Ted Auch

“Size is not the appropriate restriction,” said Senator Mark Warner, Democrat of Virginia and a member of the banking committee, who helped draft the regulatory bill. “The real question should be the level of inter-connectedness and the risk-taking we saw in the crisis of 2008.” Mr. Warner added, “The Dodd bill does provide ability for these banks to be broken up.”

So let me see if I have this straight Senator Warner your not concerned about the size of bangs with respect to Senator Kaufman and Senator Browns Safe Banking Act of 2010 – which would have limited the size of individual bank’s assets to 3% of GDP (6 Largest banks currently account for 63% of GDP) and the all important leverage factor to 16 to 1 (It had risen to 30 & 40 to 1 at places like Bear Sterns and Lehman) -  but you want to minimize inter-connectedness?

Well let me ask you a simple question: If you go to a family reunion and their are only 6 Warner’s – or whatever your mother’s maiden name was – at the shindig are you more or less likely to be “inter-connected” with those individuals than if that reunion instead included 100 of your nearest and dearest relatives?

See this is classic talking out of both sides of your mouth. As Stephen Roach likes to say you can’t have both decoupling and globalization at the same time. Pick your Poisson Senator Warner: Inter-connectedness or TBTF?