Too big to fail..

There is currently legislation proposed to regulate financial institutions that are deemed "too big to fail -" this misses the real culprit of the mess we're in. Let's face it - recessions happen. In a free market economy, there is very little that can be done to avoid recessions. Periods of growth are inevitably followed by periods of stagnation. What really made this current recession bad is not the subprime crisis. What made this recession from a run-of-the-mill downturn to one tettering on the edge of a depression was the credit default swaps (CDS). These unregulated financial instruments allowed companies like AIG to take huge risks which threatened to bring down the entire financial system. What is needed is regulation to regulate the markets for these instruments, and any other instruments that allow companies to leverage far in excess of what they can reasonably handle.