In the beginning of the credit crisis, the problem was that Bear Sterns was just too big to fail. The repercussions throughout the market and the economy would be too great. So the government stepped in and brokered a deal to bail them out.

Then Fanny Mae and Freddy Mac. Too big to fail - they'd take down the whole economy. The government should just take them over and then everything would be just fine.

Lheman Brothers it seems was not too big to fail.

We don't really know if Meryl Lynch was too big to fail they were bought by Bank of America before we had a chance to find out.

AIG it turns out was too big to fail. So the federal government just printed up some new money and bought them.

Washington Mutual with $300 billion in assets was not too big to fail. JP Morgan was sitting there waiting for them to go under and have their assets seized by the FDIC so they could buy them at a bargain price.

Wachovia seems to be the next institution on the edge. Their stock is on the way down and unless they are thrown a lifeline soon … FAIL.

All of this leaves me wondering, have we run out of banks and other financial institutions that are too big to fail?

And if we have, why are we rushing headlong into a bipartisan bailout?

Posted by: Stephen Macklin at 03:12 PM | No Comments | Add Comment