08-01-2016, 01:49 PM
Here is Simon Johnson, former chief economist of the IMF:
This doesn't seem to be a good idea..
Quote:Unlike Trump, House Republicans have formulated and published detailed plans that can fairly be compared to what the Democrats have presented. And, in the event of a Trump presidency, financial policy would likely be crafted in large part by the House Financial Services Committee, whose chairman’s clearly stated priorities are to reduce consumer protection and remove any effective constraints on big banks’ activities. At the heart of the House Republican strategy is a simple idea: all financial firms should be able to go bankrupt without damaging the rest of the economy and without the government becoming involved. That is fine as a campaign slogan. But there is a major problem with the logic. In September 2008, Lehman Brothers did go bankrupt – and no form of government support was provided. There were catastrophic consequences for the rest of the financial sector, for the non-financial economy, and for employment. The House Republicans propose to fix that by amending the bankruptcy code. This, too, sounds good, but what exactly does it mean?The Republican Bankruptcy Illusion by Simon Johnson - Project Syndicate
The viability of the Republican bankruptcy proposal boils down to this: who will provide financing to a large complex financial institution – operating globally – while it is being restructured in bankruptcy? The private sector won’t provide it. The courts themselves cannot borrow. If there is no financing, the scheme collapses – and we have another “Lehman moment,” or worse. So we must be talking about a scenario in which some part of the federal government, with or without express legislative approval, scrambles to provide an ad hoc loan in the range of tens or hundreds of billions of dollars, via a judge. This is mind-boggling and deeply disturbing.
This doesn't seem to be a good idea..