Notwithstanding what seem to me to be shortcomings in the administration’s public/private partnership plan, their agenda for new financial regulations seems quite a bit better. This, in particular, is encouraging:
A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds. [...] The government now has the power to take over only the banking unit that controls federally insured deposits of large troubled institutions, not the parent company — a limit that could pose problems if large financial conglomerates like Citigroup or Bank of America continued to spiral downward.
I’ve heard repeatedly that one problem with nationalization proposals is that there’s no set procedure in place. That seems like a legitimate concern, but it’s been hard to know how much that talk was really “concern” and how much was just excuse-making. Stepping forward to try to actually resolve that problem so as to make a receivership option more valuable in the future seems to me to be an important step for the medium-term.
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