Wednesday, December 12, 2007

Too Big To Fail?

"How much would you pay to become, with capital-letter authority, Too Big To Fail? ... 'There is a lot of subsidy provided to really large banks,' [Julapa Jagitiani (JJ)] added, noting that the study was the opinion of the authors [JJ and Elijah Brewer III] and not the Federal Reserve. 'It seems like we may be encouraging misallocation of resources. She did caution that 'at the Federal Reserve, we don't have a list of Too Big To Fail banks'," WSJ, 12 December.

JJ can testify she has not have seen the list, but cannot testify it does not exist. I suspect it exists and that Citigroup, Wells Fargo, JPMorgan and the Bank of America are on it. As for misallocating resources, welcome aboard, JJ. You're saying what Ludwig von Mises said in 1930!

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