Too Big to Fail is Too Big to Exist?

With this new action from Barack Obama trying to scalp "Too Big To Fail Banks" into several smaller entities, he is touching a very sensitive area. Overall this would be a segmentation in several years converting Universal Banks (entities that include Investment risky business with Retail banking) back to separate entities.

For a little bit of story, since the Financial crisis, major Investment banks disappeared due to substantial losses, therefore they got bailed out by the government and/or merged with other banking institutions. Such as the case of Merill Lynch "inserted" into Bank of America. I said inserted because it was a government/bank deal since BOA bought it with government help/TARP.

Only Goldman Sachs and JP Morgan are still almost purely Investment Banks (in the US), therefore they should be less touched by this Obama project. That being said, Goldman Sachs could be a gold mine the 2 things that prevent me to invest in GS: 1- The stock price too expensive (and it's all abut price) 2- Can be brought down pulled by the Financial sector (SKF) since it has been lagging in this rally.

Back to the Banking reform, by doing this separation Obama's idea is to protect the "population money" from Retail banks so they are not being at risk in case of a substantial loss from the Investment section.
The market sell off was due to several fears:
1- Government intervention is almost never welcome by Wall Street
2- Banks will have to cover their positions invested in Hedge funds, themselves heavily invested in the Markets.
3- As I said in my previous post The Economy is Not improving that much, it was more a Stock Market Inflation effect
4- The market rose substantially since March leading to very important technical levels, investors took the news as an excuse to take profits.

Finally, the concept is a good thing overall, Too big to fail is definitely a big problem and this is what they should have done before the crisis. By being too big, corporations can exercise pressure upon government and thus force them to bail out. Being sure of this eventuality, those corporations would tend to take risky positions and show a lack of responsibility other words: "Too Big to Fail is too Big To Exist".But isn't it a inevitable effect of our Capitalist system?
Never-mind, even if the entities are "legally" separate, it won't change the fact that Important Bankers will have contact with each other and still be integrated in some way. There will still be ghost inter-connexions between Investment and Retail banks, just like there is ghost connexions between Investment banks and Hedge Funds.
The question is will it pass?
As I say, It doesn't matter they still will be doing the same thing and if a new financial crisis comes, "too big to fail or not" everybody will plunge since all interconnected.
It is another fancy regulation that will probably pass but with a foggy content just like the fake Tax even measure by the OCDE Since nobody is in the Black list any more (See: Davos- Welcome to th Real Financial Paradise).

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