The Wall Street Journal had an article up recently (today?) Divorce as cure for banking headache written by Peter Eavis.I am not subscriber so I was only able to read the first five lines or so. But I think I get the drift of the article and that is, these massive banks such as Morgan Stanley, Goldman, Wells Fargo, Citi and others might want to separate their banking divisions from the securities aspect of their businesses so that if one area implodes, the whole ship won’t go under water like a big, fat, bloated titanic.
Interesting metaphor I guess. But I thought a more appropriate title, though, would have been “Legal separation as cure for banking headache as opposed to Divorce as cure for banking headache. And here is why: THERE’S A BIG DIFFERENCE BETWEEN SEPARATION AND DIVORCE.
With a divorce, you are breaking ties completely. The marriage will be adjudicated ca-put, you cut your losses and move on. You change your name, pick up another lover/spouse, move on with your life sometimes as if the marriage never even happened. The only thing that might connect you to the past marriage is a (child or children) and in that case the divorce is often just the beginning for really serious “headaches” and no cure for warring, incompatible parents who are forced to parent minor children till they turn 21 (at least that’s the law here in New York.)
Is that what WSj’s Peter Eavis is suggesting that the big banks do? And if so, is that really the result we need as a country? As taxpayers who have to clean up the mess once the kids are done playing in the water-color? I don’t know….I’m thinking maybe a separation is what we should be after. Couples who separate rather than divorce are usually not so combative with each other and are more inclined to share custody of their children without needing, say, a “parenting coordinator.” Plus, with a separation, the marriage still exists, it’s just that parties may be free to date other suitors and live separate and apart. They may also have an agreement that clearly absolves each other from responsibility for any debts incurred during the period of separation by the other spouse. But usually, there is no name change. And the marriage is still in tact and can remain in tact indefinitely. And there are many benefits to marriage, obviously. They can continue to file joint tax returns, for example. Health care is a huge benefit if one spouse does not otherwise qualify on their own for coverage. They can get life insurance in each other’s names. There are inheritance rights in the case of death. Things like that. Marriage can be a very fiscally advantageous institution. It’s not all bad, marriage penalty notwithstanding.
So, I’m just wondering whether the big banks that are too big to fail really need to divorce their various spouses (lots of bigamy and polygamy going on in this arena, I’ve noticed) or simply get a legal separation, crafting an airtight separation agreement that protects each other as much as possible, but keeping all the other benefits of marriage?