Geithner's Plan: They're All Fannie Now

Geithner's new ambitious plan hinges on one assumption -- some financial institutions are too big to fail. Once one buys into that assumption, government intervention becomes inevitable.  The banks that are too big to fail have the implicit backing of the United States government and the United States government must take steps to make sure that those banks do not misuse the implicit guarantee.  We therefore need a bigger, badder regulatory agency, more regulatory powers, and a right to take over financial institutions that are insolvent.  Inevitability, the regulation must go global, as the institutions must be stopped from moving offshore to do what they cannot do here.  The alternative, now dismissed, is that no financial institutions are too big to fail and that those financial institutions that make bad bets will cost those who own them and run them their investments and salary.  This system is the one we, more or less, used to have.  Once we leave it, we cannot go back.  This is a one way ratchet to global government financial regulation.