“too big to fail” on The Daily Caller

The Huntsman plan for regulatory reform is a good effort, but it fails to come close to accomplishing the one major goal that it highlights in its summary description — “ending” too-big-to-fail (TBTF). To do this, the plan proposes a “hard cap” on bank size and would impose fees, higher deposit insurance premiums and higher capital requirements. Of these items, only size matters in the determination of whether a bank is TBTF; the fees, etc. are ways to cause a bank to reduce its size or to compensate for the risks it creates, but do not have any effect on whether it is TBTF. (more)

Kansas City Fed president Thomas Hoenig just crushed the arguments against breaking up the biggest banks. (more)

The Federal Reserve, which has the power to print money, also sets its own operating budget. That’s the wrong kind of independence. Unfortunately, recent proposals to audit the Fed do not address this issue. (more)

UPDATE – 7:20 P.M. – Sen. Olympia Snowe, Maine Republican, announced late Monday she will support the financial regulation bill, in what appears to guarantee passage of the measure into law. (more)

Senators ought to know they shouldn’t make promises they can’t keep. (more)

Senate Republicans said Tuesday that a three-paragraph amendment offered by a Democratic senator, which claims to prevent taxpayer-funded bailouts, is purely cosmetic and will have no real impact. (more)

In his recent speech on Wall Street, President Obama tried to delegitimize any criticism of his proposed financial regulations and taxes. He said, “What’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed. That makes for a good sound bite, but it’s not factually accurate. It is not true. In fact…a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story.” (more)

President Obama tried Monday to portray the Senate’s vote on financial regulation as a simple, black and white case of Republicans blocking needed progress on Wall Street reform. (more)

In a sign that a bipartisan deal is much farther away from being reached than had been thought, Senate Republicans said Monday they will likely offer an alternative comprehensive bill on financial regulatory reform if they defeat Democrats’ attempts Monday to move forward on debate with the bill as it is currently written. (more)

Key Senate Republicans said Sunday that while the financial regulation bill is headed in right direction, it is not tough enough on large financial institutions that require government intervention in case they fail, and they indicated that all 41 Republican senators will vote against a procedural motion Monday in order to gain leverage in ongoing negotiations. (more)

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After two days of angry partisan arguments in Washington over the issue of financial regulation reform, a Republican senator from Tennessee summed up the state of play. (more)

Surprise, surprise. Sen. Chris Dodd’s financial-regulation proposal raises the possibility of substantial progress on the road to ending “Too Big To Fail” (TBTF) and bailout nation for banks and other financial institutions. (more)

WASHINGTON — There is no U.S. government guarantee to protect the largest financial firms, a Treasury Department official said Thursday, as a congressional watchdog criticized the $45 billion in government aid provided to Citigroup Inc. (more)

In his recent testimony before the Senate Banking Committee, former Federal Reserve Chairman Paul Volcker said the size and activities of financial institutions should be limited and that financial institutions should be allowed to profit and fail, without any expectation of government support. Volcker’s stance was sobering; current and potential too-big-to-fail (TBTF) policies are corrupting our financial system. (more)

Since the bailout of Wall Street, the populist drum in Washington has been beating faster and louder. The outrage over executive pay is nothing new on Main Street. When taxpayer dollars used to save the skins of executives who put their companies in peril are now getting bonuses- the fury of Main Street can be understandable. In this “new normal” where many Wall Street legends like Peter Cohen are expecting a reshaping of the financial industry based on returning to an environment of a more client-oriented business, the Obama administration has set out an aggressive plan for Congress to reshape the financial system as we know it. But are they tackling the true root causes of the financial meltdown or are they pandering to populism? (more)

If AIG, the insurance giant bailed out by the U.S. government, had failed a large number of assets such as mortgage-backed securities would have lost their insurance against losses (called credit default swaps) causing their value in the market to fall. (more)

At least for the day, the most powerful man in the U.S. financial industry and for equities markets is 82 years old, a man who ended his leadership of the Federal Reserve more than 20 years ago. (more)