Posted on 11/12/2015 8:47:30 AM PST by RoosterRedux
In an op-ed published in the Financial Times, John Reed says large banks like the one he used to run are now "inherently unstable and unworkable."
The man who was one of the chief architects of the "Big Bank" model now says says the United States never should have repealed the Glass-Steagall banking act in 1999.
That's exactly what Democratic presidential hopefuls Bernie Sanders and Martin O'Malley have been arguing on the campaign trail. They want the law reinstated. Hillary Clinton and the Republican candidates do not.
As CEO of Citi from 1984 to 2000, Reed was one of the main lobbyists advocating Congress and President Bill Clinton to get rid of the Glass-Steagall Act. It had been in place since the Great Depression, and it prohibited banks from doing both investment banking (Wall Street activities like selling stocks and bonds) and retail banking (checking and savings accounts targeted at Main Street).
But Reed wanted Citi to merge with Travelers Group, an insurance company. For that, he needed the law repealed.
"We were wrong about some things, and others we failed to anticipate," Reed wrote Thursday, the 16th anniversary of the end of Glass-Steagall.
(Excerpt) Read more at money.cnn.com ...
He collected hundreds of millions and finds Jesus, ex post facto. How many EPF’s is this now ?
NOW he tells us.
The big banks today aren't really banks at all: they're huge proprietary trading houses (that's where 2/3 of their "assets" are).
So the Federal Reserve-- which was created to inject liquidity during a banking crisis-- now serves to inject liquidity (bubbles) into the securities markets.
In addition to being inherently more risky than traditional banking, the higher returns in proprietary trading-- especially for "bank" officers and traders-- encourages yet more risk taking and starves the real banking sector (commercial and consumer lending) of capital.
This is one reason commercial and consumer lending rates are ridiculous multiples of the prime rate: the banks expect to make 15-20% ROI on their "investments," so why should you pay less to borrow the same money? So we have a system that simultaneously multiplies risk and starves the real economy of cash.
The big banks today are financial vampires sucking the life-blood out of the economy and rewarding a corrupt circle of banksters and their political associates.
Regardless, he’s correct. If banks are smaller then you don’t have to worry about them being “too big to fail”. One of the most evil acts of FDR was to get rid of the small city banks. But he always was the tool of the Central Banks.
If the taxpayers are on the hook if a bank fails, then they are in essence a part of the government.
Perhaps is conscience is bothering him.
Let’s see now..
We allow billions of FDI-insured deposits to be placed under the control of “heads-I-win/tails-you-lose” speculators...
WHAT could possibly go wrong?
Let’s see now..
We allow billions of FDI-insured deposits to be placed under the control of “heads-I-win/tails-you-lose” speculators...
WHAT could possibly go wrong?
Let’s see now..
We allow billions of FDI-insured deposits to be placed under the control of “heads-I-win/tails-you-lose” speculators...
WHAT could possibly go wrong?
They need to be broken up, geographically distributed so they don't hire the same lemmings as managers and their proprietary operations need to be moved to completely separate entities that also need to be smaller.
It should be made clear in both law and fact that NO proprietary trading operations will be covered by any kind of bailout or guarantee by the Federal government or the Federal Reserve, and neither should the Federal Reserve manipulate interest rates to prop up stock prices.
That’s the gist of the problem: even if the accounts are not FDI insured, if the banks are “too big to fail” they might as well be.
Anti-Trust Laws?!?!?!?! What are those?
“Hillary Clinton and the Republican candidates do not.”
Anyone know if Trump or Cruz has ever made a statement on this issue?
Maybe, but not enough to disgorge the 700 million in his pockets, n’est pas ?
I think that the current $250,000 FDIC “guarantee” protects hot-money brokers more than it protects “small-depositors”.
IMO, a reduction of the FDIC “guarantee” to $100,000 — per bank — will protect everyone who actually “needs” protection.
Moreover, that move would reduce the Government’s future “liabilities”.
A win-win.
If big government is bad, why is big business/banks good?
The same problems exist. To big to fail, to big to be allowed to exist.
Too big to fail means taxpayers are on the hook, for all intents and purposes, that makes it nationalized.
Only the risk is nationalized.
Profit is privatized.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.