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66 Comments
- tonmil, on 05/09/2009, -3/+41Actually, the banking system was ruined in the '90s with the passage of the Gramm-Leach-Bliley Act which overturned the Glass-Steagall Act of the '30s. The government should split all banks that are both commercial and investment banks.
- tonmil, on 05/09/2009, -4/+36I doubt the government will break up the banks since they have been allowing the opposite recently:
- Wells buying Wachovia
- JPMC buying WAMU
- BofA buying Merrill
Break them up only if there is not enough competition. - AngelBunny, on 05/10/2009, -0/+29"Big US Banks: Will the Government Break Them Up?" no
SHOULD the gov break them up (and the FED)? yes - rmxz, on 05/10/2009, -1/+25"Too big to fail" companies appear to be a bigger threat to the US than Iraq + Iran + Taliban put together. They've proven they can take the whole country hostage.
- sodade, on 05/10/2009, -1/+24"Too big to allow to fail" = Too big to allow to exist. We can not let these people hold our economy hostage to their demands any longer.
- solmakou, on 05/09/2009, -6/+26They never should have allowed the banks to go across state lines, huge mistake.
- Lederhosed, on 05/09/2009, -2/+20It's funny that the conventional wisdom used to be that the larger banks are, the more stable they are. Now that idea has flipped.
- foucaultsvac, on 05/10/2009, -4/+17I'd like most of the federal government to break up and liquidate its assets into the 50 smaller governments, keeping just enough people to keep the lights on and perform its original duties laid out in its business plan. It has monopolized the market for quite some time now.
- rmxz, on 05/10/2009, -1/+12"Too big to fail" means there *is* not enough competition.
If there were enough competition, than the industry could survive a failure. - inactive, on 05/10/2009, -1/+9The banks have no interest in remaining stable. The boom and bust cycle is not some unintentional side effect of the system. During each bust it is largely the working class and poor who lose any small amount of wealth they may have manged to acquire over time in the form of pensions, invested savings, stock, etc.
Meanwhile the top one percent come out of the maelstrom richer than ever and preaching about how if you had "stayed the course" you could have joined them. Never mind the fact that their wealth is shored up by shameless government hand outs and deregulation that allows them to shed their financial responsibilities.
Meanwhile bankruptcy law is changed so that the average Joe who falls on hard times can not escape indebtedness. You may soon see a return of debtors prison in this country... - angryfirelord, on 05/10/2009, -0/+7Why would the government do that? Bank of America has shown that it's perfectly capable of failing by itself.
- ZhiZaki, on 05/10/2009, -2/+9(my opinion here)
- DarkShroud, on 05/10/2009, -1/+8That is not the job of the Fed. That is the job of bankruptcy court. You know that place where failed businesses are supposed to go.
- KJGJ, on 05/10/2009, -1/+7Please say you forgot /s...
- DangerCollie, on 05/10/2009, -0/+6Funny that the anti-trust laws already on the books didn't kick in anywhere along the process of them becoming too big to fail. We may not need a lot of new regulation, just start actually enforcing what's already on the books.
- LokitheComplex, on 05/10/2009, -0/+5I disagree.
- mah2cent, on 05/10/2009, -2/+7This whole problem started in 1913 with the creation of the Fed, a private corporation created by the Congress with monopoly powers over the creation of money (legal counterfeiting) and with the following powers. "Among the Fed’s "functions" are the regulation of:
* Bank holding companies
* State-chartered banks
* Foreign branches of member banks
* Edge and agreement corporations
* U.S. state-licensed branches, agencies, and representative offices of foreign banks
* Nonbanking activities of foreign banks
* National banks
* Savings banks
* Nonbank subsidiaries of bank holding companies
* Thrift holding companies
* Financial reporting procedures
* Accounting policies of banks
* Business "continuity" in case of economic emergencies
* Consumer protection laws
* Securities dealings of banks
* Information technology used by banks
* Foreign investment by banks
* Foreign lending by banks
* Branch banking
* Bank mergers and acquisitions
* Who may own a bank
* Capital "adequacy standards"
* Extensions of credit for the purchase of securities
* Equal opportunity lending
* Mortgage disclosure information
* Reserve requirements
* Electronic funds transfers
* Interbank liabilities
* Community Reinvestment Act sub-prime lending demands
* All international banking operations
* Consumer leasing
* Privacy of consumer financial information
* Payments on demand deposits
* "Fair Credit" reporting
* Transactions between member banks and their affiliates
* Truth in lending
* Truth in savings". (Source: Fed publication entitled "The Federal Reserve System: Purposes and Functions)
To say the banks are a fault for the current economic crisis is a bit overboard since the Fed is in control of its members. The is not to say that the management of these banks are not guilty of stupidity and should be removed by the shareholders for their mismanagment. A lot of what the bank did though is due to government regulation which in no small way created the sub-prime loans. The packaging of loans as security was a way to keep the banks liquid for additional lending. The fact that so many purchased them was testimony to a complete lack of investor investigation prior to purchasing them.
