banks that are too big to fail
Poll
 | 22 votes (66.66%) | ||
| | 11 votes (33.33%) |
33 members have voted
April 25th, 2010 at 7:36:07 PM
permalink
The six largest US banks are now collectively worth more than 60 percent of the U.S. gross domestic product. (Bank of America alone has $2.2 trillion in assets.) When a bank gets so big that letting it fail would devastate the entire US economy, it becomes cheaper for the taxpayer to bail out the bank than to let it crash and bring down every other American corporation with it. But bailing out these banks creates moral hazard: it encourages banks to take irresponsible risks, because the banker knows that if he loses his bets, he'll still get bailed out. Moreover, it's inherently unfair that the finance industry gets help while every other industry suffers from the banks' mistakes.
One possible preventative measure is to break up the biggest banks: the rationale is that if they're too big to fail, then they're too big to exist. Last week, a bill was introduced in the Senate which would break up the biggest banks, and cap bank sizes so that they can never grow so big again. Is this a good idea?
One possible preventative measure is to break up the biggest banks: the rationale is that if they're too big to fail, then they're too big to exist. Last week, a bill was introduced in the Senate which would break up the biggest banks, and cap bank sizes so that they can never grow so big again. Is this a good idea?
April 25th, 2010 at 8:01:18 PM
permalink
Why is it that the CEO of a bank that failed gets to stay on and keep making his millions, while the taxpayers bail out the bank? There is absolutely no reason to not take huge risks. If the risk pays off, you make millions. If the risk fails horribly, the government will step in and make you whole. And, you still make millions. Oh sure, you could get fired, but since your buddies are sitting on your board, and you are sitting on theirs, it's not likely anything negative will happen.
Not that I think government stepping in to limit the bank size will actually improve anything.
Not that I think government stepping in to limit the bank size will actually improve anything.
Always borrow money from a pessimist; They don't expect to get paid back !
Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
April 25th, 2010 at 8:32:59 PM
permalink
The real problem is having the taxpayers bail any private business out to begin with.
Everyone, from airlines, to banks to savings and loans, would take more measured risks if they had to face the consequences of their failures, rather than being bailed out every time.
Nor would letting big banks collapse be a catastrophe. The assets a failed bank manages won't disappear, for one thing, plus other banks, or other investors, would pick up the pieces.
Everyone, from airlines, to banks to savings and loans, would take more measured risks if they had to face the consequences of their failures, rather than being bailed out every time.
Nor would letting big banks collapse be a catastrophe. The assets a failed bank manages won't disappear, for one thing, plus other banks, or other investors, would pick up the pieces.
Donald Trump is a fucking criminal
April 25th, 2010 at 8:40:17 PM
permalink
Much like a casino that is too big to fail.
When a casino as large as Harrahs for example, begins to act in a predatory way towards gamblers, the gaming commission can no longer seriously threaten to suspend or revoke their gaming licence. Gaming then has to protect the casino's interests or too many people lose their jobs. Consequently we see patrons like the blackjack players having their civil rights violated.
Players like Terrance Watanabe also fall prey to management. In the past, the casino would not have tried to collect the remaining ten percent or less that he owes by trying to throw the guy in jail, and it certainly wouldn't have allowed the story to make it into the news. Gaming would also have acted to suspend their gaming license over the documented stories of drug and alcohol abuse. Even Steve Wynn saw a problem with the guy and banned him before he could self destruct, but not Harrahs. Caesars Palace welcomed him with open arms.
When a casino's bonds become junk bonds, then the entire gaming enviroment in such a casino becomes a program to fleece players out of more money. Not intentionally at first, but as the direct result of upper management putting pressure on individual casinos and their managers to meet unrealistic goals. When this begins to happen, players should just stay away.
Over the next couple of years, I'm sure casinos owned by Harrahs will see a large part of their "Seven Star Players" jump ship to the Wynn and elsewhere because of the casino's junk bond status. Afterall, if we don't want to buy their bonds, then why on earth should we to trust them with our money while we gamble with markers in their casinos. (I don't think the free cruises are going to help much.) Besides, we all get skiddish when we hear of the patron abuse stories in the casino in the LV Sun, from other players, and now from the dealers that work there - since they've become unionized.
Just my ten cents,
Keyser.
When a casino as large as Harrahs for example, begins to act in a predatory way towards gamblers, the gaming commission can no longer seriously threaten to suspend or revoke their gaming licence. Gaming then has to protect the casino's interests or too many people lose their jobs. Consequently we see patrons like the blackjack players having their civil rights violated.
Players like Terrance Watanabe also fall prey to management. In the past, the casino would not have tried to collect the remaining ten percent or less that he owes by trying to throw the guy in jail, and it certainly wouldn't have allowed the story to make it into the news. Gaming would also have acted to suspend their gaming license over the documented stories of drug and alcohol abuse. Even Steve Wynn saw a problem with the guy and banned him before he could self destruct, but not Harrahs. Caesars Palace welcomed him with open arms.
