The Return of Glass-Steagall?

Quote from newwurldmn:
Tax payers bailed out AIG directly, sold puts at zero to JPM on Bear Stears, sold puts at zero to BAC on Merril, and paid off depositers of dozens of regional banks.
And the fed intervened in the LTCM unwind (before my time) and there was the savings and loan crisis in the 80s.

None of this was influenced by Glass Steagal (at least directly). And size does matter because the regionals largely failed because they didn't have the scale to compete with the national banks and they were forced into markets away from their regions.

In fact, if Glass Steagal had existed and Bear was the size that it was, who could have absorbed it (size and legaly)?

Ken Griffin said it right at a congressional hearing (even though he was talking his book) that it's too big to fail, it's "too interconnected to fail."

There are other solutions to protect tax payers. Glass Steagal isn't it.
More...
Hold on, I didn't say anything about the crisis and all the other issues you're raising here...

My question is very simple. Do you think, during normal, non-crisis times, the American taxpayer should be lowering the funding costs of the large "supermarket" banks by allowing these banks to use FDIC-insured deposits to fund investment banking activities? This is on top of the implicit govt backstop that the mkt independently prices in for the TBTF banks. And yes, I realise that these large financial institutions only have everyone's best interests at heart and that, without them, society as we know it will surely unravel.
 
Quote from Martinghoul:

Hold on, I didn't say anything about the crisis and all the other issues you're raising here...

My question is very simple. Do you think, during normal, non-crisis times, the American taxpayer should be lowering the funding costs of the large "supermarket" banks by allowing these banks to use FDIC-insured deposits to fund investment banking activities?
More...

Yes. As much as they should be lowering the funding costs for banks to offer commercial bank lines to corporations, home buyers, and credit card users.

And yes, I realise that these large financial institutions only have everyone's best interests at heart and that, without them, society as we know it will surely unravel.
More...

:)
 
Quote from newwurldmn:
Yes. As much as they should be lowering the funding costs for banks to offer commercial bank lines to corporations, home buyers, and credit card users.
More...
In this case, we will have to agree to disagree...
 
I forgot this has already been voted on twice in Dodd-Frank and shot down. Almost zero chance of it passing, at least in this administration.

Quote from nitro:

Prop traders are moving to Hedge Funds:

http://www.elitetrader.com/vb/showt...ll&pagenumber=1

Hedge Fund advertising rule about to become law:

http://www.elitetrader.com/vb/showt...threadid=276431

Europe strikes deal to push cost of bank failure on investors

http://www.elitetrader.com/vb/showt...threadid=276023


Glass Stegall reinstated? Seems like a logical consequence of the first two above. The argument for the repeal of GS (not Goldman Sachs, although it is an interesting pun) the argument was that Europe did not have a similar law [they move in the opposite direction, see link 3 above], and US banks could not compete and it was actually sold as a national security issue (I don't remember where I read that).

If you put the pieces together posted in this and the Economics forum over the years, the logic of causation is pretty straightforward, and I expect it to pass forcefully.
More...
 
Quote from MarketMasher:

LOL :D

It has to be a SINGLE, SILVER BULLET piece of legislation that will GUARANTEE that we can NEVER HAVE another BANKING CRISES for ALL TIME!!

He so smart.
More...

Bubble Ben is already sowing the seeds to the next financial or banking crisis.
 
Bail-in is the new rule, going forward. Bank failures/deposit confiscations >100K, like Cyprus, will occur in the United States, when the next crisis hits. Glass-Steagall 2.0 mitigates the damage. It won't pass because DC is owned by the banking establishment. Good luck.
 
It's partly down to that too big to fail argument isn't it. Perhaps it would help if investment companies and banks branch off financially independent companies as they grow. Then if they are mismanaged it won't bring the whole system down.
 
You must log in or register to reply here.
Back
Top