[O]ne price we are paying in these bailouts is the creation of a new tier of mega-banks that, because they are Too Big To Fail, have the competitive advantage of being essentially government-guaranteed. What we really need as a condition on TARP money is a new regulatory structure to make sure that these mega-banks do not abuse the oligopolistic position we have just handed them, and perhaps a commitment to break them up when economic circumstances allow. That would be considerably more valuable than a cap on executive salaries and corporate jets. But it will also be a lot more difficult to define and to agree on.
These bailouts are just going to go on and on and on. Each big bank is going to keep dribbling out losses like an incontinent elephant and our politicians are going to keep lecturing out of one side of their mouth and whispering about future campaign contributions from bank executives out of the other. Meanwhile helicopter Ben will jump around in the background shouting, "Me too! Me too! I want to regulate everybody!". It kinda reminds me of that great scene with the mechanical contraption in Rules of The Game.
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