2016 Postmortem
Related: About this forumAn observation on "breaking up the banks"
My wife is a Wall Street lawyer, and while she doesn't object to breaking up "too big to fail banks", she observes that "smaller" doesn't equal "safer". Just think back to the Savings & Loan crisis of the 1980s. Small banks can make the same mistakes as large ones, and while they may not have the same level of net economic impact, depositors and homeowners will still be at risk.
safeinOhio
(32,715 posts)better prices and less power to dominate and control markets.
BlueStateLib
(937 posts)lease, electricity, employee salaries, taxes. Bernie Sander's plan would drive up the cost of banking
GeorgeGist
(25,323 posts)safeinOhio
(32,715 posts)are making huge profits.
Gregorian
(23,867 posts)A small bank won't get huge bailouts at taxpayer expense.
Ed Suspicious
(8,879 posts)EdwardBernays
(3,343 posts)Was the failure of government to regulate. And governments inability to make sound fiscal policy.
Totally. Different.
Lol.
The fact is that smaller and more diverse is safer as long as something doesn't affect all of them at once. And even then it's relatively safer in most circumstances, due to the spreading of risk.
djean111
(14,255 posts)We are quite aware that there is no such thing as "no risk". There is a middle ground, and keeping the huge banks in place is not the way to go.
Bradical79
(4,490 posts)My wife is a Wall Street lawyer, and while she doesn't object to breaking up "too big to fail banks", she observes that "smaller" doesn't equal "safer". Just think back to the Savings & Loan crisis of the 1980s. Small banks can make the same mistakes as large ones, and while they may not have the same level of net economic impact, depositors and homeowners will still be at risk.
That sounds safer to me. There's a massive difference between saying something is "safer" on a large economic scale and saying there is no risk on an individual level. Saying risk to depositors and homeowners will still exist doesn't really mean much.
Douglas Carpenter
(20,226 posts)But they are certainly a lot safer for the economy as a whole. A small local bank crashing is simply not going to drag down the global economy. A major bank like Lehman Brothers crashing could very likely do that.
AgingAmerican
(12,958 posts)Small banks can't take down the economy with them if they fail. That's the point of breaking them up.
enid602
(8,652 posts)Canada, Germsny, France, Japan, UK , Spain, etc all have economies dominated by small number of very large banks. What are the international economic effects of unilaterally breaking up US banks. Lots off raink and file jobs on Wall St.
dmosh42
(2,217 posts)savings banks were insured. Also, going back in my memory, to the 50s, bankers who did illegal activities were jailed and exposed in the press. This was the first failure where I haven't seen anyone jailed for illegal activities, probably because our government is part of the corruption.
Armstead
(47,803 posts)makes us less dependent on the whims of a handful of monopolistic monsters.
Banks and other financial institutions and the economy overall did fine before they were deregulated and allowed to consolidate and engage in bad behavior on a massive scale.
And, bottom line....We need a more broadly based and diverse system and honest competition and institutions of many sizes because.....well, I was raised to believe those are all good things, and a whole lot better than monopolistic empires.
antigop
(12,778 posts)Half-Century Man
(5,279 posts)Reinstate the regulations that worked so long and so well.
Enforce anti-trust regulations.
Break up monopolies.
ljm2002
(10,751 posts)...kinda makes the point, eh?
Are you arguing that because breaking up the too-big-to-fail banks does not solve 100% of the problems in the financial industry, that it is better not to do it at all?
Whatever happened to "Don't make the perfect the enemy of the good"???
brooklynite
(94,727 posts)I also said my wife didn't object. I'm joint pointing out that the outcome may solve all ills.
ljm2002
(10,751 posts)...shows why "smaller" actually does equal "safer", at least from a macro perspective. IOW, while people can still lose $$$ when a smaller bank fails, it is much less likely to precipitate a larger crisis. Which is the whole reason for doing it.
You are the one who took pains to try and convince us that it will have little effect if implemented, even as your own post suggested otherwise, making your position on this matter is less than crystal clear.
I'm glad to hear you and your wife are for Bernie's proposal to break up the big banks.
Motown_Johnny
(22,308 posts)^snip^
We cannot have a safe and sound financial system if we cannot trust the credit agencies to accurately rate financial products. And, the only way we can restore that trust is to make sure credit rating agencies cannot make a profit from Wall Street.
Investors would not have bought the risky mortgage backed derivatives that led to the Great Recession if credit agencies did not give these worthless financial products triple-A ratings ratings that they knew were bogus. And, the reason these risky financial schemes were given such favorable ratings is simple. Wall Street paid for them.
Under my administration, we will turn for-profit credit rating agencies into non-profit institutions, independent from Wall Street. No longer will Wall Street be able to pick and choose which credit agency will rate their products.