greedcanbgood

Break Up the Big Banks

But don't you think that regulation (and rigorous reporting) of the off balance sheet portfolios such as derivatives and credit default swaps will provide the defacto free markets influences you wish to see? Why break up a large bank or break apart the “riskier” pieces? Why not let the market decide what level of risks they are comfortable with?

Don’t get me wrong, I concur with much of your conclusions I’m just fearful of government intervention to create a market that is more “free”.

Break Up the Big Banks

Your diatribe here is fraught with contradictions but let me just pick out one:

“It goes without saying that, in a “free” economy, the government should never arbitrarily limit someone’s income. Free markets should be sufficient in themselves to discipline all pay rates, and enforce strict risk management.
But what happens if the market is not free? What happens if an oligarchic consortium takes control of the financial system? What happens when supposedly “free” markets don’t do their job because they are not really free?”

Your first premise here is that the banking industry is controlled by a handful of banks and by extension competition is limited. I challenge you to demonstrate where this is the case. Go to nearly any town in the US and right by your BofA, Wells, Citi, Chage, USB (pick your big bank here) is a small community bank who offers products/services and rates that are at least as competitive. Most of them are making money and doing well. Where’s the “oligarchic consortium”?

Your second premise (though I didn’t quote it here) is that there are no penalties when the big mucky-mucks make a mistake. Tell that to the executives of Bear, Indy and the others that essentially failed.
So you want government to make sure that there is truly a free market by taking stapes that are anti-free market? Give me a break. Look at history. Even if your oligopoly theory is true they will fail eventually. Why? Free market, baby.