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(Gawker)   Headline: "It's time to break up the big banks." This is not a repeat from 2008...yet   (gawker.com) divider line 36
    More: Obvious, community banks, dot com companies  
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1248 clicks; posted to Business » on 21 Feb 2013 at 10:43 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



36 Comments   (+0 »)
   
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2013-02-21 09:30:15 AM  
when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.
 
2013-02-21 10:47:47 AM  
They are too big to be broken up
 
2013-02-21 10:48:34 AM  

Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.


Not all countries in the world suck banker's Koch, and the US government should follow their example.
 
2013-02-21 10:51:36 AM  
It always strikes me as interesting that we have over three hundred years of advanced thought and theory on how to protect ourselves from the draconian measures of the state (Democracy, checks and balances, rule of law, constitution, etc.), yet the same vigilance is not equally applied to the controllers of economic systems and wealth.

Outside of anti-trust laws, there are no rules against how much one can own or accumulate. There are no checks and balances that prevent massive financial firms from shuffling the paperwork for most of the entire country. The phrase "too big to fail" really means "so big the economy cannot survive without us". So a firm can do whatever it likes since it has neutralized all the risks, and when things go south it can put a gun to the head of the government and the American people and demand a trillion dollar bailout or it will blow Western Civilization's brains out.

When government has this sort of overreach, there is usually a revolution or massive upheaval. But this sort of thing never happens in the private sector. People visit their bank ten times more than their town council yet they operate under the misguided fear that the government might one day control their lives.
 
2013-02-21 10:51:50 AM  
Err, it's not a repeat of 2008 because 2008 was when all the big banks consolidated(or at least the ball started rolling on it) with the blessing of the government(Bear Sterns, you want a bailout? No, fark you, I sold you to Chase)..
 
2013-02-21 10:52:01 AM  
Yes I'm sure that directly following action that gave them money to gobble up smaller banks to get even larger the government will turn around and break them up.

I also might when the lottery even though I haven't played it.
 
2013-02-21 10:59:13 AM  

DoBeDoBeDo: Yes I'm sure that directly following action that gave them money to gobble up smaller banks to get even larger the government will turn around and break them up.

I also might when the lottery even though I haven't played it.


Again, why can't the US do what Iceland did?.
 
2013-02-21 11:03:37 AM  
i.imgur.com
 
2013-02-21 11:09:45 AM  

CygnusDarius: DoBeDoBeDo: Yes I'm sure that directly following action that gave them money to gobble up smaller banks to get even larger the government will turn around and break them up.

I also might when the lottery even though I haven't played it.

Again, why can't the US do what Iceland did?.


Again, CAN and WILL are two different words with two different meanings.

We CAN break up the big banks, just like we broke up Ma Bell.  However those banks were just given BILLIONS of dollars to become even larger than they were.  The guys that did that are still around in DC.  They aren't going to now turn around and change that, especially because the guys they made even richer are padding thier accounts.
 
2013-02-21 11:14:08 AM  

CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.


ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.
 
2013-02-21 11:22:42 AM  

Weaver95: CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.

ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.


Did they set them all adrift?

/hoping so
 
2013-02-21 11:27:30 AM  

Dog Welder: Weaver95: CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.

ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.

Did they set them all adrift?

/hoping so


I would sacrificed them all to their volcanoes, or Bjork.
 
2013-02-21 11:33:13 AM  
I read somewhere just yesterday that "banker" is a super-secret lefty codeword for "jew", so anytime anyone says anything even remotely negative about banks or bankers, it proves that they are so anti-Semitic that it would make Hitler himself blush. Why does everyone in this thread hate Israel??
 
2013-02-21 11:33:56 AM  

CygnusDarius: Dog Welder: Weaver95: CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.

ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.

Did they set them all adrift?

/hoping so

I would sacrificed them all to their volcanoes, or Bjork.


Does anyone know how to say 'Jump, you farkers!' in Icelandic?
 
2013-02-21 11:35:30 AM  
so what would happen if we bailed out the homeowners and let the banks fail?  I am intrigued by this idea.
 
2013-02-21 11:38:13 AM  

Aar1012: Does anyone know how to say 'Jump, you farkers!' in Icelandic?


