As you know I'm no friend of the big banks. They have systematically and, through their intensive lobbying, legally raped and pillaged America. Some would say the entire world. Now our illustrious congress is debating whether to include/enforce "The Volcker Rule" as part of our banking "reforms". Those reforms have been watered down so much already they're of dubious value, but still I suppose they're better than no reforms as all.
The Volcker Rule would prevent banks from "proprietary trading", which means taking their money and betting it on highly risky trades. "But if it's their money, why should we care" you ask? Because they can't lose. Only we taxpayers can lose. If they gamble big and win, they make mega-billions of dollars, meaning huge profits and BIG bonuses for their top executives. But if they gamble big and lose, like they all did back in 2008, they know the US Government....you and I....will step in and make good their losses. (They'll just have to be more discreet when they pass out their bonuses.)
They know they're "too big to fail"....if they lose everything and go out of business they'll take the whole country with them. They know we won't let that happen. It would be like you and I partying in Vegas with daddy's money. As long as somebody is behind us to cover our losses, why hold back? That's what they call "moral hazard".
The banks have already successfully beat back a proposal to break them up into smaller parts. Under this scenario if their freestanding proprietary trading company failed it would just be allowed to go bankrupt. It wouldn't hurt the bank's depositors (as they would be in a separate freestanding company) and the FDIC / U S Treasury wouldn't be out anything. Just the proprietary trading company's investors would lose. They do NOT like that idea! They would lose their Sugar Daddy, aka Uncle Sam.
The time allowed for the banks to plead their case why they should continue to be allowed to gamble wildly has passed. It's time for congress to decide. Are they going to cave....again....to the banks and agree to cover their losses with our taxpayer money, or will they introduce some prudence to the banking biz? My guess? Bend over, America.
Will it do any good to write your Congressman and Senators and express your opinion? Only if you attach a check for about $100,000 with your letter. Those seem to be the only letters they read.
S
Gloom, despair & agony on me... it's crazy-making - it really is!
ReplyDeleteI think the answer to your question depends on who wins the next election. Yes, I know both sides have lobbyists and no system is perfect, but one side does do more to protect the middle class while the other just talks about it. Have a great day.
ReplyDeleteWell ranted!
ReplyDeleteIt would be interesting if the people who give the most lip service to capitalism actually tried it once in a while. The way capitalism works, or so I was told during my civics lessons, is that when a business fails, it goes OUT OF BUSINESS. This results in GOOD businesses being rewarded with more customers and BAD businesses becoming non-existent.
ReplyDeleteNow, correct me if I'm wrong, but do you recall anything in YOUR civics classes that said some businesses are too big to fail? And that, if they look as though they might, government should step in and give them OUR money?
Nah, didn't think so.
Grrrrrrrrrrrrrr.