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Vague funeral plans

Mike Konczal says my favorite of Dodd's FinReg bill isn't actually worth very much. Nuts.

By Ezra Klein  |  March 19, 2010; 8:41 AM ET
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I tend to agree with Mike and others. More importantly, I think resolution is being oversold. It will be helpful to unwind these companies, but we will still be bailing them out. For example, Lehman and AIG were billions in the hole. Now, lets assume the gov't had resolution authority. They might have a process to unwind orderly, but they would still need to inject billions into both companies b/c of interconnection and counterparties.

One company failing means the next in line will face dramatic capital pressure and capital calls. So we still have TARP, but instead of staying in business the gov't will be unwinding many companies. Who thinks that will happen? Not I. The bill does not solve too big to fail, especially during a widespread financial crisis. Just wait.

Posted by: fiorehoffmann | March 19, 2010 9:44 AM | Report abuse

You do realize that FinReg is not a word, and that no one else is picking up on the campaign to make it one?

Posted by: pj_camp | March 19, 2010 4:23 PM | Report abuse

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