDeleteIt's not merely size but scope. By that I mean these financial behemoths that can do all parts of financial service and something like a Citigroup: a bank, an invesmtent company, insurance, and real estate, is too big to fail because its tentacles are everywhere.