Passively compliant? Ha.
Binary response set:
0: Repug,VWRC,et al
1: Unstoppable ,MIC,Bankster et al
Anything outside of this set does not compute.
Another GREAT CONTRIBUTION from the whimpering, -slapped TB
Wow. I really hit nerve.
http://dallasfed.org/news/speeches/f...3/fs130316.cfmIn one of Patrick Henry’s greatest speeches, he noted that, “Different men often see the same subject in different lights.” And then he went on to appeal to all perspectives to do right: “This is no time for ceremony,” he said, for it “… is one of awful moment to this country.”
The great patriot was, of course, addressing the injustice of operating under the thumb of the British Crown. This morning, I am going to address what I consider the injustice of operating our economy under the thumb of financial ins utions that are so large they are considered “too big to fail” (TBTF).
I will argue that these ins utions operate under a privileged status that exacts an unfair tax upon the American people.
I will argue that they represent not only a threat to financial stability but to fair and open compe ion, that they are the prac ioners of crony capitalism and not the agents of democratic capitalism that makes our country great.
I will argue that by the attorney general’s own admission, their privileged status places them above the rule of law.
I will argue that the effort crafted by Congress to correct the problems of TBTF—known as the Dodd–Frank Act—is, despite its best intentions, counterproductive and needs to be changed, that it is an example of the triumph of hope over experience.
And, last, I will argue that dealing with TBTF is a cause that should be embraced by conservatives, liberals and moderates alike. For regardless of your ideological bent, there is no escaping the reality that TBTF banks’ bad decisions inflicted harm upon the American people during the “awful moment” of the 2008–09 crisis. The American people will be grateful to whoever liberates them from a recurrence of taxpayer bailouts.
A redneck bubba makes this speech at CPAC. Go figure.
Boom!
First, we would roll back the federal safety net—deposit insurance and the Federal Reserve’s discount window—to apply only to traditional commercial banks and not to the nonbank affiliates of bank holding companies or the parent companies themselves (for which the safety net was never intended).
Second, customers, creditors and counterparties of all nonbank affiliates and the parent holding companies would sign a simple, legally binding, unambiguous disclosure acknowledging and accepting that there is no government guarantee—ever—backstopping their investment. A similar disclaimer would apply to banks’ deposits outside the Federal Deposit Insurance Corp. (FDIC) protection limit and other unsecured debts.
Third, we recommend that the largest financial holding companies be restructured so that every one of their corporate en ies is subject to a speedy bankruptcy process, and in the case of the banking en ies themselves, that they be of a size that is “too small to save.” Addressing ins utional size is vital to maintaining a credible threat of failure, thereby providing a convincing case that policy has truly changed. This step gets both bank incentives and structure right, neither of which is accomplished by Dodd–Frank.
wish more politicians had the guts to say it. the rip off was, and remains, epochal.
http://www.americanbanker.com/issues...1057723-1.htmlFederal Reserve Board Chairman Ben Bernanke on Wednesday said regulators would take additional steps to eliminate the problem of "too big to fail" if current efforts fall short.
Although he noted progress that regulators have made, including new capital and liquidity rules targeting the largest ins utions, the central banker was clear that "too big to fail" has not yet been solved.
"We need to keep assessing," said Bernanke at a press conference following a two-day Federal Open Market Committee meeting. "If we don't achieve the goal, I think, we'll have to do additional steps. It's not something we can just forget about."
Bernanke said the issue remains a top priority for regulators.
"It may take some time, but 'too big to fail' was a major part of the source of the crisis and we will not have successfully responded to the crisis if we don't address that problem successfully," said Bernanke.
Beranke can talk it, but Congress won't EVER walk it
that he talks it is newsworthy in itself. if there's another financial panic within the decade the pols might come around -- supposing the political order remains intact.
"the pols might come around"
no, they won't. the pols, esp the Repugs, work for the financial sector. as we can see as the House Repugs gut and defund and loophole the already feeble regs post-2008.
http://www.bloomberg.com/news/2013-0...o-kill-it.htmlIn a previous post, I explained that banks are inherently fragile. One way to make them more robust is to increase equity capital requirements. This is the remedy advocated by Bloomberg View's editors. The banks call it radical but it's really pretty moderate, because it leaves the basic structure of banking alone. The same is true of calls to make the banks smaller. Smaller banks are still banks.
A genuinely radical approach would be to kill banking as we know it. Rip all banks, large or small, in two -- separate deposit-taking from credit-creation. Back the deposits one-for-one with reserves at the central bank. Then fund loans not with deposits or other money-like liabilities but by tapping investors who understand they've put their savings at risk.
This approach, unfamiliar as it sounds, has a long and distinguished academic lineage. Luminaries such as Irving Fisher, Milton Friedman and James Tobin have all advocated it
Think Your Money is Safe? Think Again: The Confiscation Scheme Planned for US and UK Depositors
A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear le to the banks of depositor funds.
New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19 th:
The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.)
But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.
The 15-page FDIC-BOE do ent is called “ Resolving Globally Active, Systemically Important, Financial Ins utions.” It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:
An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S ., the new equity would become capital in one or more newly formed operating en ies. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country , the new equity holders would take on the corresponding risk of being shareholders in a financial ins ution.
No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks. The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.
http://www.alternet.org/economy/thin...-uk-depositors
http://finance.yahoo.com/news/texans...000500764.htmlDuring Jeb Hensarling's first congressional bid, a man at a campaign stop in Athens, Texas, asked the Republican if he was "pro-business."
"No," the candidate replied, drawing curious stares from local business leaders who had gathered to hear him speak, a former Hensarling aide recalled. "I'm not pro-business. I'm pro-free enterprise."
