Skip to comments.Brokers threatened by run on shadow bank system - Regulators eye $10 trillion market...
Posted on 06/20/2008 10:01:11 AM PDT by Ernest_at_the_Beach
SAN FRANCISCO (MarketWatch) -- A network of lenders, brokers and opaque financing vehicles outside traditional banking that ballooned during the bull market now is under siege as regulators threaten a crackdown on the so-called shadow banking system.
Big brokerage firms like Goldman Sachs, Lehman Brothers , Morgan Stanley, and Merrill Lynch,
which some say are the biggest players in this non-bank financial network, may have the most to lose from stricter regulation.
(Excerpt) Read more at marketwatch.com ...
Regulating these firms is impossible because they ARE the government. Any new regulation will coincide with a bailout.
I agree that there should be some regulation otherwise the suffering is widespread and economy becomes a yo-yo.
The idea is that same rules that Federal Reserve lives by should be applied on shadow bankers as their size has gown equivalent to central banks.
The whole world is facing inflation and bad stuff is on the horizon.
This could have been avoided and nation would not have been trending hard left if someone could have nipped the evil in the bud.
Bailouts are needed because there was no regulation.
They simply did not have any liquidity to adjust to short term needs.
People don’t know who is offering them Mortgages.
These guys are.
Yet when they do not follow traditional banking guidelines, they go out of business and millions who thought that they were taking out loans like people TRADIONALLY do are now going to be wiped out.
This protects everyone.
If they are going to act like Banks, they should follow the same guidelines or find some other business.
The mother lured the daughters into the trp where they were murdered. I hope she hangs.
Cramer BRAGGED how he committed a CRIME by doing naked shorts - the SEC, etc refuses to enforce existing laws so why do we need new ones?
The US has been preaching transparency and rule-of-law to the governments of a lot of third-world hellholes. We could use some here, particularly when the taxpayers are taking part of the risk.
Now I know why my grandmother said NEVER trust a banker.
Oops. Wrong thread.
BTTT, I have always believed anything that is not based on something real is a shell game with the taxpayer as the fool.
Congress critters will never bite the hand that feeds it. Real reform would be to limit campaign contributions to individuals from their own state.
Scary! If you don't know how a derivative works.
That is scary!
Proof Jim Sinclair doesn't know how derivatives work.
Even if we use the figure that experience tells us is the cost of derivative contract failure is 2 to 3% of the notational value, that’s what, $20 trillion+?
Even that number sounds too high.
I’m fully prepared, however, to believe that the sum total costs of failed counter-parties will reach or exceed $1 trillion. The under-capitalization of many of these derivative contract holders is absurd. Look no further than the so-called “monolines” - they have nowhere near the capitalization to handle the CDS instruments they’re in now, which is why they were downgraded this week.
Derivative contract failure is 2% to 3%? Says who? Where?
What does "contract failure" even mean?
thats what, $20 trillion+?
If nobody long ever offset anything with a short. If no one short ever offset anything with a long.
Im fully prepared, however, to believe that the sum total costs of failed counter-parties will reach or exceed $1 trillion.
Sum total costs are zero. Every loss on a derivative is offset by a gain on the other side.
Look no further than the so-called monolines - they have nowhere near the capitalization to handle the CDS instruments theyre in now
Yes, it'll suck if you were counting on a monoline to pay you and they end up defaulting.
President, Paulson, Bernanke will all hold there ground, despite threats to them that they will offshore and damage the economy further if the party for the shadow banking system stops. Sheila Bain is sickening. Get her off the Fed now Mr. President.
The pain will be massive as a depression unfolds over a couple year period and final resounding tipping point of collapse. The President knows this and is acting honorably for the American people, but half the dummies out there will blame him entirely for there pain when it happens.
Make money now while you can and prepare a back-up plan and I am not talking about hedging your portfolio bets, I am talking about a physical place to go. Mobs of hungry, enraged, entitled, deluded, spoiled population will feel it has a right to break into your nice home you slaved your life away for and do unpleasant things to your family. The guys at the shadow banking system who knew this or couldn’t understand the economics behind these schemes have 20 foot high fences and security. Do you?