When a casino's bonds become junk bonds, then the entire gaming enviroment in such a casino becomes a program to fleece players out of more money. Not intentionally at first, but as the direct result of upper management putting pressure on individual casinos and their managers to meet unrealistic goals. When this begins to happen, players should just stay away.
Over the next couple of years, I'm sure casinos owned by Harrahs will see a large part of their "Seven Star Players" jump ship to the Wynn and elsewhere because of the casino's junk bond status. Afterall, if we don't want to buy their bonds, then why on earth should we to trust them with our money while we gamble with markers in their casinos. (I don't think the free cruises are going to help much.) Besides, we all get skiddish when we hear of the patron abuse stories in the casino in the LV Sun, from other players, and now from the dealers that work there - since they've become unionized.
Just my ten cents,
Keyser.
April 25th, 2010 at 9:41:05 PM
permalink
Banco Intercontinental (or BANINTER) was the second largest privately held commercial bank in the Dominican Republic before collapsing in 2003 in a spectacular fraud tied to political corruption. The resulting deficit of more than US$2.2 billion was equal to 12% to 15% of the Dominican national gross domestic product.
Banco Intercontinental was created in 1986 by Ramón Báez Romano, a businessman and former Industry Minister. His oldest son, Ramón Báez Figueroa, took over the small bank and helped build it into the country's number two private commercial bank. BANINTER grew quickly into a typical family-run conglomerate, buying up companies or controlling interests in firms that touched on nearly every aspect of Dominican life.
Since I have friends in the DR, I was shocked at how much this affected everyone's life in the country. I remember thinking that I am glad that I don't live in a country where one man's corruption is sufficient to crash the currency.
=================
Harrah's controls 44% of the market in Atlantic City. MGM-MIRAGE controls 9% (half of the Borgata). MGM chose to leave the market so that it would not have to face the inquiry control board about their planned operations in Macau that might involve Pansy Ho. Losing MGM cuts down the possibility of recovery, because MGM-MIRAGE at one time had plans to build a big resort similar to MGM GRAND. But obviously Harrah's can't pull out just as easily.
Banco Intercontinental was created in 1986 by Ramón Báez Romano, a businessman and former Industry Minister. His oldest son, Ramón Báez Figueroa, took over the small bank and helped build it into the country's number two private commercial bank. BANINTER grew quickly into a typical family-run conglomerate, buying up companies or controlling interests in firms that touched on nearly every aspect of Dominican life.
Since I have friends in the DR, I was shocked at how much this affected everyone's life in the country. I remember thinking that I am glad that I don't live in a country where one man's corruption is sufficient to crash the currency.
=================
Harrah's controls 44% of the market in Atlantic City. MGM-MIRAGE controls 9% (half of the Borgata). MGM chose to leave the market so that it would not have to face the inquiry control board about their planned operations in Macau that might involve Pansy Ho. Losing MGM cuts down the possibility of recovery, because MGM-MIRAGE at one time had plans to build a big resort similar to MGM GRAND. But obviously Harrah's can't pull out just as easily.
April 25th, 2010 at 9:51:42 PM
permalink
Right now a visit to any Harrah's, Caesar's Palace, etc seems to be a pretty risky bet.
April 26th, 2010 at 6:24:27 AM
permalink
Quote: pacomartinSince I have friends in the DR, I was shocked at how much this affected everyone's life in the country. I remember thinking that I am glad that I don't live in a country where one man's corruption is sufficient to crash the currency.
I was working in the DR in the winter of 04. The currency depreciated something like 44% against the US dollar in 4 months. It was a little scary...
As for the big banks, Canada has staunchly refused to allow any of the large banks to merge any further. There were some rumours of lightening the restrictions, then then recession hit. The banks weathered the storm fairly well and now we don't hear any talk about bank mergers... That being said, I prefer the concept of the open market with no bailouts, but time after time has shown that certain companies with a culture of risk-taking will self destruct and cause damage to economies.
Wisdom is the quality that keeps you out of situations where you would otherwise need it
April 26th, 2010 at 7:14:55 AM
permalink
I heard Larry Summers discussing this the other day -- one rationale he gave for not carving up large financial institutions is only monster banks can compete with other international entities in some large financial interests.
In other words, the U.S. would lose out as smaller banks can't provide the backing needed--I assume for deals involving billions of investment dollars. China, or someone would take up the slack and the profit would go there.
In other words, the U.S. would lose out as smaller banks can't provide the backing needed--I assume for deals involving billions of investment dollars. China, or someone would take up the slack and the profit would go there.
There's no secret. Just know what you're talking about before you open your mouth.
April 26th, 2010 at 8:42:08 AM
permalink
I cannot believe you cite Summers' opinion. It was Summers who led the way to deregulate the industry and allowed AIG and the banks to become so large that when they did fail they not only took the US economy but also the world economy with them.