According to Google translate, it's "Hoppa, helvíti þú".
 
2013-02-21 12:09:56 PM  

Lost Thought 00: They are too big to be broken up


We'll never know unless we grab some hammers and see if they break...metaphorically speaking of course.
 
2013-02-21 12:29:33 PM  

Ishkur: It always strikes me as interesting that we have over three hundred years of advanced thought and theory on how to protect ourselves from the draconian measures of the state (Democracy, checks and balances, rule of law, constitution, etc.), yet the same vigilance is not equally applied to the controllers of economic systems and wealth.

Outside of anti-trust laws, there are no rules against how much one can own or accumulate. There are no checks and balances that prevent massive financial firms from shuffling the paperwork for most of the entire country. The phrase "too big to fail" really means "so big the economy cannot survive without us". So a firm can do whatever it likes since it has neutralized all the risks, and when things go south it can put a gun to the head of the government and the American people and demand a trillion dollar bailout or it will blow Western Civilization's brains out.

When government has this sort of overreach, there is usually a revolution or massive upheaval. But this sort of thing never happens in the private sector. People visit their bank ten times more than their town council yet they operate under the misguided fear that the government might one day control their lives.


I was kinda thinking about that the other night. There's a FOIA request process for government agencies, but nothing for private corporations or NGOs. Of course I will be told that corporations are accountable to that mythical creature called a 'shareholder', even though that accountability is only for the stock price to grow ever higher no matter the moral, economic, or societal costs that are incurred.

/was reading this when I had that thought
 
2013-02-21 12:38:10 PM  

Weaver95: CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.

ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.


Essentially, there are two solutions to the problem of "too big to fail" banks.

You can go with the Canadian model, where you allow big banks but you regulate them really tightly so as to prevent financial shenanigans. Canada's banks are huge, but they are well regulated so the financial collapse pretty much passed Canada by. The Canadian banks were simply not allowed to get involved with the kind of dodgy securities that collapsed the financial house of cards in the USA. The downturn we felt was mostly due to the indirect effects passed back through international trade and finance.

Or you can go with the Ma Bell solution, where you break up the banks into smaller insitutions that must compete against each other, and enact legislation that prevents them from growing beyond a certain size.

Each of these solutions has its upsides and downsides, but both can be effective, as the empirical evidence to date has shown. What won't work is doing nothing and letting the last fiasco repeat itself in some new permutation of financial gamesmanship on the part of the megabanks.
 
2013-02-21 12:48:46 PM  
Oh, Gawker thinks its time to break up the banks?  Really?  I mean, I'm just so surprised that Gawker would say that.  Hey, did you hear that my dog thinks I should leave the roast beef out?  And the petty thief thinks I should leave my wallet unattended?

Breaking news is so exciting.  Can we please stop linking to Gawker?  I'd rather have FarkTV come back.
 
2013-02-21 01:05:57 PM  
I finally got around to watching a little 7 minute animated short narrated by Ed Asner that pretty much sums up what's wrong. It's so simple, even children can grasp it, too bad those in control and those who have the ability to change things can't.
 
2013-02-21 01:07:17 PM  

mod3072: I read somewhere just yesterday that "banker" is a super-secret lefty codeword for "jew", so anytime anyone says anything even remotely negative about banks or bankers, it proves that they are so anti-Semitic that it would make Hitler himself blush. Why does everyone in this thread hate Israel??


Because they are causing a Palestinian Holocaust..
 
2013-02-21 01:11:09 PM  
From the article:
Because if they win, they keep their winnings, and if they lose, the public helps cover their losses.

Yep, we are all socialists. The only difference between conservatives and liberals is that conservatives want socialist programs that only help big business, i.e. they privatize the profits and socialize the costs, while liberals want socialist programs that help individuals.
 
2013-02-21 01:11:47 PM  

KiltedBastich: Weaver95: CygnusDarius: Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.

Not all countries in the world suck banker's Koch, and the US government should follow their example.

ranting delivery mode aside, he's got a point - we DON'T talk about Iceland and how they fixed their banker problems.

Essentially, there are two solutions to the problem of "too big to fail" banks.

