Former State Senator: Too Big To Fail Means Too Big To Insure

Wednesday, April 7, 2010 at 2:54PM
Staff in News/Commentary, chingyu Wang, sam zamarripa. sloan johnson, too big to fail

By Chingyu Wang-Talk Radio News Service

Sam Zamarripa, a former State Senator for Georgia, is calling on Congress to put regulations in place that would prevent financial institutions from becoming "too big to fail."

"Too big to fail is also too large to insure," Zamrripa, who nows chairs the organization Stop Too Big To Fail, said during a conference call Wednesday.

Zamrripa explained that if an institution grows large enough to pose a systemic risk if it fails, then the U.S. should be able to step in and essentially break it up.

Former chief economist for the International Monetary Fund Sloan Johnson, who joined Zamarripa on Wednesday's call, said that adding resolution authority financial reform legislation will effectively end "too big to fail."

If implemented, the federal government would be able to take control of an institution in crisis and provide a number of safeguards against systemic failure by liquidating it.

"The resolution authority is a magic bullet," Johnson added.

Article originally appeared on Talk Radio News Service: News, Politics, Media (http://www.talkradionews.com/).