SIFIS

 t. man hatter

Who caused much of the financial trouble of the last recession? Most agree it was the Fed's big buddies, big banks.

So what do the bureaucrats in Congress and at the Federal Reserve do, implement more regulations.

David Hunt is CEO of Prudential Investment Management, the $890 billion asset management subsidiary of the huge insurer, Prudential. Here's a quote from a recent  interview in the Financial Times. Prudential has been designated, overlook if you can the stilted economic language used here, a systematically important financial institution. To use the acronym, it's a Sifis.

You should be familiar with them because Fed Chair Janet Yellen loves to bring them up in her little media chats. 

Now we already have selfies, but this is Sifis. Imagine if you can two strangers at a cocktail party and one, after a few brief exchanges, innocently asks the other one what he does. 

"I work for a Sifis."

"What'd you call me?" the first guy responds

A Sifis is bureaucratic babble for too big to fail, also know as TFTB.

Hunt: "... cautions that increasing difficulties of meeting regulatory requirements will reshape asset management as smaller players struggle to meet rising legal and compliance costs."

So what's the point, you ask? The point is simple. Perhaps too simple for most to get. Regulators do what they always do, the only thing they know: Punish the many to get the few.

So let's repeat our original question. Who caused the financial turmoil, the big guys or the little guys? One of the current on-going criticisms of the haves is they have ways or access to ways around things little guys don't  Big corporations is synonymous for haves.

So read Mr. Hunt's statement carefully. If you drive the smaller players out you're only left with the the big players who committed the foul deeds in the first place. Whether it's accounting changes, pension funding, compliance with environmental regulations or health insurance, this principle is true across the entire economic landscape.

When the subject of shadow banking comes up and the increasing role asset managers play in it, Hunt is careful to differentiate his firm. "We don't believe in that model at all, " to which he adds that this firm lends "directly to companies with which it has long-term relationships, instead of via an agent."

A cynic might suggest that sounds like an accurate description of crony capitalism. Last time we checked Washington lobbyists have long term relationships with Congress members who keep getting re-elected. Ask any self-aggrandizing lobbyist his or her worst nightmare and you'll get a one-word answer--turnover.

Prudential is the 10th largest asset manager in the world. With few exceptions the government always lets the little guys go out of business. Keep the concept of level playing field in mind when you're ruminating about this, if you ever ruminate.

Too big to fail is a bureaucratic excuse for keeping dysfunctional, bloated behemoths on the taxpayer funded respirator when in even a semi-free market they'd be mercifully euthanized before you or I can spell Sifis backwards.