You can go with the Canadian model, where you allow big banks but you regulate them really tightly so as to prevent financial shenanigans. Canada's banks are huge, but they are well regulated so the financial collapse pretty much passed Canada by. The Canadian banks were simply not allowed to get involved with the kind of dodgy securities that collapsed the financial house of cards in the USA. The downturn we felt was mostly due to the indirect effects passed back through international trade and finance.

Or you can go with the Ma Bell solution, where you break up the banks into smaller insitutions that must compete against each other, and enact legislation that prevents them from growing beyond a certain size.

Each of these solutions has its upsides and downsides, but both can be effective, as the empirical evidence to date has shown. What won't work is doing nothing and letting the last fiasco repeat itself in some new permutation of financial gamesmanship on the part of the megabanks.


Or, you can do what has floated around as an idea for Europe: make a bank bailout fund paid into by the banks themselves, to which they are legally required to contribute to.
So banks bail each other out with their own money, instead of taxpayer money.
 
2013-02-21 01:35:12 PM  

Weaver95: so what would happen if we bailed out the homeowners and let the banks fail?  I am intrigued by this idea.


I never understood why we didn't go this route.  Well, maybe not "never understood" just disappointed we didn't.

Give bailouts to homeowners to pay off mortgage.  Homeowners give the money to the bank to pay off mortgage.  Banks still get the bailout money, get distressed assets off their books and the homeowner now can put more money into the economy via consumer spending.

Instead, give money directly to banks.  Banks still want their mortgage (rightly so), so homeowner has to take money from the economy to give to bank or walk away.  Bank now has property it can't or won't upkeep and it is probably underwater and they will take a loss on the sale.

Banks got money, still wanted more money which in turn tanks the economy, but at least they still have money.

/Yes I am a Fark economist and probably explained that horribly.
 
2013-02-21 01:44:21 PM  

hollaburoo: Or, you can do what has floated around as an idea for Europe: make a bank bailout fund paid into by the banks themselves, to which they are legally required to contribute to.
So banks bail each other out with their own money, instead of taxpayer money.


I would classify that as a variation on the first idea: effective regulation. After all, the banks aren't going to do that by choice. Government legislation at some level is going to have to make them do so.
 
2013-02-21 02:01:16 PM  

CygnusDarius: Again, why can't the US do what Iceland did?.


I was just over in Iceland last weekend. It was very interesting how . . . jubilant, they were about winning in court that they could simply tell the banks to go fark themselves for defrauding them.

And that folks, is how a country wipes out most of its national debt overnight.
 
2013-02-21 02:03:43 PM  
No entity should be able to influence the economy in the manner that banks do. Also, monopolies suck.
 
2013-02-21 02:41:50 PM  

Hyjamon: Weaver95: so what would happen if we bailed out the homeowners and let the banks fail?  I am intrigued by this idea.

I never understood why we didn't go this route.  Well, maybe not "never understood" just disappointed we didn't.

Give bailouts to homeowners to pay off mortgage.  Homeowners give the money to the bank to pay off mortgage.  Banks still get the bailout money, get distressed assets off their books and the homeowner now can put more money into the economy via consumer spending.

Instead, give money directly to banks.  Banks still want their mortgage (rightly so), so homeowner has to take money from the economy to give to bank or walk away.  Bank now has property it can't or won't upkeep and it is probably underwater and they will take a loss on the sale.

Banks got money, still wanted more money which in turn tanks the economy, but at least they still have money.

/Yes I am a Fark economist and probably explained that horribly.


I seem to recall some people moaning about "moral hazard."

And the fact I would be rather upset if someone else gets a free home while I'm toiling away living in a crummy apartment.
 
2013-02-21 06:23:54 PM  
Nah, its not on Big Banks' schedule:

uboachan.net
 
2013-02-21 08:34:04 PM  
This didn't really seem to work to well with the telecoms. Why would it work better with banks?

/want it to happen.
//too cynical.
 
2013-02-22 08:45:43 AM  

Ishkur: It always strikes me as interesting that we have over three hundred years of advanced thought and theory on how to protect ourselves from the draconian measures of the state (Democracy, checks and balances, rule of law, constitution, etc.), yet the same vigilance is not equally applied to the controllers of economic systems and wealth.


