Sen. Dodd wants to make it permanent.
...is the Dodd bill really tough legislation, particularly in its treatment of the major financial entities? My American Enterprise Institute colleague Peter Wallison argues that it is not, because it gives Too Big To Fail status to the big entities—Citigroup and JPMorgan Chase, Goldman Sachs and Morgan Stanley.
Barone then quotes from the Wallison analysis:
...[the] Dodd bill does it again--it signals to creditors that they will get a better deal if they lend to the big regulated firms rather than their smaller competitors, and it does this by making it possible for creditors to be fully paid when a too-big-to-fail financial firm is liquidated, even though this would not happen in bankruptcy. There are a number of ways that this can be done, including through a simple merger with a healthy firm. As a prescription for moral hazard, this can hardly be surpassed.
Clive Crook is also quoted in agreement.
It's often been mentioned that Dodd is the ABA'*s lackey, so this should not be a surprise.
*American Bankers' Association
HT: Beltway
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