This all sounds wonderfully tidy and neat, right? Problem is it won’t work.
The rather large fly in the ointment is that counteryparties would be concerned that putting the holding company into what Satyajit Das calls “a strange hypnotized state” would trigger cross defaults across agreements, including derivative agreements, where the holding company had guaranteed a contract.Read it at Naked Capitalism
The FDIC Continues to Promote the Fantasy That It Can Resolve Megabanks
by Yves Smith
The short version: We're screwed. The swamp monsters (systematically dangerous institutions aka SDIs) can't be killed by any ordinary means. They really are too big to fail and also too big to exist. Rock meet hard place.
2 comments:
I think Bernie Sanders came up with the only way to cut the Gordian Knot.
http://baselinescenario.com/2009/11/09/the-too-big-to-fail-too-big-to-exist-act-of-2009/
Of course this plan does requires a Tsy Sec who isn't an embedded lobbyist for Wall Street. The Secretaries from Texas (Anderson, Connally, Baker, Bentsen) know their next job is back in the oil patch and not in banking, so they tend to be the only ones willing (and, perhaps, eager) to crack down on Wall Street.
Thanks, beowulf. I had not read the bill. Very impressive drafting.
But Geithner in charge? No way. It would take a Bill Black to cut through all the FUD the banks would throw up.
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