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Forum Post: How to Cut Megabanks Down to Size

Posted 1 year ago on Jan. 19, 2013, 5:19 p.m. EST by grapes (2830)
This content is user submitted and not an official statement

A board member of our Federal Reserve, Richard W. Fisher, the president of the Federal Reserve Bank of Dallas, has spoken about cutting the megabanks down to size (and calling our politician's baseless claim about no more bailouts).

From New York Times' Gretchen Morgenson:

" IT is a prevailing myth in Washington: big bailouts are over for good. Never again, the line goes, could giant financial institutions imperil the nation’s economy.

This is nonsense, of course. Whatever regulators and lawmakers say, the Dodd-Frank financial overhaul lacks any guarantee that taxpayers won’t have to come to the rescue again.

So it was refreshing to hear a member of the Federal Reserve Board debunk the bailouts-are-gone theory last week."

How to Cut Megabanks Down to Size

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20 Comments


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[-] 3 points by shadz66 (18275) 1 year ago

What Jack Lew won't do - 'FINANCIAL REFORM' , 10 Points from : http://www.jillstein.org/issues :

  • Break up the oversized banks that are “too big to fail,” starting with Bank of America.

  • Create a Corporation for Economic Democracy, a new federal corporation (like the Corporation for Public Broadcasting) to provide publicity, training, education, and direct financing for cooperative development and for democratic reforms to make government agencies, private associations, and business enterprises more participatory.

  • End bailouts for the financial elite and use the FDIC resolution process for failed banks to reopen them as public banks where possible after failed loans and underlying assets are auctioned off.

  • Bring monetary policy under democratic control by prohibiting private banks from creating money, thus restoring government's Constitutional authority.

  • Let pension funds be managed by boards controlled by workers, not corporate managers.

  • Regulate all financial derivatives and require them to be traded on open exchanges.

  • Require banks to use honest bookkeeping so that toxic assets cannot be hidden or sold to unsuspecting persons.

  • Restore the Glass-Steagall separation of depository commercial banks from speculative investment banks.

  • Democratize monetary policy to bring about public control of the money supply and credit creation. This means nationalizing the private bank-dominated Federal Reserve Banks and placing them under a Federal Monetary Authority within the Treasury Department.

  • Establish federal, state, and municipal publicly-owned banks that function as non-profit utilities and focus on helping people, not enriching themselves.

Also - "Hit The Bankers Where It Hurts - My Advice to the Occupy Wall Street Protesters", by Matt Taibbi ; http://www.commondreams.org/headline/2011/10/13-4?print :

  1. Break up the monopolies. The so-called "Too Big to Fail" financial companies – now sometimes called by the more accurate term "Systemically Dangerous Institutions" – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled; a good start would be to repeal the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.

  2. Pay for your own bailouts. A tax of 0.1 percent on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives would generate enough revenue to pay us back for the bailouts, and still have plenty left over to fight the deficits the banks claim to be so worried about. It would also deter the endless chase for instant profits through computerized insider-trading schemes like High Frequency Trading, and force Wall Street to go back to the job it's supposed to be doing, i.e., making sober investments in job-creating businesses and watching them grow.

  3. No public money for private lobbying. A company that receives a public bailout should not be allowed to use the taxpayer's own money to lobby against him. You can either suck on the public teat or influence the next presidential race, but you can't do both. Butt out for once and let the people choose the next president and Congress.

  4. Tax hedge-fund gamblers. For starters, we need an immediate repeal of the preposterous and indefensible carried-interest tax break, which allows hedge-fund titans like Stevie Cohen and John Paulson to pay taxes of only 15 percent on their billions in gambling income, while ordinary Americans pay twice that for teaching kids and putting out fires. I defy any politician to stand up and defend that loophole during an election year.

  5. Change the way bankers get paid. We need new laws preventing Wall Street executives from getting bonuses upfront for deals that might blow up in all of our faces later. It should be: You make a deal today, you get company stock you can redeem two or three years from now. That forces everyone to be invested in his own company's long-term health – no more Joe Cassanos pocketing multimillion-dollar bonuses for destroying the AIGs of the world.