August 21st, 2012 at 2:15:55 PM
permalink
I'm delighted to read what some conservative Republican bloggers have to say on this subject. In fact, I think this issue has the potential to be totally bipartisan at the grassroots level. Within Washington, both political parties are already bought & paid for by the banking lobby. But outside Washington, the Tea Party activists on the right and the consumer advocates on the left could work together to expose the corruption of forcing taxpayers to bail out bank mistakes that are big enough to destroy the entire economy.
August 21st, 2012 at 2:30:55 PM
permalink
"I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation,
the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson,
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation,
the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson,
I Heart Vi Hart
August 21st, 2012 at 4:56:04 PM
permalink
Quote: mustangsallyfirst by inflation, then by deflation...
Thomas Jefferson,
This quote attributed to TJ has been circulating since the late 1930's. There is no source that says TJ ever said anything like this, and the word "deflation" was not used until the 1920's.
It seems that the quote is a hoax, expressing disdain for banking in the great depression. Now it is true that TJ did have a distrust of banks.
August 21st, 2012 at 5:35:11 PM
permalink
Quote: renoThe six largest US banks are now collectively worth more than 60 percent of the U.S. gross domestic product. (Bank of America alone has $2.2 trillion in assets.) When a bank gets so big that letting it fail would devastate the entire US economy, it becomes cheaper for the taxpayer to bail out the bank than to let it crash and bring down every other American corporation with it.
I think this statement can be inherently confusing. Assets are a measure of collective worth , while GDP is a measure of the goods and services transactions in a year. The statement that the 6 largest banks are worth collectively more than 60 percent of the US GDP is true, it might be better to measure against the net worth of the nation.
Bank of America is listed as having $2.13 trillion in assets in 2011. In comparison WALMART has only $0.19 trillion in assets.
But WALMART has $15.7 billion in profits on $447 billion in revenue.
Bank of America has $1.45 billion in profits on $115 billion in revenue.
Banking as an industry has a lot of assets, on which it makes a small percentage in revenue. Other industries are not about building huge asset base, but generating revenue and profit.
Your comment about "too big too fail" applies to a lot of things. WALMART crushes competition, so if it failed much of America could not eat. Exxon makes huge profits. I am shocked at how much profit the local electric utility is making.
I don't worry about banking, per se. There is plenty of stuff to worry about.
August 21st, 2012 at 5:46:44 PM
permalink
Quote: pacomartinBanking as an industry has a lot of assets, on which it makes a small percentage in revenue. Other industries are not about building huge asset base, but generating revenue and profit.
Years ago, I read and analyzed a case study of AT&T, back before it was forced to split off the "Baby Bells". In that case study, the total assets of AT&T at that time were compared to other corporations. I don't remember the details, but the AT&T assets exceeded the combined assets of a rather long list of companies like GM and Exxon. AT&T owned every telephone in the country, every telephone wire, and every switching or relay system. Their profit was basically determined by regulators who approved their rate structure, and the allowable rates were generally based on a percentage of investment/assets. A company like that, operating in that kind of business environment, had plenty of incentive to capitalize almost every purchase, expensing little. There might still be companies like that; I don't know of any, but I suspect that regulated utilities would be prime candidates.
August 21st, 2012 at 7:23:16 PM
permalink
Do you have a list pre-crash?
There's no secret. Just know what you're talking about before you open your mouth.
August 21st, 2012 at 8:40:04 PM
permalink
A better question would be, where do we stand bank-wise?
What countries have more money in their banks than than
the USA? Are we even in the top 5?
What countries have more money in their banks than than
the USA? Are we even in the top 5?
"It's not called gambling if the math is on your side."
August 21st, 2012 at 9:44:47 PM
permalink
Quote: EvenBobA better question would be, where do we stand bank-wise?
What countries have more money in their banks than than
the USA? Are we even in the top 5?
The latest ranking that I can find is for 2010. BOA is #6 in the world. But you will note that one single bank in France or the United Kingdom has assets on the same level as the entire country's GDP for one year. That is why the initial comment that the top 6 banks in the USA have combined assets of 60% of the USA GDP doesn't seem very alarming to me.
