Warren, McCain introduce bill to bring back Glass-Steagall

Or we could just regulate them so that losses don't **** the universe over. And now we've come full circle.

 

Nah, Glass Stegall actually proved to be safer for banks and lowers financing costs by diversifying. Lehman and Bear, the first to collapse, didn't even have commercial sides. http://mobile.nytimes.com/blogs/dea...-old-rule-is-not-a-cure-for-crisis/?referrer=


However, banks should not be allowed to get over leveraged. If they are making risky ivestments, these should be financed by equity (stock investors willing to take the risk) or long term debt to avoid runs.

Any deposits should be backed by treasuries or some such safe asset.

Allowing banks to use short term debt to fund long term risky strategies makes our system prone to runs.

Deposit insurance was a bandaid to cover that underlying problem.

Boom and busts like the tech bubble will continue but systemic bank runs should be addressed. The tech bubble didn't thrust us into great depression or recessions.

 

So it's one of those rigid ideological things then. Welcome back to the 1800's. Bank runs, yeeeeehaw!

 

That's like saying taxpaying parents shouldn't be on the hook for teachers' salaries, or taxpaying truck drivers shouldn't be on the hook for road construction.

 

We have the SIPC. Also, it's possible the FDIC's intent is to placate private depositors into allowing the banks to keep lending their money. Furthermore, private depositors aren't investing anything, they expect to get out exactly what they put in, while private investors are hoping to capitalize on risk by being on the correct side of a bet.

 

Yes - it's called Greece.

 

Mattresses don't work so well.