Post exclusive: Greenspan says bad big banks should be busted up

WashPost

Alan Greenspan, the former chair of the Federal Reserve, created a bit of a stir when he suggested recently that big banks should be broken up. You could hear the jaws dropping across the economic blogosphere.

“If they’re too big to fail, they’re too big,” he said earlier this month. “In 1911 we broke up Standard Oil — so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

As it turns out, Greenspan says he was talking about busting up only the big financial firms that are failing, The Post's David Cho reports.

“A policy of too-big-to-fail cannot be allowed to stand, if we wish to have a growing economy and rising standards of living,” Greenspan said, in an interview Wednesday with Cho. Greenspan explained that when a large financial firm becomes insolvent it should be seized by the government, broken into pieces and sold off in the private market.

(More here.)