Today’s NYT discusses some of the parts of Geithner’s new regulatory plan, including this paragraph from the article:
If regulators decided that a company had become “too big to fail,” as was the case with A.I.G. in September, they would subject it to much stricter capital requirements than smaller rivals and much closer scrutiny of its borrowing levels and its trading partners, or counterparties.
Isn’t the more tried and true method of handling these types of companies is to break them apart? And even better yet, prevent them from ever existing? That isn’t to write that additional regulations are a bad idea, just that let’s use some of the tools we already have.