THURSDAY'S CUP: Too big to fail is a disaster in waiting

Gulf Coast community bankers have argued for years that the too-big-to-fail dictum ushered in by Washington, D.C., punishes small banks at the expense of big ones.

Now there's an admitted government bureaucrat, a high-ranking official with the Federal Reserve Bank of Dallas, who agrees with them. Indeed, Harvey Rosenblum, executive vice president and director of research at the Dallas Fed, says the policy has morphed into a safety net for behemoth banks that “do crazy things.”

Rosenblum, who recently spoke about his disdain for the theory at an event at New College of Florida in Sarasota, says being big in and of itself isn't the problem. The problem, he says, is when the biggest banks, like JPMorgan Chase, Citibank and Goldman Sachs, do all sorts of risky non-banking activities yet remain protected like a regular bank.