Financial Reform: Republicans want to remove one of the best parts

During the financial crisis, there was a phrase seared into the collective consciousness of the population:too big to fail. The notion that the failure of a particular company or business would lead so such catastrophe, it must be saved at all costs.

There are really only four ways to deal with the problem of "too big to fail":

1. Let it fall anyway. That was tried during the run up to the Great Depression. Didn't work out so well.
2. Bail it out. We did that in 2008' and yeah, the financial system was saved, but the people who helped ruin the economy elated away with their millions of dollars in bonuses, and the financial organizations have no disincentive to act like addicted gambler's with Grandma's retirement money.
3. Make being too big illegal. I personally like this one. You basically expand the monopoly laws to encompass "too big". If a company is too big, you break it up into smaller pieces that have to compete with each other. This insures that the government, which is answerable to the populace at large and not just those rich enough to buy shares, is always much more powerful than the business community. It also has a tendency to make Republican heads explode.
4. Create procedures to shutndown a "too big to fail bank" safely. I rather like this one too. It's also the way the current financial bill works.

Right now, the FDIC exists to make sure that is a bank fails, that the people with accounts in the bank (checking and saving accounts, CDs, etc) still get their money. Basically the FDIC swoops in, takes control of the bank, insures the accounts and gives them to a responsible bank. Usually this takes 48 hours for the transfer to occur, and then the cleanup goes from there.

During the financial collapse, there were plans to take over a giant bank if need be, but the billions of dollars-and the will to use such plans- wasn't there.

The new financial reform bill fixes that. It would set up a banking industry paid for fund of $50 billion dollars and procedures that, should a "too big to fail" bank is about to fail, the answer is "guess what? You're not too big after all. We're taking your assets, firing your management, your investors who encouraged your bad behavior get *nothing*, your customers with checking and savings and mortgages get saved."

It creates a giant Sword of Domacles over the heads of the financial institutions that tells them "you are *not* to big to fail-and if you fail, you lose everything. There will be no more bailouts where you get to go on with business as usual at the expense of the taxpayer."

Which, naturally, is why the Republicans are now lying and calling it a "eternal bailout machine", and why Mitch McConnell is lining up every Republican to filibuster it.

Because unlike the corporate welfare systems the Republicans love, that socialism for the rich and none for the poor, the banks get the profits and the public gets the losses- the financial reform bill stops bad bank behavior. So the banks and their bought politicians will do anything to stop it.

This part of the financial reform bill must not be removed. It must be kept in so big banks know they are not "too big to fail". Sadly, there's word that President Obama will let that part be removed to get Republicans on board.

That would be a horrible idea, and I hope both the President and the Congress fight to keep that part in. Because it's too important.