Word: failed
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What should Washington be doing? We need to do something about firms that are too big to fail. These firms have become loss transmitters and accelerators to the rest of the system. We need to distribute the risk, not concentrate it in a few very large players. There are a number of ways to do that...
Like what? One approach is to lay on a heavy cost of being big. Too-big-to-fail banks should have a capital cost that will make it a disadvantage to compete in the riskiest parts of the financial-services market. I also like President Obama's recent proposal, the so-called Volcker Rule, which would limit proprietary trading and investing. Combining these two regulatory changes ought to encourage big banks to figure out new business strategies, and that would involve selling off some of their riskier businesses...
Wall Street also seems unhappy about a fee for being big. Financial executives don't like the idea of having to pay a too-big-to-fail tax, but nonetheless I think they get it. Banks pay for deposit insurance - this just extends the idea to the rest of the bank's liabilities, which get covered by implicit too-big-to-fail guarantees. What a lot of firms don't like is the idea of having to pay a financial-crisis-responsibility fee for the next decade, as Obama has proposed to recoup TARP loans to AIG, the auto industry...
...practices of American industries, such as how liabilities and assets are calculated. It wasn’t—and those who have benefited from the Enron-led train of unscrupulous practices of the market—such as short-selling, betting against the market or hoping it will fail so that you can make money selling for high to buy at very low. or profiting from a fall in stock prices, insider trading, and mark-to-market accounting, or pricing assets at a higher value than they are actually worth—now unfairly criticize the president...
...Much Happiness” exhibit Munro’s power at its best. Possibly due to the repetitive nature of her subject matter, her later stories become less and less fresh and she resorts more and more to the formula that she knows cannot fail. She becomes overly romantic about the characters she is describing and can’t help but hide her enthusiasm. Describing the third craftsman we encounter, she says, “He can lie awake nights thinking of a splendid beech he wants to get at, wondering if it will prove as satisfactory...