Our financial policy is now that certain financial institutions are Too Big To Fail and so they must be tightly regulated and bailed-out by the taxpayers if they do fail, lest they topple the U.S. economy.

Over regulation is a potential problem. Bail-outs of hundred of billions and perhaps several trillion are also potential problems, especially when our government is running large deficits and is trillions of dollars in debt.

Too Big To Fail = Too Big To Exist is the simplest solution. Simply, do not let the institutions reach a size where they threaten the U.S. economy. Some institutions already exceed that size and need to be gradually broken-up or unwound to get under that number.

Jon Huntsman proposed such a plan during his bid for the Republican presidential nomination. I’m sure there are other plans out there.

Too Big To Fail = Too Big To Exist can be shortened to TBTF = TBTE or 2B2F = 2B2E for those who like things shorter. Thus financial institutions will be freer to experiment and take risks. The taxpayers need not regulate so closely and are not on the hook for a bail-out. It is a win-win as far as I can see.