| Rank | Bank | Country | Total Assets ($m) |
|---|---|---|---|
| 1 | BNP Paribas | France | $2,669,906 |
| 2 | Deutsche Bank | Germany | $2,546,272 |
| 3 | HSBC Holdings | United Kingdom | $2,454,689 |
| 4 | Barclays | United Kingdom | $2,331,943 |
| 5 | The Royal Bank of Scotland Group | United Kingdom | $2,275,479 |
| 6 | Bank of America | United States | $2,268,347 |
| 7 | Crédit Agricole | France | $2,129,248 |
| 8 | JPMorgan Chase | United States | $2,117,605 |
| 9 | Industrial & Commercial Bank of China (ICBC) | China | $2,032,131 |
| 10 | Citigroup | United States | $1,913,902 |
| 11 | Mizuho Financial Group | Japan | $1,890,220 |
| 12 | Bank of Tokyo-Mitsubishi UFJ | Japan | $1,687,313 |
| 13 | ING Group | Netherlands | $1,666,368 |
| 14 | China Construction Bank | China | $1,632,261 |
| 15 | Banco Santander | Spain | $1,626,805 |
| 16 | Bank of China | China | $1,579,346 |
| 17 | Agricultural Bank of China* | China | $1,568,722 |
| 18 | Lloyds Banking Group | United Kingdom | $1,552,245 |
| 19 | Société Générale | France | $1,512,657 |
| 20 | UBS | Switzerland | $1,401,924 |
| 21 | Groupe BPCE | France | $1,400,911 |
| 22 | Wells Fargo | United States | $1,258,128 |
| 23 | Sumitomo Mitsui Banking Corporation | Japan | $1,247,053 |
| 24 | UniCredit | Italy | $1,241,967 |
| 25 | Credit Suisse Group | Switzerland | $1,098,345 |
| 26 | Commerzbank | Germany | $1,007,882 |
| 27 | Goldman Sachs Group | United States | $911,332 |
| 28 | Intesa Sanpaolo | Italy | $880,221 |
| 29 | Rabobank Group | Netherlands | $871,908 |
| 30 | Norinchukin Bank** | Japan | $844,431 |
| 31 | China Development Bank | China | $771,729 |
| 32 | Nordea Bank | Sweden | $776,108 |
| 33 | Dexia | Belgium | $757,262 |
| 34 | Banco Bilbao Vizcaya Argentaria (BBVA) | Spain | $738,560 |
| 35 | Royal Bank of Canada (RBC)* | Canada | $713,646 |
| 36 | National Australia Bank* | Australia | $664,174 |
| 37 | Commonwealth Bank of Australia | Australia | $660,205 |
| 38 | Toronto-Dominion Bank (TD) | Canada | $608,113 |
| 39 | Westpac Banking Corporation* | Australia | $598,647 |
| 40 | Bank of Communications | China | $596,655 |
| 41 | KfW | Germany | $590,269 |
| 42 | Danske Bank | Denmark | $572,547 |
| 43 | Scotiabank (Bank of Nova Scotia) | Canada | $516,939 |
| 44 | Standard Chartered | United Kingdom | $516,542 |
| 45 | Australia & New Zealand Banking Group (ANZ) | Australia | $514,857 |
| 46 | DZ Bank | Germany | $512,378 |
| 47 | ABN Amro* | Netherlands | $509,249 |
| 48 | Banque Fédérative du Crédit Mutuel (BFCM) | France | $501,422 |
| 49 | Landesbank Baden-Württemberg (LBBW) | Germany | $500,285 |
| 50 | Banco do Brasil | Brazil | $481,179 |
The 2011 numbers for just the top 6 American banks
$2,265,792 J.P. Morgan Chase & Co.
$2,129,046 Bank of America Corp.
$1,873,878 Citigroup
$1,313,867 Wells Fargo
$923,225 Goldman Sachs
$749,898 Morgan Stanley
Quote: rxwineDo you have a list pre-crash?
Here is a list from 2006
1 Citigroup: $1.494 trillion
2 Bank of America Corp.: $1.291 trillion
3 J.P. Morgan Chase & Co. : $1.198 trillion
4 Wells Fargo: $0.48 trillion
5 Wachovia Corp.
6 U.S. Bancorp
7 Capital One Financial
8 National City Corp.
9 SunTrust Banks
10 Bank of New York Co.
I am not disputing the OP's claim that US Banks are merging and growing larger (in both dollars and percent of GDP). It's just that much of the world's banks are also huge.
In 2006 Citigroup's assets were 11.2% of the GDP
In 2011 J.P. Morgan Chase assets were 15.0% of the GDP
August 22nd, 2012 at 7:36:47 AM
permalink
Quote: pacomartinWALMART crushes competition, so if it failed much of America could not eat.
I disagree. If Wal-Mart went out of business tomorrow, there'd be other retailers (Target, Costco) who'd immediately swoop in and take their place. I doubt we'd have famine & starvation.
The problem with the banks is the domino effect: if Chase crashes, it could spread to Citibank or Bank of America. (Especially if these bankers are all leveraged on one bet: subprime mortgages.) Hopefully these guys have learned their lesson about diversification. But the bankers don't have an incentive to invest prudently if they know they'll get a bailout.
August 22nd, 2012 at 10:16:44 AM
permalink
Quote: renoI disagree. If Wal-Mart went out of business tomorrow, there'd be other retailers (Target, Costco) who'd immediately swoop in and take their place. I doubt we'd have famine & starvation.
The problem with the banks is the domino effect: if Chase crashes, it could spread to Citibank or Bank of America. (Especially if these bankers are all leveraged on one bet: subprime mortgages.) Hopefully these guys have learned their lesson about diversification. But the bankers don't have an incentive to invest prudently if they know they'll get a bailout.
Well, I didn't mean so much that people would starve, but it is just another example of consolidation that prevents independents from operating in any significant manner. The nation and the world is doing so many things today that used to be illegal or just plain bad business that I personally don't worry about bank consolidation more than any others. It just seems to me that most of the rest of world is even more consolidated than the USA.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was the piece financial deregulation that set off waves of bank consolidation.
