What "dangerous" activity are they still involved in? Banks have absurd amounts of excess reserves and you can't get loans even if you want them.
The bolded portion is ridiculous. Banks engage in "dangerous, high-risk practices" because our banking system incentivizes less stringent credit standards and risky lending practices. So, what's their solution? Break up the big banks -- In other words, allow the politically well-connected run the banking system in their favor. We've seen how well this solution worked in the past, but the rhetoric sounds good to morons who have no idea how the banking system works.
Don't know. Not many people knew what derivatives were 20 years ago. Unfortunately its hard to know what they are doing until another card house collapse.
stop using the taxpayer to back their risk, stop allowing the Fed to print and spend $85 billion every month buying bad assets from big banks, and they will fail of their own accord when they make bad loans not that complicated
Welcome to capitalism. If the government saves a bank every time it makes bad decisions, the bank will continue to make bad decisions. Let it fail.
That's nice and all, if only the bank failing affected only it. But when it affects the rest of the US economy, it becomes part of that whole "protecting the general welfare" that is a central purpose of government. The government tried letting Lehman Brothers fail, in case you've forgotten - it didn't really work out so well.
Too big to fail without dragging us all down with them. The only reason it's come to this is because the safeguards put in place to prevent it were ripped out. It was evident that these financial supermarkets had already become so intertwined with our politicians that the only way to reverse the change would be to wipe the slate clean the moment Gramm–Leach–Bliley passed. That was the event horizon. Thinking that this can be fixed without ushering in the next depression is idealistic. However, it's a absurd as the notion that banks would invest public funds prudently, rather than pushing one another to cheat more & more like Tour de France cyclists. They will get bailed out over & over again if necessary. The people who make those decisions will be sure of it, and it will continually be at the majority populations expense. What seals the deal is the fact that people won't act until it's too late. Like the seabarriers routinely dismissed until the huricane destroys the city, or cutting fire prevention only to spend exponentially more on fire extinguishing. The majority of people won't be motivated to make any real change until they are neck deep in the consequences.
There's a whole lot of confusion and misinformation surrounding the term "bank", people need to learn the difference between the traditional retail-commercial-personal lending & depository institutions and the FICC securities/derivatives/market-based I-banks. This is the whole crux of the Glass-Steagal debate and it seems to go right over many heads. And another FU to Phil Gramm, just for good measure.
and when they fail en masse, welcome to 1929..with no backstop. no thanks. I think we just have to accept the reality that they're going to fail..once every 20 years or so, the event repeats itself in some fashion. So limit the sort of activities that carry risk for them....and I don't just mean lending risks with limits. The banking industry is the ONE industry the whole economy can't afford to have fail...affects everyone. Because of that, it must be highly regulated. I'm open to discussion about nationalization, considering we're all fronting the risk anyway. I know that makes me Castro to someone with a very conservative worldview.
I agree. Banking is to our economy what water is to basic human survival, and we definitely regulate our water supply. Limiting risky behavior is to me impossible. Finding new risky behavior is always the way financial institutions will out-earn their competition, so they will keep innovating (credit default swaps, ad nauseum) out ahead of regulators. This is the primary reason I think the only solution is to limit their size and reach. Campaign finance reform would be the second necessary plank in this, since the banks can get congress to do whatever they want at present.
And trillions in unregulated derivatives. they are still involved in the same things that helped exacerbate the 2008 meltdown
The loan thing is overstated. People are refinancing like crazy right now. Businesses are getting loans. Construction is picking up. There was a time this was true...I don't see it as true anymore. I haven't heard a client complain about not being able to get banks to move on loans in a long time now.
They don't fail in Canada. I wonder why we have to suffer every 20 years or so while their system is so stable (I don't wonder at all, it is because Canada has reasonable oversight and regulation of their financial industry, regulation that the Chicken Little's in this country claim would make the sky fall).
2. Banks are so big and intertwined, one bank collapses, essentially all banks collapse. That is the whole point of the idea....Make them smaller so when they are allowed to fail, there are not severe consequences.
