DISMANTLE THE TBTF BANKS, AND GOVERNMENTS TOO
July 7, 2012
If we ever needed a better reason to dismantle the TBTF banks, certainly “LIBOR-GATE” is it. Fraud, deceit, profiteering, greed all of which put millions of investors at risk to benefit a few, it is tragic. Not that smaller banks have no “crooks”, I am sure they do, but those crooks don’t have the leverage of the Diamonds and Corzines, the power in their greed and arrogance to damage millions of people and impair the operation of our financial system, to make bets with billions, trillions of dollars which can go wrong and do. Their behavior forces central banks to pursue policies (“rates too low for too long”) which set us up for problems in the future, it’s not a “one and done” deal, we have to unwind Diamond’s bets and the Fed’s!
Big government poses the same threats to us, often in league with the big financial institutions. History makes it pretty clear, the larger the share of resources the government controls, the worse off the citizens. More government spending and regulation does not create more wealth and output for citizens. Most of our Federal budget involves taking money from one citizen and giving it to another, not creating anything but political constituencies. It’s hard to find meaningful exceptions other than in a few countries that have “city size” populations. And there are plenty of “crooks” in the government where, once again, the leverage over the quality our future is immense. And it’s for sale. Politicians buy our votes with promises they cannot pay for and use that power to their benefit. It’s a fraud, just like the financial institution frauds.
Our strength lies in numbers – lots of competitors, none of which have the power to move or manipulate markets. Always has been the strength of our economy and will be if it is not crippled by taxes and regulations. And lots of voters to reign in the size of government and its intrusion into the private sector’s management of its resources, not just at the Federal level, but state and local as well.
William C. Dunkelberg is co-founder and Chairman of the Board of Liberty Bell Bank, Cherry Hill, N.J., and Professor of Economics at Temple University