I would imagine major bank CEO's everywhere are holding their heads in their hands, wondering how things had gone so wrong. Four years ago American banks hit the wall, essentially going bust, being saved at the last minute by the taxpayers. Now the European banks are finding they have no place left to hide and it looks like we're in for Round II.
As I've said for years, banks can't be trusted. They shoveled money as fast as they could to European countries, raking off HUGE profits and instant commissions for themselves in the process. Now the sovereign debtor nations can't pay back their lenders, the lenders can't afford to write it all off, and the EU probably can't afford to bail everyone out. It's OH SHIT time!
I think it's time to admit the Anglo-American freewheeling form of banking/capitalism has flaws. They (the financiers) are like little kids: Left unchecked, they'll gorge themselves at the dessert buffet until they explode. They need adult supervision, someone responsible enough to say "No". I understand why they fight regulation at every turn...they don't like being told "No". Most little kids don't.
It's time to spank the little ruffians, ground them, send them to their rooms, no TV, no video games, and no cell phones. Break up the banks and regulate and supervise their surviving parts....not just wink and nod but sternly supervise their activities. Prosecute individuals who played games with their depositors and the taxpayers money, claw back their ill-gotten gains, and confiscate their properties like you would a common mafiosi. That should put bankers world-wide on notice. Enough!
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Yes, it's way past time for some punishment for their foul deeds.
ReplyDeleteThere is no problem with Banks today, the problem is with the people that run the banks. They don't bank, they speculate. When they are right in their speculation they are geniouses and are paid exhorbatant sums of money. When they are wrong we are all f*cked!
ReplyDeleteI'm not sure we need more regulation, but you are correct, we need to prosecute when regulations are broken!
cranky
You're right Joe...banks themselves are just brick and morter. It's their leadership that is errant. But lemme ask you this: what will force the banks/bankers to act responsibly (not gamble like drunken sailors) if it isn't some sort of strong oversight/regulation? "The Market" that Greenspan was so sure would keep the bankers in line certainly didn't, and apparently they're right back to their old ways today, having learned nothing from the meltdown of '08. How many other Chase-style boo-boo's are playing out right now? I'm not sure we should just sit here with our thumbs up our a*sses waiting to find out. I'd rather be pro-active.
ReplyDeleteS
I wish we could pin a badge on you and give you the authority to straighten all this out. But why would I saddle you with such a thankless job?
ReplyDeleteI'm not sure that the regulations and oversight are not in place, however some transgressions are difficult to pin point and the regulators are reticent(SP?) to inforce them. the politicians (all parties) get millions and like to blow smoke, but tend to look the other way. Take the JP MOrgan deal. The bank was speculating against regulations, but disguised the trades as "Hedges" against risk. Jamie Dimon acts like he doesn't know what was going on and congress makes nothing but noise...so far.
ReplyDelete"...so far" Do I dare hope something good (for us, not the bankers) might eventually happen?
ReplyDeleteJoe, you're right again, damn it! We have enough rules and regulations. What we DON'T have is any real enforcement. The fox runs the hen house. It's all about politics, and both parties are up to their eyeballs in the sleaze.
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You are wrong about "...major bank CEO's everywhere are holding their heads in their hands, wondering how things had gone so wrong..."
ReplyDeleteThere is no way you can hold your head in your hands while holding big wads of bonus money with both hands.
(BTW - I finally figured out the meaning behind your handle, lowandslow - see my latest blog entry. Can't believe I didn't know before)
"There is no way you can hold your head in your hands while holding big wads of bonus money with both hands."
ReplyDeleteLOL! Touche! Did I ever tell you about my aviation past? :)
S
Sometimes I am amazed at how little people know about capitalism. What does everyone think banks should do with your money? Put it in the bank? Get a big vault and stick it inside? Does anyone here know what banks are for?
ReplyDeleteBanks in their current iteration are a recent phenomonen, Burst, an anomali. Banks are supposed to put people who have an excess of capital together with people who need capital, and take a percentage for themselves for providing this service. Banks are supposed to be risk-wary. Peddling "synthetic credit derivatives" has nothing to do with matching those who have and those who need capital. They have everything to do with making the banks tons of instant, fat fees. That's it. Why is this so hard for you to understand?
ReplyDeleteIt isn't hard to understand. Banks have done the same thing since the Renaissance. Risk-adverse generally means small returns as reflected in low cap-rates. Public banks, like healthcare, have become overly burdened by legislation and bureaucracy. Where these encumbrances do not exist, as in private banks, the risk/reward ratio and cap rates are much higher. Yet, few private banks go under and you certainly don't hear about their failed investments.
DeleteWhen I read the comments and your post, it sounds as if I am watching Good Morning, America.
Private banks....you mean like Donaldson Lufkin Jenrette, Lehman Brothers, Morgan Stanley, etc...????? The things banks have been doing since the Rennaissance are NOT the things they've been doing for the past decade. Every time the banks decide they need to "enhance their returns" they turn to speculation, and every time it turns out badly. The final bit of sanity in the banking biz was trampeled in 1999 by the Gramm-Leachy-Bliley Act that killed Glass-Steagall. After that banking became a runaway train. (Interesting how Phil Gramm went from Chair of the Senate Banking Committee to Vice-Chair of UBS. Cha-Ching!!)