Mother Jones reference
August 22nd, 2012 at 5:49:45 PM
permalink
The Banks are not too big. The free market should determine the size of the bank not a government bureaucrat. This is the source of the problem, government picking winners and losers from their office in DC. I will admit I am a bit bias because I have worked in the banking industry my whole adult career. Why doe it matter how big a bank is? As long as the FDIC is charging premiums that reflect their risk then the tax payer wont be left holding the bag. The problem of the housing boom and collapse was NOT caused by big banks it was caused by big government. Government promotes home ownership thorough tax deductions and credits. Then funds Fannie and Freddie to underwrite sub prime loans. and then when the housing market become falsely inflated and collapses everyone blames the banks? It's like blaming you nose for running when you have a cold....the problem is not your nose, it is the fault of the virus in your body.....the virus is government tying to manage the economy through tax code and regulation...and not letting the free market do it
and comparing banks net worth to GDP is a meaningless compassion....you are comparing the sale of final goods and services in one year to assets and earnings of many years......
and comparing banks net worth to GDP is a meaningless compassion....you are comparing the sale of final goods and services in one year to assets and earnings of many years......
August 22nd, 2012 at 7:27:58 PM
permalink
Quote: vert1276Why doe it matter how big a bank is? .
It's easy to see the faults of unregulated growth in the game of Monopoly
There's no secret. Just know what you're talking about before you open your mouth.
August 22nd, 2012 at 8:36:51 PM
permalink
Quote: vert1276The free market should determine the size of the bank not a government bureaucrat.
Sir Mervyn King: Banks have become too big.
Three banks in the UK are larger than even the ones in the USA. Considering that the GDP of the UK is 1/6 the size of the USA they are very large relative to the economy.
Sir Mervyn King is the Governor of the Bank of England,
August 22nd, 2012 at 10:48:58 PM
permalink
Quote: rxwineIt's easy to see the faults of unregulated growth in the game of Monopoly
monopolies are impossible to maintain without the help of government....as a company grows it gets diminishing marginal returns....without government writing regulations and tax code to prop them up to make up for those diminishing returns...it is pretty much impossible for a company to maintain a monopoly for any length of time.....Like I said in my OP.....the problem is not the growth of a business...it is government picking winners in losers through legislation...
August 22nd, 2012 at 11:03:55 PM
permalink
My first question is why do you keep comparing the size of the bank to GDP.....the two are not even in the same ball park.....One is total assets(book value/cap value) of a company...the other is the SALES of final goods and service for a year....It makes no sense to me why they are being compared to each other.....
And why would you link and article about Sir Mervyn King saying the banks are to big? He is the governor of the NATIONAL bank of England(a government owned and operated bank) of course he is going to say the PRIVATELY owned banks are to big....what do you think he is going to say? He is trying to protect his power. Thats like the head of the Social Security Administration, Commissioner Jo Anne Barnhart coming out and saying "I'm against the privatization of Social Security"...Do you think anyone in government wants to be rivaled by the private sector?
And why would you link and article about Sir Mervyn King saying the banks are to big? He is the governor of the NATIONAL bank of England(a government owned and operated bank) of course he is going to say the PRIVATELY owned banks are to big....what do you think he is going to say? He is trying to protect his power. Thats like the head of the Social Security Administration, Commissioner Jo Anne Barnhart coming out and saying "I'm against the privatization of Social Security"...Do you think anyone in government wants to be rivaled by the private sector?
August 22nd, 2012 at 11:12:58 PM
permalink
Quote: vert1276monopolies are impossible to maintain without the help of government....as a company grows it gets diminishing marginal returns....without government writing regulations and tax code to prop them up to make up for those diminishing returns...it is pretty much impossible for a company to maintain a monopoly for any length of time...
When govenrment fails to regulate large business monopolies effectivly, monopolies will then seek to regulate government. It's going to happen one way or the other way, you can't avoid it. It does happen. It's called lobbying.
There's no secret. Just know what you're talking about before you open your mouth.
August 22nd, 2012 at 11:22:18 PM
permalink
Quote: rxwineWhen govenrment fails to regulate large business monopolies effectivly, monopolies will then seek to regulate government. It's going to happen one way or the other way, you can't avoid it. It does happen. It's called lobbying.
so we should just all throw our hands up in the air and give up and let the government manage our economy? I personally refuse to do that.....I believe in free market principals....and not in government picking winners and losers....monopolies will get crushed under their own weight unless government props them up.....Instead of voting for people who want to regulate the economy, why not vote for people that don't?.....FYI I'm not a Ron Paul supporter or a libertarian....I just believe in limited government and letting the company with the best product/service prevail....
August 23rd, 2012 at 1:57:56 AM
permalink
Quote: vert1276My first question is why do you keep comparing the size of the bank to GDP.....the two are not even in the same ball park.....One is total assets(book value/cap value) of a company...the other is the SALES of final goods and service for a year....It makes no sense to me why they are being compared to each other.....
