If the prime reason for America’s economic meltdown is the overconcentration of financial firms, then it should not give anyone comfort that the solutions that former Goldman Sachs CEO Henry Paulson has come up with, brought Bear Stearns into J.P. Morgan Chase; and now Merrill Lynch into Bank of America with Barclays and others picking over the bones of Lehman Brothers.
Bank of America had already swallowed one of the catalysts for the subprime mess, Countrywide. Adding the exposure of Merrill Lynch is a recipe for an even bigger catastrophe.
Teddy Roosevelt must be spinning in his grave, that the country has not learned against concentrating wealth. It’s politically indefensible, but it also doesn’t work financially either. The temptation to take bigger and bigger risks always catches up.
Franklin Roosevelt kept banks, insurance and investment firms separate to prevent another Crash of 1929 from happening. Since Ronald Reagan, the controls have been gradually eliminated.
Now we have the worst of all worlds — no regulation, and unlimited handouts to Wall Street moguls.