There is some fuzzy thinking in Congress and government at large. The aspect of a super bank like Citi or Bank of America being too big to fail is a rather ridiculous assumption. When an institution starts out, growing in size usually means better efficiency through organization and utilization of resources. The company can double in size and probably handle three times as much business. This increased efficiency is what keeps organizations growing. There comes a point where this sort of return will fail to materialize. The returns will start to diminish with increased size.
Once we exceed certain limits, the benefits decrease with increasing size. General Motors increased in size, the item here that did them in was retirement benefits. Now they can’t sell cars and pay what they promised in benefits.
It’s rather irritating to see a super bank that has receive TARP funds declare that the money spent on the trip to Las Vegas or what ever, was not TARP money. What it tells one, is that the government lent them too much money. Take away the TARP money and let them collapse. Of course if the bank collapses, we don’t have to worry about setting maximum payout for upper management to 500K per year. We don’t have to worry about the money being spent on office furniture or corporate jets.
If a company has money coming in, their priorities don’t have to change. If they are broke, they have to change their lifestyle. Toys are not free. They have been removed as a consumer.
These companies are too big to compete on a realistic level, they need to fail. The reason they need to be allowed to fail is to show the world, you screw up, you’re toast. There is no reward for incompetence (I could be wrong, ask your Congressman). The one problem I have is that Congress seems to think that they are going to solve our problem with some legislation. They repealed the laws that allowed this to happen for a second time. Don’t expect the new administration to be our “White Knight.” It reminds me of a Will Rogers quip, “If stupidity got us into this mess, why can’t it get us out of it.