This disgusting politician – Barney Frank – will haunt us for a long time. George Will has a great “overview” of Too Big Too Fail – a policy that caused the banking disasters of the past few decades, a policy that continues and will continue to lead to banking disasters as long as it exists, and a policy that is enshrined in law by the Dodd-Frank act.

From Will’s’ article:

“Capitalism — which is, as Milton Friedman tirelessly insisted, a profit and loss system — is subverted by TBTF, which socializes losses while leaving profits private. And which enhances the profits of those whose losses it socializes. TBTF is a double moral disaster: It creates moral hazard by encouraging risky behavior, and it delegitimizes capitalism by validating public cynicism about its risk-reward ratios.”

Yes, profit and loss.

Though, I disagree with Will on his last point. TBTF does not delegitimize capitalism. This is because any system in which TBTF is a policy is not capitalism; it’s cronyism.

-JD Cross

 

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