By William K. Black
(Cross posted at Benzinga.com)
I explained in a prior column that Gregory Mankiw, Governor Romney’s lead economist, wrote a column endorsing the regulatory “competition in laxity.” “Romney’s Lead Economist Urges Policies that will Cause the Next Financial Crisis.” One of the key events in “winning” the regulatory race to the bottom is welcoming significantly dangerous institutions (SDIs). The SDIs are the leading contributor to U.S. politicians – and the politicians of many nations). The difficulty is that “too big to fail” (TBTF) institutions are unpopular with both parties’ voters. Historically, TBTF was a misleading phrase, for TBTF banks could fail. TBTF actually meant that the general creditors would be bailed out by the government.