Winding down
I guess I'd heard the term before, but it really stuck at out me in Fed Chairman's Ben Bernanke's interview on 60 Minutes.
http://www.cbsnews.com/...
He used the phrase several times, while basically framing this current mess: Some banks and financial organizations are too large for the US government to allow their failure. He wants the Fed and the Treasure to develop tools that would allow them to intervene in these companies, take possession, split them up, and sell them.
That's what winding down is: Putting toxic companies (your AIG's, your CitiGroups) out of business.
And now, we have the news that Treasury Secretary Timothy Geithner is asking for the very authority that Bernanke was hypthesizing about:
http://news.yahoo.com/...
More below the fold...
In my very rational way, I could be more ecstatic.
This is the first, and probably, the most important step in returning sanity to the markets: It will create entities of reasonable size and portfolios that can be regulated. Say hello to the return of vanilla banks.
Geithner specifically wants the power to target "non-bank" firms, but I have to wonder: After the deregulation, how many pure banks are out there? Very few, I'd suspect...so all the cards are on the table, and all firms are subject to seizure and "winding down"!
I know many of us have been upset about the appearance that Obama and his administration are filled with Wall Street-types and other people who might not be able to conceive a major paradigm shift, but when I hear about news like this, I, for one am mighty pleased.
Let's dismantle the firms that don't work and put a rational regulatory back in place!