Talks with Treasury Secretary Henry Paulson on the Dollar
Ron Paul Financial Services Hearing - July 10, 2008
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Sunday, July 13, 2008 | 03:30 AM | Permalink
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In his response to Rep. Paul Treasury Secretary Paulson said “What I believe in Congressmen, is markets.”
The problem is that if financial firms are too big to fail, the government must step in or chaos ensues.
It is clear what the problem is: that FNM, Bear Stern's and a few other firms are not just too big to fail, they are too big.
Large financial firms are an unnecessary risk to the free market ecology and should be broken up. The only reason these firms "must" get large is to compete with other large firms. Without any large firms, this need vanishes.
Bringing in PE does not solve "too big to fail" either, but only exacerbates the concentration of power in a low tax shell (carried interest.) If anything, as financial firms increase in size their tax rates should go up - like progressive taxation - to discourage useless, dangerous financial empire building.
Furthermore, the regulatory system can shrink if we don't need to worry about a firm ever being too big to fail.
Posted by: VennData | Jul 13, 2008 6:55:45 AM
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