banks that are too big to fail
Poll
 | 22 votes (66.66%) | ||
| | 11 votes (33.33%) |
33 members have voted
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.
When I briefly worked there, BAC was run by not the best management, however to be fair lots of their fines are due to Countrywide.
Quote: AZDuffmanQuote: 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.
When I briefly worked there, BAC was run by not the best management, however to be fair lots of their fines are due to Countrywide.
Whatever we can do for the tbtf banks, financial products is our biggest industry,that is why we let them slide they're entire 53 trillion derivatives book onto there fdic side of the ledger.http://www.zerohedge.com/news/bank-america-forces-depositors-backstop-its-53-trillion-derivative-book-prevent-few-clients-dep
We let taxpayers insure their trading desk, price up they win, price down we lose, but always reward the management.The truth behind bac earnings.
http://www.zerohedge.com/news/2013-01-17/frightening-truth-behind-bank-americas-earnings
Quote: renoHere'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.
Interesting article. They did not sell what I worked in, but there was a "get it done" attitude. I think it changed when they merged with BankOne as many was the underwriter who would see the new standards (BankOne basically took all but the name, just like Daimler did to Chrysler) and were amazed. What they used for an appraisal was insane, a UW came back to me with a "wtfit?" and I said it was what they ordered. Eventually they learned they were expected to DUAUW, ask no questions.
Looking at the sweetheart deal is not a huge surprise as Dimon came out of Chicago same as Obama and so many with him. All friends way back.
Plain matter of fact... the gov't did a great disservice to all of us by not letting the big banks/investmtent-houses fail.
IMHO the sleazy underbelly of derivitives and other so-called debt-swapping/debt-wagering is the cause of the perceived misery inflicted upon themselves.
The solution to the woes created and self-inflicted was to offer the same entities 0% money. One could just sit on it and not lose. Or one could by a tangible asset like copper/oil/gold/silver/soybeans and receive something tangible in exchange for fiat money.
And of course there are "reserves" in case such entities lose money on fiat speculations like the above. I remember distictly, and took advantage of, Hartford Insurance Group being tossed out with all the other fiat players. As a follower of the stock I knew they were keeping about 650-800 million $ in reserve. Imagine seeing the stock under $5, knowing the reserves alone were worth north of $20, and said stock was "only" playing the currency mkts at that time. Within 30 days of seeing and investing in HIG, the Co. came out with notice of IIRC 680million reserves with only an 80million currency risk. The stock went promptly from about $7 to $23. Today its around $40 give or take the close.
If anyone here thinks there was not any real damage to stocks, just look at pricing from 10 years ago and compare it today's pricing
Quote: 98ClubsPlain matter of fact... the gov't did a great disservice to all of us by not letting the big banks/investmtent-houses fail.
I do not know.
But you can also control plagues to a certain degree by letting them run their course. Once lots of people die, you'll still have lots left with immunity. But you have lots of people dead also.
I kind of prefer gentle slopes of vaccination, which is a form of artificial manipulation.
I don't know whether the economy will blow up one day, and many people start catching trains as hobos looking for work, and long bread lines and all that.
Do people who say let everything fail know any better than anyone else the total effect?
One thing I worry about in system failure is the tipping point where there is so much damage, the system itself can't easily fix itself -- too many resources for recovery are taken down. For instance, closing a store because of bad business, leaves an empty store. Though if it is not too long, the building is still usable.
Too long and too deep, building is damaged or raised, vandalized , and no one can even move in to work there. Everything must be rebuilt.
Quote: rxwine
One thing I worry about in system failure is the tipping point where there is so much damage, the system itself can't easily fix itself -- too many resources for recovery are taken down. For instance, closing a store because of bad business, leaves an empty store. Though if it is not too long, the building is still usable.
Too long and too deep, building is damaged or raised, vandalized , and no one can even move in to work there. Everything must be rebuilt.
Or maybe you'll see you're better off without it, and enjoy the wildflowers that have taken over =)
A good parasite doesn't kill the host.Quote: rxwine
Quote:Do people who say let everything fail know any better than anyone else the total effect?
After all this time I cant believe we still think wall street or big banks caused the financial
problems........it was our government, end of story....period, end of sentence or what ever
phrase you want to use.
The destruction of the housing market caused this and led to all the other problems...
I say that because it is the truth, I worked in banking and lending for 40 years now, this
very minute I work for fanny and Freddie going after the fraud in the event. I have seen it
from the inside and outside.
