Government Backing Away from Business
July 10, 2009
The government seems eager to be getting out of the business of bailing out banks and other large institutions, many of which have been responsible for the downturn in the global and U.S. economies.
To achieve this strategy, proposals have been put forth that restrict the size and reach of businesses that often are so interwoven and so far reaching that their failure was previously averted by any means necessary and were titled “too big to fail”.
By placing heavy, and costly, restrictions on companies that allow themselves to become “too big”, the administration hopes to compartmentalize future failures of any company so that they are unable to drag down the entire economy with them, as has happened in the past year.
This burden will hopefully make companies rethink how they operate and force them to do so in a much more controlled and legitimate manner; no longer will it be opportune to be marginally involved in many industries and become a liability if one or all of a company's divisions collapse.
The companies that decide to remain exceptionally diversified will be required to have more capital on hand in the case of a downturn and even have plans in place, should they fail, to sell off assets in a fashion that does not induce another global panic.
While there are serious questions regarding the oversight of this program and the whether the Fed should have such powers, the program in itself is a powerful tool to ensure that the global and U.S. Economies are protected from future AIGs and Citigroups, and that no more taxpayer dollars are wasted on companies “too big to fail”.
CapitolWatch supports the abandonment of sending good money after bad and believes that Members of Congress should give this program fair debate and provide a working version so that our economy can have a solid foundation on which to grow.