The truth is that no one is too big to fail and should just be allowed to go bankrupt and clear the mess. Other banks will pick up the pieces and carry on with the business of lending.
We do not need more government regulation, we need less. As a matter of fact we do not need any regulation except to end the Fed, the IRS and a whole host of other "ABC" federal agencies that impede private enterprise and intrude on the citizen's personal freedom.
. - muckemuck, on 05/10/2009, -0/+5Ah yes.. Gramm was one of the ones who helped set this in motion.. but... hmmm.. where have I heard that name before? Oh! Here: http://www.youtube.com/watch?v=9Uql4qVQYFA
- thealsir, on 05/10/2009, -0/+4Excessive centralization of power is not a good thing. When something becomes big enough to threaten to topple the economy if it fails, it's too big. This may just be the thing.
- BeerRules, on 05/10/2009, -0/+3The government a day late and a dollar short for that. Back a couple months ago they were begging for banks to buy up the weaker banks. Wachovia, Citi and a ton of other banks merged at the governments request. Now to come back and say oh no that company that you bought up all their bad debt, and took on all their issues, you have to break them off and can't make a profit off them. After that why would any bank merge next time there were huge issues?
- cheesehead, on 05/10/2009, -0/+3I completely agree. I wonder how many diggers realize that when your gov't starts wars, or bails out the smaller banks it is borrowing money from the private bank, called the Fed at high rates and mortgaging your future and your children's future with compounding interest rates. All unnecessarily because the Government could print it's own money and avoid paying usuary to these dark masters.
- jfreeman, on 05/10/2009, -0/+3It can survive a failure, but the government will gladly tell us it won't so that they can make a grab for more power over the system.
- LinuxLars, on 05/10/2009, -1/+4Excellent comment. Thanks.
- inactive, on 05/10/2009, -0/+3Why break them up when you can bully them around and place your political cronies on their boards and in their upper management?
- UtahApocalyse, on 05/10/2009, -0/+3Hell no they won't. The goal is to put them all together into one big National bank.
- connieLingus, on 05/10/2009, -1/+4sure sounds great...cant wait until i get the same quality of service at my bank as i get at the local department of motor vehicles or other gov't offices
- jgzman, on 05/10/2009, -0/+2I've only been saying this since the first damn-fool newscaster uttered the phrase.
Sadly, no one I know IRL believes me. - topcat5, on 05/10/2009, -0/+2I'll believe it when I see it. They should have broken them up months ago and fired the management. Why Ken Lewis still has a job boggles the mind. Yet there he is along with all the other crooks of these institutions that screwed everything up while collecting millions in compensation.
- inactive, on 05/10/2009, -0/+2CNBC wants to know if we should stop dumping our money into a hole as well.
http://www.youtube.com/watch?v=JnX-D4kkPOQ
This entire article is a twisted double think propaganda piece. There is not even the remotest possibility that the government is considering breaking up these institutions. If you think otherwise please excuse me while I laugh in your face. - esc27, on 05/11/2009, -0/+2I've thought about this ever since I first heard "too big to fail." If they are to big, then just split them to make them smaller.
- BassMastr, on 05/10/2009, -0/+2I have no idea what will happen but whatever they decide i hope they hurry up and just do it so we can get to work moving forward.
- hyderalamgir, on 05/10/2009, -0/+2The bigger the boozo...
- 15charmaxwtf, on 05/10/2009, -2/+4It would have been simpler not to create a banking cartel, namely the Federal Reserve System.
- ZhiZaki, on 05/10/2009, -0/+2I offer disapproval of your opinion and supplement with a rebuttal.