And why would you link and article about Sir Mervyn King saying the banks are to big?
I mentioned in an earlier post that it is not really a fair comparison. However, to be fair to the OP, it is done all the time in dozens and dozens of news articles on this subject. I merely added that saying cumulative assets of the 6 biggest banks = 60% of US GDP can be contrasted with the UK, where 3 private banks each individually have assets on par with the GDP of the UK.
The link to Sir Mervyn King was just to point out that this "banks too big to fail" idea is not unique to the USA.
Also, let me repeat that this is not really one of the things that bothers me.
February 26th, 2013 at 9:03:52 PM
permalink
Supposedly, bigger banks make bigger profits. This is a myth. Of the 5 biggest banks in America, 2 of them aren't even profitable without taxpayer subsidies:
February 27th, 2013 at 12:44:43 AM
permalink
If they put them in jail or break them up, the easy big ticket political donations stop, plus I am sure they must get dirt on them before they sign the checks, mafia style. The dirt used for leverage is probably the inside information they accidentally give them and which they use to make some big plays on. Or is that the clean way to make a bribe now?
I am a robot.
February 27th, 2013 at 3:27:36 AM
permalink
Quote: rxwineWhen govenrment fails to regulate large business monopolies effectivly, monopolies will then seek to regulate government. It's going to happen one way or the other way, you can't avoid it. It does happen. It's called lobbying.
Lobbying = Free Speech
All animals are equal, but some are more equal than others
February 27th, 2013 at 5:17:00 AM
permalink
Quote: AZDuffmanLobbying = Free Speech
For sheep who let others influence their government it sure is. What's the total of congress people you take to lunch.
There's no secret. Just know what you're talking about before you open your mouth.
February 27th, 2013 at 5:28:22 AM
permalink
AZDuffman, your posts that I've read are always spot on.....the Lobbing=Free Speech is correct. Unfortunately lobbying for the most part is simply sleaze. Yes, businesses go to Washington and ask to simply be left alone....no harm there. But the vast majority of lobbying is self serving sleaze. It's a big money grab which means grabbing somebody else's money or liberty (one in the same) for their gain.....or stealing.Quote: AZDuffmanLobbying = Free Speech
Each day is better than the next
February 27th, 2013 at 5:56:41 AM
permalink
Quote: rxwineFor sheep who let others influence their government it sure is. What's the total of congress people you take to lunch.
It varies from year to year. I am technically not a lobbyist, because I am not paid, but I do represent the American Society of Anesthesiologists in meeting with Congressmen and Senators in Washington, and I represent the New York State Society of Anesthesiologists in meeting with state Senators and Assemblymen in Albany. Those higher up the food chain have met with the governor as well. If I don't meet with our elected officials to educate them as to the possible effects legislation would have on my specialty and our patients, who should do so?
One anectdote about the 'money' factor. I had a local State Assemblyman who I got to know throughout the years. He was really bright, and a great listener. I was hoping he would advance to higher political office. Even though the district I live in is 50 -50 Republican/Democrat, he, a Republican, was never seriously challenged in an election as he had bipartisan support. I wanted to give a small donation to his campaign, and I stopped by his local office. I had a check in an envelope and handed it to his secretary after I met with him, and she told me she could not accept it IN THE OFFICE. She said we would have to step outside the office and then she could accept it. So we walked outside... Apparently this silly dance occurs all the time....
Unfortunately, last election he chose not to run... He cited kids entering college and he needed to make more money in the private sector than he could as a State Assemblyman. I don't know the exact figure, but I think our State Assemblymen make around $70k per year.
February 28th, 2013 at 4:21:40 PM
permalink
Sen David Vitter (R-LA) has solid conservative Republican credentials: an "A" rating from the NRA for gun rights, a "4%" rating on environmental issues from the League of Conservation Voters, and a "0%" rating from NARAL for abortion rights. Meanwhile Sen. Sherrod Brown (D-OH) has solid liberal Democratic credentials: a "100%" rating from NARAL for abortion rights, a "93%" rating on environmental issues from the League of Conservation Voters, and an "F" rating from the NRA for gun rights.
So on many issues, Vitter and Brown can't agree on anything. And yet these 2 polar opposite Senators are working together to co-sponsor legislation to break up the big banks.
"Eighteen years ago, the largest six banks' combined assets were 16 percent of GDP. Today they're 64-65 percent of GDP," Brown said. "So the large banks are getting bigger and bigger, partly because of the financial crisis, partly because of the advantages they have."
This topic is one of those rare issues where hardcore liberals and hardcore conservatives can find common ground. Let's stop giving billion$ of taxpayer dollars to the damned banks.
So on many issues, Vitter and Brown can't agree on anything. And yet these 2 polar opposite Senators are working together to co-sponsor legislation to break up the big banks.
"Eighteen years ago, the largest six banks' combined assets were 16 percent of GDP. Today they're 64-65 percent of GDP," Brown said. "So the large banks are getting bigger and bigger, partly because of the financial crisis, partly because of the advantages they have."