Now, more than a decade later, that distinction has Wall Street on edge. The new chairman of the House financial services committee wants to limit taxpayers' exposure to banking, insurance and mortgage lending by unwinding government control of ins utions and programs the private sector depends on, from mortgage giants Fannie Mae and Freddie Mac to flood insurance.
Banks and other large financial ins utions are particularly concerned because Mr. Hensarling plans to push legislation that could require them to hold significantly more capital and establish new barriers between their federally insured deposits and other activities, including trading and investment banking.
"A great case can be made that we need greater capital and liquidity standards," the conservative 55-year-old Texan said in a recent interview. "Certainly, we have to do a better job ring-fencing, fire-walling—whatever metaphor you want to use—between an insured depository ins ution and a noninsured investment bank."
http://www.washingtonpost.com/opinio...7ad_story.htmlWhile some suggest that the 2010 Dodd-Frank Act removed all protections and subsidies for these largest firms, there is no evidence to support that assertion. Recently, Attorney General Eric Holder testified before the Senate that there is a reluctance to pursue legal actions against these firms for fear of destabilizing the markets. The subsidy and its effects remain entrenched and continue to distort the free market.
This form of corporate welfare allows the protected giants — those “too big to fail” — to profit when their subsidized bets pay off, while the safety net acts as a buffer when they lose, shifting much of the cost to the public. For example, the conglomerates can cover — and even double down on — their trading positions for extended periods using insured deposits or discounted loans from the Federal Reserve that come with the commercial bank charter. The subsidy often allows them to stay in the game long enough to win the bet, but it supersizes the loss if the bet should finally fall apart.
This system distorts the market and turns appropriate risk-taking into recklessness. The result is a more concentrated and powerful financial sector — and a more fragile economy. The way to return the financial services industry to the free market is by separating trading from commercial banks and by reforming the so-called shadow banking sector. Government guarantees should be limited primarily to those commercial banking activities that need it to function: the payments system and the intermediation process between short-term lenders and long-term borrowers.
Non-banking financial activities such as proprietary trading, market making and derivatives should be placed outside of commercial banks and so outside of the safety net. Trading and investment companies would be free to engage in these activities; they would be subject to the forces of market discipline and have greater incentives to innovate and thrive.
None of these reforms can be effective unless the shadow banking system is also removed from the safety net by ending the subsidy for money-market funds and the short-term ins utional loans known as repurchase agreements or “repos.” Money-market funds should be required to represent themselves for what they are: uninsured investments, the value of which changes daily. Similarly, repo lenders that accept mortgage-related collateral should be subject to the same bankruptcy laws as other secured creditors. (Details of my proposal can be found at www.fdic.gov/about/learn/board/hoenig/*index.html.)
As en lement reforms are being debated, the subsidy enjoyed by the most powerful players in the financial services industry should not be overlooked. Stronger, sustainable economic growth will stem from successful firms that are the right size and structure to support the economy instead of being dependent on government protection.
It is time to return our financial system to one in which success is no longer achieved through government protections but, rather, through innovation and compe ion. While trading and investment activities are vital parts of the financial services industry, there is no economic or social rationale for protecting and subsidizing them. Financial services firms are in the business of taking risks. Our country shouldn’t attempt to take the risk out of the system. But we should absolutely stop subsidizing it.
Thomas M. Hoenig is vice chairman of the Federal Deposit Insurance Corp.
When the banks screw up, the authorities will simply STEAL DEPOSITORS' MONEY.
Destruction of Cyprus Economy Proceeding Ahead of Schedule
Big depositors in Cyprus’s largest bank stand to lose far more than initially feared under a European Union rescue package to save the island from bankruptcy, a source with direct knowledge of the terms said on Friday.
Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back…
Officials had previously spoken of a loss to big depositors of 30 to 40 percent….
At Bank of Cyprus, about 22.5 percent of deposits over 100,000 euros will attract no interest, the source said. The remaining 40 percent will continue to attract interest, but will not be repaid unless the bank does well.
===
over 60% of deposits at the Bank of Cyprus could be toast:
Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity, with the rest remaining as a frozen, non-interest-bearing deposit that they would be able to access in the future.
If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that.
Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.
http://www.nakedcapitalism.com/2013/...+capitalism%29
I suppose Cyprus' "big depositors" aren't GERMANS.
the banks have to screw up badly enough for the FDIC to fail. not unthinkable, minus a public backstop, but hard to see how raiding insured deposits will be more more palatable politically than another TARP/QE style bailout.When the banks screw up, the authorities will simply STEAL DEPOSITORS' MONEY.
This can only happen to our acounts right before we're drafted... for freedom.
ouch
Don't make the germans cranky. You wouldn't like them when they are cranky.
I suppose Cyprus' "big depositors" aren't GERMANS.
Since when does the plutocracy give a about politics or Human-Americans? Whatever the financial wants and/or needs, it gets.
Sherrod Brown Goes After the Big Banks
Boiled down to its essence, Senator Brown’s legislative initiative may compel Democrats to ask themselves, Are we with the people on this, or should we stick with the big guys? This may prove to be a seminal question for the future of the party, not to mention the health of the economy. If Democrats stay with the financial ans and ignore the disorders of the Wall Street monopoly, the party will become ever more distant from its working class legacy. If instead Democrats like Sherrod Brown, joined by newly elected bank critics like Elizabeth Warren, lead the party in the direction of aggressive reform, we might see the beginning of something big. http://www.thenation.com/article/173...fter-big-banks
I bet Brown/Warren fail. Wall St owns the Democrats as much as it owns the Repugs. Repugs own the House, while Repug Senators, even tea bagger assholes like Cruz, will obstruct anything.
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