The government started the problem with the CRA which was created by who else...Jimmy
Carter, It was enlarged by Clinton and ignored by Bush...This law put very real pressure on
banks to make loans to people that would not qualify under the banks normal guide lines. And
if you did not comply, you could lose your banking charter. Nearly 50% of home loans were made
that way. Couple that with almost 8 million FHA loans made which placed the buyers almost 12%
under water on each home loan the very minute they signed the loan papers.
A review now shows the loans the government demanded banks make have foreclosure and problem
rates 3,4,5 times higher than the loans the banks would make on their own. FHA is also way higher
than normal loans, and FHA had the ability to devastate entire small villages and certain low income
areas of cities because they actually "gave" poor people money to buy, and over valued almost
every home.
I have now investigated over 100 of these and been in countless others, and I tell you, it is your
governments desire to socialize home ownership that caused what we saw in the country.
Further the administrators comment about replacing what was once a useful home or other
building with flowers makes about as much sense as what the government did. You cant encourage
people to buy homes that they cant pay for them, and you cant support local schools with tax dollars
paid by a violet.
dicesetter
Retail deposits, which are covered by federal insurance, are seen as less likely to be pulled out, so require banks to hold reserves of as little as 3 per cent against them. The reserve requirement rises to 40 per cent for some corporate deposits, however, and as much as 100 per cent for deposits from other financial institutions. The rationale for the new regulations is to reduce asset concentration and thereby systemic risks.
In other news, Chase is closing 300 branches...
Quote: dicesitterTruth
After all this time I cant believe we still think wall street or big banks caused the financial
problems........it was our government, end of story....period, end of sentence or what ever
phrase you want to use.
The destruction of the housing market caused this and led to all the other problems...
I say that because it is the truth, I worked in banking and lending for 40 years now, this
very minute I work for fanny and Freddie going after the fraud in the event. I have seen it
from the inside and outside.
The government started the problem with the CRA which was created by who else...Jimmy
Carter, It was enlarged by Clinton and ignored by Bush...This law put very real pressure on
banks to make loans to people that would not qualify under the banks normal guide lines. And
if you did not comply, you could lose your banking charter. Nearly 50% of home loans were made
that way. Couple that with almost 8 million FHA loans made which placed the buyers almost 12%
under water on each home loan the very minute they signed the loan papers.
A review now shows the loans the government demanded banks make have foreclosure and problem
rates 3,4,5 times higher than the loans the banks would make on their own. FHA is also way higher
than normal loans, and FHA had the ability to devastate entire small villages and certain low income
areas of cities because they actually "gave" poor people money to buy, and over valued almost
every home.
I have now investigated over 100 of these and been in countless others, and I tell you, it is your
governments desire to socialize home ownership that caused what we saw in the country.
Further the administrators comment about replacing what was once a useful home or other
building with flowers makes about as much sense as what the government did. You cant encourage
people to buy homes that they cant pay for them, and you cant support local schools with tax dollars
paid by a violet.
dicesetter
This is one of the smartest posts I've read on here in a long time. When will people realize the free market works better than the govt. Period. I'm not saying some oversight and regulation aren't a good idea. But when you social engineer real estate. This is what happens.
Quote: renoJP Morgan Chase will start charging fees to accept deposits. The new fees will only affect large financial institutions who make enormous deposits: hedge funds, foreign banks, etc. Chase is responding to new government regulations which require banks to keep liquid cash on hand in the event of a crisis, thereby preventing a run on the bank.
Retail deposits, which are covered by federal insurance, are seen as less likely to be pulled out, so require banks to hold reserves of as little as 3 per cent against them. The reserve requirement rises to 40 per cent for some corporate deposits, however, and as much as 100 per cent for deposits from other financial institutions. The rationale for the new regulations is to reduce asset concentration and thereby systemic risks.
In other news, Chase is closing 300 branches...
They are immune from prosecution and the fines for theft and fraud are merely a cost of doing business. http://wallstreetonparade.com/2015/02/jpmorgan-still-on-2-year-probation-under-scrutiny-in-gold-fixing-probe/
The tbtf banks are no longer banks as of the repeal of the Glass-Steagall law. Big banks are just hedge funds with fdic protection for their trading books slid over to their banking side. Privatized gains and socialized losses.
Some may blame the government but should look at who finances the campaigns and writes the legislation that CONgress approves. Might also question the rating agencies that gave cdo's and cdo squared 3A ratings as investment grade.