This topic is one of those rare issues where hardcore liberals and hardcore conservatives can find common ground. Let's stop giving billion$ of taxpayer dollars to the damned banks.
February 28th, 2013 at 5:02:44 PM
permalink
Quote: AZDuffmanLobbying = Free Speech
Lobbying == legalized bribery
lobbying == coercion through influence by powerful interests, not necessarily in the best interest of the majority
The Golden Rule: Those with the gold make the rules
Always borrow money from a pessimist; They don't expect to get paid back !
Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
February 28th, 2013 at 5:16:33 PM
permalink
If you find yourself in a corrupt society, then lobbying does not equal free speech, because what is portrayed as lobbying is not lobbying.
I am a robot.
February 28th, 2013 at 7:09:24 PM
permalink
Quote: RaleighCrapsLobbying == legalized bribery
lobbying == coercion through influence by powerful interests, not necessarily in the best interest of the majority
Ever hear that democracy is two wolves and a sheep voting on what to have for dinner?
Perhaps I need to start making a list of these truths of politics...
1. Lobbying = Free Speech
2. EVERYONE is a "special interest" from someone else's point of view
3. The First Amendment was made for POLITICAL speech; first, foremost, and in total
4. If you want to ban trying to influence an elected official, you have no right to ask for anything that suits your interests, ever
5. Congress was made to make it hard to pass laws, not easy to pass them. Heaven help us if it ever becomes the other way around.
6. Trying to "keep money out of politics" is the same as holding back water. You might be able to do so for a short time, but eventually it will find its way through.
All animals are equal, but some are more equal than others
February 28th, 2013 at 7:43:07 PM
permalink
Quote:4. If you want to ban trying to influence an elected official, you have no right to ask for anything that suits your interests, ever
Explain to me how a lobbying ban would prevent anyone from getting specific info to a representitive when we have various communication systems set up.
Tell me one thing, anything at all that can't be conveyed to a Rep. I will send off the information myself and wait and show you the response.
I can send diagrams, recordings. I can call on the phone.
Tell me one thing will be censored by a lobbying ban, other than money, or dinner, or implied donations..
Reps could do town halls open to all. The corporate guy can show up with the union guy, and the farmer, and the other citizens.
STATE ANY COMMUNICATION AT ALL THAT CAN'T BE CONVEYED. I'll wait.
There's no secret. Just know what you're talking about before you open your mouth.
February 28th, 2013 at 9:00:15 PM
permalink
The government has created corporations by passages of laws and to be a corporation is not an inalienable right. I don't see why the government cannot regulate them if they have the power to destroy them the same way they created them. Without being corporations, they are just companies owned by people and the people become responsible for their debts and actions. I'm sure it is too simple for the Supreme Court to deal with since Rush Limbaugh will never explain that to them.
I am a robot.
February 28th, 2013 at 9:33:17 PM
permalink
Quote: rxwineSTATE ANY COMMUNICATION AT ALL THAT CAN'T BE CONVEYED. I'll wait.
That's usually the case when the addressee will not or does not listen to the message that you want to convey. You may send it or say it, but if he/she isn't listening, the communication is not conveyed.
The fact that someone will not listen to what YOU want to convey, does not mean they will not listen to what is said by someone else who is making adequate financial contributions.
February 28th, 2013 at 9:57:16 PM
permalink
Quote: DocThat's usually the case when the addressee will not or does not listen to the message that you want to convey. You may send it or say it, but if he/she isn't listening, the communication is not conveyed.
The fact that someone will not listen to what YOU want to convey, does not mean they will not listen to what is said by someone else who is making adequate financial contributions.
And in general, the politician should be considering the merits of your case, not how much you schmooze with him.
I mean, we could also conduct trials like that. (Lower court judges are also elected). The judge decides the case influenced by the pockets of the plaintifs and not just the details of the case.
If it doesn't seem like a wise idea on how to run a court, why is it a good idea for the other branches of government?
And as I said, the only thing you're censoring is the schmoozing.
There's no secret. Just know what you're talking about before you open your mouth.
March 1st, 2013 at 3:26:43 AM
permalink
Quote: rxwine
I can send diagrams, recordings. I can call on the phone.
Sorry, everything you just said is lobbying.
Quote:Reps could do town halls open to all. The corporate guy can show up with the union guy, and the farmer, and the other citizens.
STATE ANY COMMUNICATION AT ALL THAT CAN'T BE CONVEYED. I'll wait.
It doesn't matter if there is an "other way" to do it, when you limit how a person or group may express themselves you are infringing on their right to free speech. Now, you may feel "it isn't fair" that one group can hire a person to go to the Congressman's office and go thru the hoops to get a ten minute one-on-one meeting when another group cannot. Well, then the other group needs to spend the time and effort to do the same (ie: "life isn't fair, deal with it.)