ReplyDeleteBurst, my sources are widely varied, including books written by participants at the critical times in history, local and national newspapers, BBC News, The Economist, Spiegel, and yes, Fox News and ABC. I like to hear ALL sides of an issue.
Say "hey" to Rush for me.
Scott, you are jumping to a conclusion, my liberal friend. If by Rush you mean Limbaugh, I don't listen to him. Not that I wouldn't but he is on during the day when I am working.
ReplyDeleteWhile those mentioned above my have private banks, it wasn't their private banks that got them in trouble. It was their real estate investment groups taking advantage of Dodd/Frank.
Most of your sources are liberal. It appears that you are falling for the weight of the evidence rather than objectivity.
Banks, since the Renaissance, have been odds makers on the success of ventures. The bigger the risk, the greater was the cost of the loaned money. In other words, if you were going to bet your kingdom on a war and you needed troops, it might cost you the crown jewels.
BTW, I suppose you are aware of the Durbin amendment to the Dodd/Frank Act? More government meddling for which we are about to pay dearly. But I'm sure someone on ABC will make you understand that it was Bush's fault.
Your logic escapes me and your timeline isn't even close to accurate. To say "it wasn't their private banks...but their real estate investment groups"....it's still THEIR subsidiary. It still took down the whole bank!
ReplyDeleteAnd your timeline: the real estate bubble was rapidly inflating from 2000 to 2007 and officially imploded in 2008. Dodd-Frank (2 giant crooks BTW) wasn't even enacted until July, 2010. Please explain how D-F caused the real estate bubble 10 years before it even existed?
Oh, and another of my source materials, the Wall Street Journal, is a leftist commie rag if their ever was one. What source material do you get your knowledge of current affairs from?
You seem to be a GW Bush apologist, Burst. Don't waste the effort on me. I don't blame him (solely) for the Great Meltdown of '08. The origins of that scam began back in the '90s when we had a Democrat president (Clinton) and a Republican Congress. Then it gained steam under a Republican president and a Democrat Congress. As I've time and again, THEY ARE ALL CROOKS! They are ALL in the financier's back pocket. I'm a political cynic for a reason.
ReplyDeleteAnd your statement, "it wasn't their private banking...but their real estate investment group" validates the main point of all my rants: we need to break apart the giant financial institutions into their various parts. In other words re/build Glass-Steagall. Build firewalls between the various components. Government guarantee (FDIC) only the commercial bank. The rest can sink or swim...I don't care. How is this liberal, or conservative, or anything besides logical?
ReplyDeleteScott...
ReplyDeleteWhat do you want me to tell you? If you look at the cause of the mortgage problem, you'll find Senator Dodd and Congressman Frank working together to lower loan standards so that the previously unqualified could get loans. Those companies that heavily invested in these, essentially, junk bonds were the ones that were hard hit. Bankruptcy for their mistakes is A-OK by me.
You made the Rush comment so I responded in kind. But to back my claim that you are a lib, is your constant appeal to increased regulation:
" Break up the banks and regulate and supervise their surviving parts....not just wink and nod but sternly supervise their activities. Prosecute individuals who played games with their depositors and the taxpayers money, claw back their ill-gotten gains, and confiscate their properties like you would a common mafiosi."
I think doing that would require increased regulation and a large bureaucracy to "supervise" their activities.
Now you've called me a Bush apologist. OK, not as bad as questioning my parentage but I'll respond with you'd make a good minister in the Obama administration with your tendency to want government to find the solution to any and all problems.
:)
You're right...Dodd and Frank were at the epicenter of the fraudulent mortgage blow-up. I want the President, whoever he happens to be, whichever party he's associated with, to put in place tough oversight AND ENFORCEMENT of our financial service industry. If you know of a different way to get the financiers to act responsibly, please share it with me. All I know is that "the market" can't keep them in line (witness 2008), and they aren't about to limit themselves. Greed trumps reason.
ReplyDeleteIMO rarely can government solve a problem. I can't count the times I've railed here against our bloated bureaucracy at every level. But I can promise you that in my industry (homebuilding) contractors would throw up absolute trash...unsafe and unhealthy homes...if there weren't building codes and inspections and inspectors with teeth. I think banking needs the same kind of enforcement forced on it. These are a couple of instances where government CAN do something constructive.
I can't remember the last time I voted for a Democrat, not that I wouldn't if I felt he/she had something superior to offer. You're the one who has said several times, "So I guess you're going to blame Bush for that, too." I never blamed Bush. Never happened. As I pointed out, BOTH parties were equally guilty. Right now I blame Obama for not taking control of them when he had all the major bankers in a room early in his presidency (March, 2009?). He let 'em off. He had 'em sweating bullets when they came in, and they were back-slapping giddy when they left. He blinked.
I would ask that you please share with me whatever books/magazines/websites you're getting your info from. I want to see things from all sides, and apparently you have information I haven't yet seen.
Still friends I hope. ;)
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apparently burstmode doesn't have any sources, he only demands them of others. Because he's a genius.
ReplyDelete