Greenspan Says U.S. Should Consider Breaking Up Large Banks

Oct. 15 (Bloomberg) -- U.S. regulators should consider breaking up large financial institutions considered “too big to fail,” former Federal Reserve Chairman Alan Greenspan said.

Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York.

“If they’re too big to fail, they’re too big,” Greenspan said today. “In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

At one point, no bank was considered too big to fail, Greenspan said. That changed after the Treasury Department under then-Secretary Hank Paulson effectively nationalized Fannie Mae and Freddie Mac, and the Treasury and Fed bailed out Bear Stearns Cos. and American International Group Inc.

Too bad he didn't come to this conclusion sooner.

To have to abandon some of his Rayndian fantasies.

Ya know, he's supposed to be really smart and everything but if you think about it, what kind of idiot would have believed all that invisible hand bullshit in the first place?

and like anyone who has a Religion, they grab data to support their Religious view of the world and discard data that conflicts with it.

He's just been confronted with too much evidence over a short period of time to show him that his Religion wasn't real.

There are those who say what powerful people want to hear in order to gain favor with them. Then they employ pretzel logic to justify what they say. Powerful people endorse you in meaningful ways. For a prime example of this, just tune in to Larry Kudlow's show today. He continues to get richer because the owners of the networks, and the owners of his sponsors' companies, love his discredited trickle-down snake oil.

NOT.

:wtf: :spank: :thumbsdown: :headbang:

He's simply having to acknowledge now that he was wrong during his entire tenure at the Federal Reserve.

Watching boy in balloon now.

If he doesnt want the banks broken up all he has to do is say he wants the banks broken up knowing that people now will think to do the opposite of what he says.

He's a devious old fart, aint he?

FFS...

People don't listen.

Or rather, Greenspan agrees with me.:P

Funny I've been saying that for quite some time.

Too bad the idiot didn't think to mention this say back when he was still head of the Fed? But no, he was too busy cheer leading for the market and declaring that workers should be kept perpetually scared of the labor market.

This bit of ass covering doesn't mean a whole hell of a lot to me. This will not change anything about what I think of this Ayn Randian freak.

Do you get the feeling that Greenspan was under a lot of pressure to be such an uber laissez faire drone? He's really done a 180 now.

...it seems there is a developing consensus, that "too big to fail" == "too big, period".

Let's hope those in power listen to him, they don't seem to have listened to anyone else on the topic.