Too Big to Fail?

I heard an interesting commentary yesterday.  The analyst said that when there is a corporation that is "too big to fail," something is very wrong with the world economy.  I would also add, that if something is too big to fail, and we're even at the juncture of talking about failing, then the corporation is also too big to be successful, which isn't that what capitalism is all about, being creating profits?

So here we are: Citibank is spinning off divisions.  Smith Barney is the first with more than likely others to follow.  And Citibank, having twice come to us, taxpayers, for money from the Troubled Asset Relief Program (TARP) will probably ask as third time for more money.

And here is the irony.  Somewhere out there some guy is opening his front door and a process server is serving him with a lawsuit.  The plaintiff?  Citicorp.  Why is he being sued?  Oh, maybe he stopped paying on his credit card, you know, made some bad decisions about his finances.  And the lawyers for Citicorp will play hard ball with this guy, taking as much money to pay the debt as they can get.  Yet, where is the accountability for Citicorp in it's own financial mess, the bad decisions it made, the creditors that don't get paid, much less the shareholders who are losing value on their investment?

No, I think it is time, now, for us to examine what it means "too big to fail."  In fact, I think when some corporation has become that big, it really isn't good for the global economy.  I mean, here we are with dark and dire warnings about what will happen to the international economy if/when Citibank fails.  Doom and darkness shall descend.  If a corporation gets to be so big that it's demise will actually impact the global economy, then something is really very wrong.  

Perhaps we have our priorities wrong.  I think the little independent two man mechanic shop down the road is too big to fail.  Or the dry cleaner's around the corner.  Or my vet clinic.  Or the green grocer that is a nice walk away.  

But Citicorp?  They have a history of bad decisions (raise your hands if you remember the Latin American loans?) yet they keep on ticking.  Where is the accountability?

Since I have written this, in Wednesday's New York Times there is an article about the banks needing even more money.  And then this small piece by a local columnist on how the banks are not lending to a small business here in Washington state.