When the controllers of economic systems and wealth are the wealthy you reap what you sow
 
2013-02-22 10:54:12 AM  

KiltedBastich: Essentially, there are two solutions to the problem of "too big to fail" banks.

You can go with the Canadian model, where you allow big banks but you regulate them really tightly so as to prevent financial shenanigans. Canada's banks are huge, but they are well regulated so the financial collapse pretty much passed Canada by. The Canadian banks were simply not allowed to get involved with the kind of dodgy securities that collapsed the financial house of cards in the USA. The downturn we felt was mostly due to the indirect effects passed back through international trade and finance.

Or you can go with the Ma Bell solution, where you break up the banks into smaller insitutions that must compete against each other, and enact legislation that prevents them from growing beyond a certain size.

Each of these solutions has its upsides and downsides, but both can be effective, as the empirical evidence to date has shown. What won't work is doing nothing and letting the last fiasco repeat itself in some new permutation of financial gamesmanship on the part of the megabanks.


I would like to see a combination of both, really. The problem with the Ma Bell solution is that it wasn't really a solution - it broke up the vertical integration of equipment from Western Electric and Bell Labs to the AT&T system, which made way for technical improvements in service, but the actual businesses providing those services are still largely operating as local monopolies. And it hasn't stopped the companies from putting themselves back together - everything is still basically either Verizon or AT&T these days.

So while I do think that we need to break up these monolithic institutions, we also need to put the hammer down on regulating them better. Ideally, there'd be no more multi-service financial institutions, in my opinion. Drawing a line between investment/traditional banking would obviously be a good first step, but I'd like to see it go further. Banks shouldn't offer insurance, and insurance companies shouldn't offer investments, and investment brokers shouldn't offer loans. And investment banks shouldn't be able to just come up with some new thing to sell overnight and have it on the street the next morning. A permissive, as opposed to restrictive, approach to allowable investments means "You are allowed to invest in A, B, and C. If it's not A, B, or C, you can't buy it." Instead of trying to regulate whatever bullshiat the wise guys in Manhattan dream up this week, lock it down to things that have an actual relationship to the real world. And get speculation out of commodities! If you buy it, you take delivery. And a transaction tax on trades - a penny a trade would hopefully cripple the high frequency trading bullshiat where algorithms try to squeeze nanoseconds and no human being can possibly understand the transactions until millions of dollars have already moved. The point of the stock exchange is to promote investment in corporations - not to make brokers rich by being sharper than another broker.
 
2013-02-22 12:01:34 PM  

phyrkrakr: So while I do think that we need to break up these monolithic institutions, we also need to put the hammer down on regulating them better. Ideally, there'd be no more multi-service financial institutions, in my opinion. Drawing a line between investment/traditional banking would obviously be a good first step, but I'd like to see it go further. Banks shouldn't offer insurance, and insurance companies shouldn't offer investments, and investment brokers shouldn't offer loans. And investment banks shouldn't be able to just come up with some new thing to sell overnight and have it on the street the next morning. A permissive, as opposed to restrictive, approach to allowable investments means "You are allowed to invest in A, B, and C. If it's not A, B, or C, you can't buy it." Instead of trying to regulate whatever bullshiat the wise guys in Manhattan dream up this week, lock it down to things that have an actual relationship to the real world. And get speculation out of commodities! If you buy it, you take delivery. And a transaction tax on trades - a penny a trade would hopefully cripple the high frequency trading bullshiat where algorithms try to squeeze nanoseconds and no human being can possibly understand the transactions until millions of dollars have already moved. The point of the stock exchange is to promote investment in corporations - not to make brokers rich by being sharper than another broker.


I'd add the caveat that the state you receive the good or service in is the state whose laws you follow. None of this "Delaware made everything banks could do legal, so they all headquarter there."
 
2013-02-23 01:55:07 PM  

Weaver95: when Occupy Wall Street said this, they got tear gassed, tasered and arrested for it.


Per orders of Obama, after they started looting and raping people.
 
2013-02-23 01:57:37 PM  

Weaver95: so what would happen if we bailed out the homeowners and let the banks fail?  I am intrigued by this idea.


I was against any bailout, but I'd take that one what we did.
 
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