Not Everything Can Be Too Big to Fail

The Wall Street Journal reports:

There is a really bad idea circulating in the nation's capital. Of course, that's not surprising -- but when it's endorsed by the Treasury secretary, we'd better pay attention.

This week, Henry Paulson said in an interview with the Washington Post that he wants the Federal Reserve to be able to regulate and ultimately take over any failing financial institution that it considers crucial -- including hedge funds. This echoes a notion that has been endorsed by executives of some industry associations, that to prevent a recurrence of today's financial crisis it will be necessary to impose tough new regulations on financial institutions deemed "systemically significant."

Henry Paulson really is a dangerous individual.