Here's an excerpt from a good article in today's WSJ- I can't link it, as they require a subscription.
"The two dozen or so big banks woven into the fabric of the global economy are a special case: If they go, it's not only their shareholders and creditors who get hurt; everyone does. Because of that, everyone expects governments to rescue them.That can be costly, and gives those institutions an edge in raising money, taking risks and attracting customers over banks that are "too small to save."
Big banks can be vital to the global economy, though how big is big enough is a question yet to be answered. Big trucks are good for the economy, too. They can carry lots of stuff and do things cars can't. But you don't want to be on the road when a truck crashes and explodes. So we require tougher safety standards for trucks than cars, more training for their drivers, and so on.
"The right response," Federal Reserve Chairman Ben Bernanke told Congress this week, "is to put extra cost, extra supervision on these [financial] firms that will give them an incentive to eliminate unnecessary size, to eliminate unnecessary activities and to reduce their risk-taking."
One approach to dealing with this small group of big banks: Make them hold even more capital, as a percentage of assets, than other banks. Leaders of big banks—mostly loudly J.P. Morgan Chase's Jamie Dimon here in the U.S.—aren't happy. No surprise: The rule is likely to reduce their profits and limit their dividends."
One more thing: There's an alternative to requiring the biggest banks to hold extra capital, which bankers would like even less: Break them up.
Comments
It's currently being offered as a "free sample of exclusive subscriber content".
Another apporach would be to bring back the guillotine.
peace,
rono
http://www.google.com/search?hl=en&source=hp&q=The+two+dozen+or+so+big+banks+woven+into+the+fabric+of+the+global+economy+are+a+special+case:+&btnG=Google+Search&oq=The+two+dozen+or+so+big+banks+woven+into+the+fabric+of+the+global+economy+are+a+special+case:+&aq=f&aqi=&aql=&gs_sm=s&gs_upl=953l1766l0l3031l1l1l0l0l0l0l516l516l5-1l1l0
also related - corp profit party close to 'ending'
http://bottomline.msnbc.msn.com/_news/2011/10/11/8273239-corporate-profit-party-may-be-ending-at-least-for-banks
But our republican congressmen and candidates is already trying to sell us that this regulation is bad in order to court donations from the bankers. But than again they have the nerve to criticize the TARP. If they do not want TARP ever again, they should support efforts to reduce risk taking in banking sector but they don't. BTW, what the congressmen says what we need (less bank regulation) is not what I hear from most of my American friends even republican ones. It shows how corrupt the system is.
"Wall St. Protestors" thread, may be a couple of the most interesting food-fights since the good old days at FA.
My only observation on your comment would be that it's probably not totally fair to single out the Republicans- they make more noise and holler a lot but when it comes time to vote for the banks there's a lot of Demos sneaking in there too. Got to get reelected, you know, and the money's got to come from somewhere...
Regards- OJ
Search for "Big Banks Find No Comfort in Capital Cushion" on Google.
Well, I agree, WSJ is equal opportunity corrupter to advance their agenda.
But since it was the Democrat politicians that basically created the Dodd-Frank bill (and it was already diluted enough by Wall Streets lobbying), Democrat politicians mostly have sort of fallen out of favor by Bankers.
Seeing this as an opportunity, Republican politicians are trying to score some points to create an advantage for their campaign war chests. But they need the constituents to vote so they are distort the view by pushing the evil regulation card and kind of fuzz it by giving examples from other sectors (which may have valid examples to excessive regulation).
By the way, Investor, since I've got you here- in the above post I tried to link to Hank's thread, but couldn't make it work properly, please try it: Wall St. Protestors
I wrote the code as: href="http://www.mutualfundobserver.com/discuss.php#/discussion/1382/wall-st.-protestors-target-homes-of-top-executives">"Wall St. Protestors".
Any ideas?
Yeah, those TBTF bankers & traders are sure fickle; you have to be with them 100%, every minute, can't even dole out a single insincere criticism for public consumption while you're shoveling cash out the back door for them, like BO and team have done, or they're off to the other guys.
Seriously, I don't see how we get out of this insanity without a major semi-anarchic event like GD II. Citizens United has us caught in the corporate spiderweb with no way out that I can fathom.