Boxer Amendment

From Bloomberg:

"Lawmakers voted 96-1 for an amendment offered by Senator
Barbara Boxer, a California Democrat, to bar use of government
funds to rescue failing financial companies. The move revises a
provision that Republicans said would perpetuate bailouts."

This is about the dumbest piece of legislation I've ever seen. Both sides of the aisle hail their efforts to save the economy by touting how things could have been worse. Pres. Bush and Sec. Paulson, who both abhor government intervention in free markets saw how awful things would have looked without the saving of the financial system. Without the help of the Fed and the U.S. Treasury, things would have been disasterous.

People talk about "Too Big to Fail" as if there is some written code or law. It's not. It's a concept that says if this company fails it's easier to save them than to let them fail and pay the consequences. You don't legislate the concept away. You create systems that 1) either prevent firms from being too big or too interconnected, or 2) you create legal ways to wind down these institutions without the normal repurcussions of a traditional bankruptcy. I favor #2 by a wide margin. #2 allows capitalism to work without creating some government oversight using vague concepts of largeness.

So, to create legislation that bans the use of government funds in cases where it may help us is MORONIC. The phrases "unintended consequences" and "best intentions" might be used here. I'd chose "stupid decisions" instead.