US government looking to control credit by reduciing system to 5 large banks

[Martinghoul]

Quote from Ed Breen:
Mghoul, I re read all your posts in this thread and the the threads you cited to where you made comments on MMFs. I also read the WSJ journal article that supported the proposed changes being pushed by Mary Shapiro. I will give you credit that you did outline a criticism of MMFs based on a lack of lack of liquidity flowing from a mis match of investments that are not transparent, a general belief that sponsers seek to promote that the funds are guarateed and a concentration of the industry. My first reading was a skim and I missed some of your comments mixed in with the annoying metacoversation.

I guess I did not realize that so many people think the funds are guaranteed. As a person who uses the funds, I never suffered that confusion and when the crises was most accute I worried about those funds and moved money in response to that vunerability. I do not think the Gov't should be in the position of having to tacitly or expressly guarantee those funds. I guess that you and I would agree on that. On reflection, I think transparency of the fund assets and values with accurate market valuations is proper and necessary.

I am not so shure however that with all interest rates on all maner of paper compressing to zero, that such uninsured funds will find a sustaining market. It seems this situation is the consequence of an evolution of banking where government has been relied on as the insurer and there is no longer a premium for banks to build brick house balance sheets to attract thier clients. I know that I would not be interested in MMF's if I had to pay an upfront fee or agree to leave a portion of funds on deposit for a period after withdrawal. I think I would put moeny somewhere else...perhaps with a super solvent bank where I thought I understood their balance sheet. Problem with that is that banks already have more cash, short term deposits than they know what to do with...and with FDIC insurance premiums they do not make much money in laying off those deposit in excess reserves or any other matched investment.

Yes, Ed, I am 100% in agreement w/you on the points you raise in the last paragraph. I don't know how viable the system is with all the issues you have described, which are serious and need to be dealt with. However, my view on this is these things will be resolved by the mkt eventually. Sure, parts of the industry will prove to be non-viable and die, but that is how things should work in mkts, IMHO. Loopholes, like the one that exists for the MMFs and puts the taxpayer on the hook (even more than otherwise), should be eliminated and then let the chips fall where they may.

 

[RewriteQuran]

To promote entrepreneurs, USA must regulate the market capitalization of all listed companies to twice their quarterly revenue.
Fed have been regulating the cash reserve ratio to promote sustainable economic growth since 1913.

 

[AKUMATOTENSHI]

Quote from gdtrader:

agreed Canada has the same system there are three manjor banks. Makes it easier to control things... in the 80's there were somthing like 10k banks early 90's about 2k and now I believe it is well under 1k...

It is wise to streamline a system or process after a major occurence. We used to have a containment process after an non conformance issue. This reduction to US banking system reduction is very similar. Having less players to deal with also streghtens the power of the the Fed. Under the current system the Fed does not have the resources necessary to control the OODA loop for the fininancial system. The consumer was not served with the past methodology of US banking. It was near a completely unregulated market as allowable. The Canadian system of banking has faired well during the last global economic crisis and it was due to safeguards and standards built into the process systems.

Welcome to Neo Feudalism,

Akuma

 

[Messi007]

Quote from AKUMATOTENSHI:

It is wise to streamline a system or process after a major occurence. We used to have a containment process after an non conformance issue. This reduction to US banking system reduction is very similar. Having less players to deal with also streghtens the power of the the Fed. Under the current system the Fed does not have the resources necessary to control the OODA loop for the fininancial system. The consumer was not served with the past methodology of US banking. It was near a completely unregulated market as allowable. The Canadian system of banking has faired well during the last global economic crisis and it was due to safeguards and standards built into the process systems.

Welcome to Neo Feudalism,

Akuma

Good post!