Large financial institutions that engage in speculative activities for profit should be allowed to fail if they get in trouble, White House advisor Paul Volcker said on Sunday.
As Congress debates financial reform in the wake of the worst financial crisis since the 1930s, Volcker has argued for fencing off investment firms primarily engaged in market speculation from commercial, deposit-taking banks.
“If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it,” Volcker said on CNN.
“It’s called euthanasia, not a rescue.”
It’s about time we have an administration in the White House that doesn’t think it’s okay to let the free market run amok. He also favors putting the Glass-Steagall Act back in place, whose removal allowed banks to mix risky investing with traditional banking, bringing risk to the entire economic system, requiring the Federal Govt to prop them up or allow our economy too crumble. Unfortunately, the Republicans in Congress are sure to prevent that from happening.