All animals are equal, but some are more equal than others
September 24th, 2013 at 10:53:22 AM
permalink
Special congratulations to our friends at Chase Bank for being ranked #1 on the list of banks who jeopardize the stability of the entire U.S. economy! The chart below was developed by NYU professor Robert Engle who won a Nobel Prize for his work on volatility. Systemic risk ("SRISK") combines information on size, leverage, and risk to indicate how serious a default would be to America.
September 24th, 2013 at 11:20:17 AM
permalink
Quote: renoSpecial congratulations to our friends at Chase Bank for being ranked #1 on the list of banks who jeopardize the stability of the entire U.S. economy! The chart below was developed by NYU professor Robert Engle who won a Nobel Prize for his work on volatility. Systemic risk ("SRISK") combines information on size, leverage, and risk to indicate how serious a default would be to America.
Interesting because Chase is seen as one of the more stable institutions and Jamie Dimon was always talked about for Treasury or Fed. Chase bought Bank One mostly to get Dimon. From working at the top 3 I always thought Chase seemed to be on things more than BAC or C.
All animals are equal, but some are more equal than others
September 24th, 2013 at 2:18:01 PM
permalink
Quote: AZDuffmanInteresting because Chase is seen as one of the more stable institutions and Jamie Dimon was always talked about for Treasury or Fed. Chase bought Bank One mostly to get Dimon. From working at the top 3 I always thought Chase seemed to be on things more than BAC or C.
Yeah, I agree. The management team at Chase seems more savvy and professional than the clowns at BofA or Citibank. On the other hand, if I knew that all of my Vegas gambling losses would be bailed out by the federal government, would I:
A) play a sober, conservative game of low edge blackjack?
or
B) place wild longshot bets on slot machines with spectacular jackpots?
It's a myth that these bankers learned nothing from the 2008 crash. These guys know exactly what they're doing.
April 17th, 2014 at 12:02:45 PM
permalink
For those of you keeping score at home, our friends at Bank of America spent $6 billion on lawsuits this quarter. Ya know, lawyers and fines. In 3 months. (During the same quarter last year, Bank of America spent a miniscule $2.2 billion on lawsuits.)
Obviously, no one at BofA did anything wrong. Bad luck, mostly.
Obviously, no one at BofA did anything wrong. Bad luck, mostly.
April 17th, 2014 at 1:04:06 PM
permalink
Those unable to bribe politicians have to hire lawyers.
April 17th, 2014 at 1:19:33 PM
permalink
If I was also in a position to make a Big Bet and if I win I keep the Profit and if I lose I get the Government to Bail me out, I would also make the Bet.
The way to make banks not making these bets in the future depends on many issues.
One is making the banks smaller (splitting them etc) so they are not too big to fail.
But there are lots of other ways. For example having laws that if bankers senior management take risks beyond prudent risk policies, then they can have personal liability. And many more.
The way to make banks not making these bets in the future depends on many issues.
One is making the banks smaller (splitting them etc) so they are not too big to fail.
But there are lots of other ways. For example having laws that if bankers senior management take risks beyond prudent risk policies, then they can have personal liability. And many more.
April 17th, 2014 at 3:42:28 PM
permalink
Oh my freaking God would I like to be working on their litigation.Quote: renoFor those of you keeping score at home, our friends at Bank of America spent $6 billion on lawsuits this quarter. Ya know, lawyers and fines. In 3 months. (During the same quarter last year, Bank of America spent a miniscule $2.2 billion on lawsuits.)
Obviously, no one at BofA did anything wrong. Bad luck, mostly.
Actually, I think a friend of mine actually is.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
November 7th, 2014 at 9:13:28 AM
permalink
Here's a great article which lays out the nitty gritty details of JP Morgan Chase's mortgage fraud. The short version of the story is that Chase had a pile of crappy delinquent mortgage loans that they re-packaged into mortgage-backed securities and sold to outside investors. Chase told the investors that these mortgages were first class top quality A+ mortgage loans.
Chase's actions were appalling, but the part of the story that really upsets me is how Obama's DOJ (read: Eric Holder) helped Chase bury the evidence, bypass the judicial branch, and pay a fine rather than face criminal charges. At face value, the fine was hefty (either $ 9 billion or $13 billion depending upon which newspaper you read) but Chase was allowed to treat $7 billion of that as a tax write-off. Needless to say, Wall Street loved it: shares soared 6 percent on news of the settlement adding more than $12 billion in value to Chase's stock. Accordingly, the board awarded CEO Jamie Dimon a 74 percent raise, bringing his compensation up to $20 million.
Chase's actions were appalling, but the part of the story that really upsets me is how Obama's DOJ (read: Eric Holder) helped Chase bury the evidence, bypass the judicial branch, and pay a fine rather than face criminal charges. At face value, the fine was hefty (either $ 9 billion or $13 billion depending upon which newspaper you read) but Chase was allowed to treat $7 billion of that as a tax write-off. Needless to say, Wall Street loved it: shares soared 6 percent on news of the settlement adding more than $12 billion in value to Chase's stock. Accordingly, the board awarded CEO Jamie Dimon a 74 percent raise, bringing his compensation up to $20 million.