- mahadiga, on 05/10/2009, -0/+2Govt must REGULATE market capitalization of all listed companies to TWICE their quarterly revenue.
This will
* Prevent Ponzi scams in Corporate Management and Stock Markets
* Will open markets for start-ups resulting in millions of new jobs.
http://tr.im/juqj
"If it moves, tax it. If it keeps moving, REGULATE it. And if it stops moving, subsidize it."-- Reagon - jfreeman, on 05/10/2009, -2/+4Repeal the Gramm-Leach-Bliley Act and you'll just have a bubble in another sector next time. The real problem is not a lack of regulation - it is artificial manipulation of money and credit. Stop bureaucrats from toying with the system and you'll see it stabilize.
- DarkShroud, on 05/10/2009, -1/+3The Feds can't even run the post office and you want them handling your finances?
- logir, on 05/12/2009, -0/+1Please take this branch to reddit where it belongs. You can't do proper nesting here anyway.
- VincentThomas, on 05/11/2009, -1/+2Wait... what is that up in the sky?!
It's republicans!
It's democrats!
No... wait! Thank god it isn't either! It's libertarians! - jgzman, on 05/10/2009, -0/+1As far as I am concerned, that's the point. I doubt it was intended that way, just a happy accident.
Companies merge and buy up fairly often; when was the last time you heard of a big company splitting into two completely separate companies? There must come times to let or force large companies to split up or fail, otherwise we will end up with one company for everything. Or, more realistically, two companies for everything. - g00dETH3R, on 05/11/2009, -0/+1Diggers do give a ***** because it's all a conspiracy theory, if the main stream media doesn't talk about it it's a conspiracy.
/s - inactive, on 05/10/2009, -0/+1Economics will tell you that monopolies don't equate to lower prices. But do equate to poor quality, high prices, poor service. History confirms it, see Ma Bell.
- defendliberty, on 05/10/2009, -0/+1Don't forget that BofA was forced to buy Merril:
In potentially explosive testimony to regulators, Bank of America’s chief executive, Ken Lewis, has claimed the US treasury ordered him to press ahead with a buyout of Merrill and to keep quiet about the Wall Street brokerage’s mounting losses. http://tinyurl.com/ojpr8p - sndream, on 05/10/2009, -0/+1Well, maybe 5 years later when this whole mess is completely gone.
But now, all we see is the govt holding shotgun marriage between large failing financial institution with even larger financial institution:
JP Morgan Chase brought Bears & WaMu
BOA brought Merrill
Wells Fargo brought Wachovia - cvrti5, on 05/10/2009, -1/+2I love the idea of breaking up these "too big to fail" banks. Breaking them up will offer more competition, which benefits us all. It even benefits the workers at the banks because they have many different employment options. Competition is good!
- inactive, on 05/10/2009, -1/+2No he is perfectly predictable and that is why the good ole boys love him.
- jfreeman, on 05/10/2009, -1/+2Why is that such a mistake?
- Amnesia10, on 05/10/2009, -0/+1I think that the repeal of Glass Steagall Act was the biggest mistake. Which the banks asked for, before everyone blames Clinton. It was sponsored by three Republicans, Gramm-Leach-Bliley.
Breaking up the banks to much more manageable sizes is a very good thing, and splitting off investment banking before a new Glass-Steagall will be a very good start.
Allowing banks across state lines is all right if regulation worked. Maybe by making them each independent within a bank holding company. That way if one state bank collapses the rest of the bank survives. Though I would add that they should be banned from buying the failed banks assets. This would give them advantage when it came to buying them back, plus it could make them use it as a way of offloading bad debts. If they lost a chunk of their network they could lose other customers as well, who may want the extended network.
If any state bank failed then every division of the holding company should have immediate in depth inspections, to check each of the remaining banks. That could stop further failures. - MiddleAmerica, on 05/10/2009, -1/+2
I can promise, the big failing banks will have to be taken into receivership (temporary nationalization), just like the FDIC has already done to 32 banks so far this year.
Its a good thing, but it should have been done already.
I study this stuff, Geithner looks to be the reason this hasn't happened.
- Barackalypse, on 05/10/2009, -2/+2Funny, when I see the term "too-big-too-exist" I don't think of banks, I think of the Federal Government.
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