Tomorrow we will be hearing from Obama about what some are calling the Too Big To Fail Tax, a tax on mega financial institutions that would bring revenue in for the federal government and discourage banks from growing so large that they pose systemic risk.
JPMorgan CEO Jamie Dimon is, of course, against the use of Size alone for a gauge of risk. He also makes the point that really big banks are important and helpful for reasons of global competitiveness.
He is right on both counts – but too bad. These benefits do not measure up to the negatives, as we’ve learned quite acutely this decade. You want to play with the big dogs and get large enough that a toppling of your bank could damage the economy, then pay the price.
There will be unintended consequences if the TBTF Tax is implemented, but bringing back real competition and responsibility to the banking sector could only be a good thing.
Sorry Jamie, the sun is setting on Too Big To Fail. There’s not a pol in the nation that will stand in the way.