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As shown by Bank of America, some financial institutions are still “too big to fail” — the same issue that led to the massive banking bailout. Simon Johnson writes in his column, “Bank Of America Is Too Much Of A Behemoth To Fail”:

The Obama administration says the Dodd-Frank financial reform law ends “too big to fail,” meaning that no financial institution will ever again need to be bailed out. The promise is alluring, but it’s already proving to be false.

The argument rests on the premise that bank capital is now high enough to withstand serious shocks, so a calamity is less likely. It also assumes that Dodd-Frank’s new resolution authority allows global financial institutions to be wound down in an orderly fashion, and that the law’s call for “living wills” ensures that banks provide all the necessary technical details regulators might need to take prompt pre-emptive action.

Consider the law’s promise in the context of Bank of America Corp. Through the back door, U.S. regulators are facilitating another round of implicit bailouts, putting more taxpayer money on the line in the form of guarantees. Bloomberg News reported on Oct. 18 that regulators have allowed Bank of America to move highly risky derivatives contracts — and the associated downside risk — from Merrill Lynch into the insured retail deposit-taking part of the bank.

The move puts the Federal Deposit Insurance Corp. on the hook for any losses. The FDIC’s deposit-insurance funds come from its member banks, but because the agency can tap a U.S. Treasury line of credit if the fund runs dry, taxpayers could be at risk, too.

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A scene from "Squid Game" on Netflix

Reprinted with permission from Responsible Statecraft

The Treasury Department's nine-page "2021 Sanctions Review" released on Monday makes vague recommendations for "calibrating sanctions to mitigate unintended economic, political, and humanitarian impact." Unfortunately, it offers few tangible policy suggestions on how to end the high humanitarian
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Mt.Rushmore

Reprinted with permission from Creators

In New York City, a statue of Thomas Jefferson has graced the City Council chamber for 100 years. This week, the Public Design Commission voted unanimously to remove it. "Jefferson embodies some of the most shameful parts of our country's history," explained Adrienne Adams, a councilwoman from Queens. Assemblyman Charles Barron went even further. Responding to a question about where the statue should go next, he was contemptuous: "I don't think it should go anywhere. I don't think it should exist."

When iconoclasts topple Jefferson, they seem to validate the argument advanced by defenders of Confederate monuments that there is no escape from the slippery slope. "First, they come for Nathan Bedford Forrest and then for Robert E. Lee. Where does it end? Is Jefferson next? Is George Washington?"

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