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Back to the Blog The Executive Pay Crackdown and Too Big to Fail Policy Explained


Coffee and Markets

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Francis Cianfrocca joins Ben Domenech for the Thursday, October 22nd edition of Coffee & Markets, a series of brief morning podcasts on politics and the marketplace, now appearing as well on WashingtonTimes.com.

Today’s podcast focuses on the White House’s latest actions capping executive pay on Wall Street and an interesting take one blogger has on Too Big to Fail policies.

Items discussed include:

US Plans Big Pay Cuts

Economics of Contempt: Too Big to Fail

One thing I’ve been noticing is that many commentators on “too big to fail” (TBTF) policy have clearly never read the Obama administration’s financial reform proposals, or at least have an extremely poor understanding of what the administration is proposing to do. This is unfortunate, because TBTF policy is an important, albeit complex, topic. It can’t be addressed in a snappy op-ed, or by simply saying “make them smaller” (as if size alone is the problem). It requires serious thought on a number of related issues.

This post is my attempt to have the beginnings of a serious discussion of TBTF policy. It’s long, since I took about half of my flight to London to write it. But this is a complex issue — there’s no getting around that. If you believe that the Obama administration isn’t proposing to do anything about TBTF, or if you believe, like Joe Stiglitz, that the administration is proposing to create “institutions too big to be resolved,” then I’m sorry, but you’ve been seriously misled. My aim in this post is to explain what the administration is actually proposing to do about TBTF, and also to explain where I think the administration’s proposals have gone wrong, and what I would do differently. If you think you already know what the administration is proposing to do about TBTF, then you can probably skip to the next section on “What I would do differently.” But I’m betting most people never fully read the administration’s proposals.