Finally, please also read some more Matt Taibbi : http://www.rollingstone.com/politics/blogs/taibblog !!!

radix omnium malorum est cupiditas ...

[-] 3 points by grapes (2830) 1 year ago

These are all very sensible proposals.

[-] 2 points by OTP (-203) from Tampa, FL 1 year ago

How can it be a prevailing myth when its still happening each month to the tune of 85 billion a month?

[-] 1 points by grapes (2830) 1 year ago

Our federal reserve uses the 85 billion dollars a month to buy up mortgage-backed securities. I presume that our allies in Europe who had trusted us the most had to be "federally supported" by our vacuuming up the questionable mortgage-based securities to add to the balance sheet of our federal reserve. This money can flow to Europe and shore up the banks there to prevent an implosion of them. As I mentioned before, this will probably end this year so the Europeans may be trying to seek other means of support for their banks. Gold calms nerves a lot! Was this why Germany showed off its gold bars and started calling them home?

[-] 1 points by grapes (2830) 1 year ago

Who is in the bath? Stop! Don't stand up -- let me get the towel first!

[-] 1 points by OTP (-203) from Tampa, FL 1 year ago

hahaha

[-] 1 points by grapes (2830) 1 year ago

Curious cats. Don't get wet!

[-] 1 points by DKAtoday (34982) from Coon Rapids, MN 1 year ago

Sure about that?

[-] 1 points by grapes (2830) 1 year ago

Too late but cats have nine lives -- see how it is emerging again, miffed but still a feline that can roar and paw down the shower curtain next time.

[-] 1 points by DKAtoday (34982) from Coon Rapids, MN 1 year ago

lol

[-] 1 points by grapes (2830) 1 year ago

Was that the very skinny John Thain hanging onto his gold faucet fixture instead of shredding his precious shower curtain? Bravo! He made it to Bank of America.

[-] 1 points by DKAtoday (34982) from Coon Rapids, MN 1 year ago

I think it might have been trump's hair piece getting a new dye job.

[-] 2 points by DKAtoday (34982) from Coon Rapids, MN 1 year ago

Nice mug shot.

[-] 1 points by grapes (2830) 1 year ago

It was a bullish buy signal -- you could have retired comfortably if you had heeded that at the time. Ha, so he could not buy your soul -- good man, DKAtoday, there are better ways for sure.

[-] 2 points by DKAtoday (34982) from Coon Rapids, MN 1 year ago

I like my soul just fine - thx.

[-] 1 points by bensdad (8977) 1 year ago

big bailouts are over for good. Never again, the line goes, could giant financial institutions imperil the nation’s economy.


who said that when ?


[-] 1 points by grapes (2830) 1 year ago

When Dodd-Frank was signed into law, "Never" was definitely uttered. It is the wisdom of crowds -- we are sleepy; we are very very sleepy; we see what we want to see; we hear what we want to hear; we love our freedom to zzzzz...

[-] 1 points by grapes (2830) 1 year ago

All five previous investment banks, Morgan Stanley, Bear Stearns, Lehman Brothers, Merrill Lynch, and Goldman Sachs, no longer exist independently of government backstopping. They are ALL being backed up by the taxpayers:

Morgan Stanley and Goldman Sachs converted to bank holding companies

Bear Stearns was taken over by J.P. Morgan Chase

Merrill Lynch went to Bank of America

Lehman Brothers went bankrupt.

The way that these investment banks' problems were "solved" was by getting federal reserve lifelines and becoming parts of even bigger banks, all of which are backed by the taxpayers.

What if there is a banking crisis? Globally, Basel III (which aims to put global banking on a sounder basis than what we experienced) implementation was pushed back four years reportedly due to sovereign bonds (think Greece) becoming rather worthless as bank reserves, shortfall based on 2010 pre-euro-crisis numbers having come to ~11 billion dollars per bank. The deferred implementation of Basel III signals that the burden of safeguarding global banking may simply be too onerous for the global banks to bear in the near and foreseeable future due to their financial weakness. Could Germany's repatriating its gold reserve really be an effort to forestall the possible weakness in banking?