We have now entered the Bizarro World of financial regulations, where the people who in 2008 orchestrated billions in bailouts for “too big to fail” institutions are now insisting that they can craft a plan to end “too big to fail,” according to an editorial posted today by The Heritage Foundation. The same people who once insisted that the only way to head off an economic crisis was for the federal government to bail out large financial institutions now say they’ll devise cunning ways to head off an economic crisis without government bailouts. Ben Bernanke, a principal author of the 2008 bailouts, is participating in the Minneapolis Fed’s ongoing Ending Too Big To Fail Policy Symposium. This effort is headed up by Minnesota Fed President Neel Kashkari, who is in charge of the $700 billion Troubled Asset Relief Program (TARP) that former U.S. Treasury Secretary Henry M. Paulson and Bernanke pressured Congress to sign off on. Former Sen. Jim DeMint distinctly remembers Paulson telling Senate Republicans, without any substantiation, that world financial markets could collapse over the weekend if Congress didn’t pass TARP immediately. Now Bernanke and Kashkari — two main architects of TARP — are working on a plan to end government bailouts? The word “irony” isn’t really strong enough to describe this situation. The editorial asserts that we’re now clearly in the realm of Orwellian double-think: “We’ve always been at war with too-big-to-fail, we just had to do it last time because things were so bad.” Theatrics aside, there’s an enormous gap among policymakers in both the economic and political reality of too-big-to-fail.
