What would actually be accomplished by breaking up the “big banks”? I keep seeing that as a talking point brought up by the left but I feel like their vision of that involves breaking up by taking their money and using it towards free college or something.
It has nothing to do with “left” and “right”. With conflating investment and savings financial institutions, you’re creating behemoths, hence the “too big to fail” institutions that can blackmail the sovereign entities (countries) claiming that they have to be bailed out otherwise contagion risk may affect the financial system as a whole. This is a travesty completely against the free market philosophy.
Say what you want about FDR, but Glass-Steagall act was fundamentally on the spot - you want to gamble with your money? Go to an investment bank. You want a low-risk low return on your saving? Go to a savings bank.
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In at least a few cases the government forced the bailout on the biggest banks.
Oh, I’m not so sure. I think it’s an unintended consequence of the free market philosophy and one of its shortcomings, but certainly not against free market principles.
Fed manipulation is not free market capitalism whether Glass-Steagall was or was not good policy.
Theoretically, the benefit is that an individual bank could fail (go out of business) without plunging the economy into recession. It also, theoretically, should increase competition. Loans will be more expensive and harder to get, though.
In most case I agree and this could be one of those cases; however, it’s a tricky argument, though, IMO, because you could relatively easily pivot to other industries and make the same argument.
We’ve recently seen this (or very similar) argument over the internet being a title II utility. I think as an example you could use the argument for the agricultural industry. Basically, anything that can successfully be argued as an entity that “fulfills a public function” could be treated at least partially as a public concern.
Consequently, perhaps I’ll finally be able to purchase a Colt M4 
As many have already stated, Bernie isn’t going to win.
Just won Wisconsin. I expect Clinton to win New York as it is her state. But Oregon and California are a little more progressive so Sanders stands a much better chance there.
As the article above points out, he needs to do better than having a chance. Its over. Sanders will drag it out, but there is no realistic way he comes out on top.
he only earned about 11 more delegates last I saw with this “win”.
Acceptance is the first step to recovery. He lost, let it go.
When it is over that is when Iconcede. The corporate media have bbeen writing him off for a very long time. He was at 3% less than a year ago . The media has an incentive to keep his profile low as they are corporations themselves and are very afraid of his policies. Corporations etc. Do not want to give up any of their power and will do just about anything to see that doesn’t come true.
The only way he wins is if Clinton is indicted - “corporate media” can’t change the laws of mathematics.
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I like following along in PWI because I never fail to learn something. So, with all this talk of breaking up large banks I have a few questions:
If JP Morgan is currently 10x as big as Bears Stearns was when BS failed, then would JPMC be broken up into at least 10 little JPMCs, each with the full complement of divisions or would it be broken up down divisional lines? Wouldn’t the inefficiencies caused by 10 back offices, let’s say, be a major drag on our financial system? Conversely, I sure wouldn’t want to head up Commercial Lending if the Legal Department stayed with Financial Services! Although I bet I could poach Accounting from Savings and Thrifts.
And, if we break up all our large banks who will the government beg to absorb the losses of smaller banks if we should ever have another financial crisis? JPMC absorbed WaMu and BS, BofA absorbed Countrywide (ooof!) and Merrill Lynch, and Wells Fargo bought Wachovia…in fact, smarter people than me have made very persuasive arguments that had Lehman not failed we may have averted the entire disaster.
Lastly, nearly 15,000 banks failed during the period from 1920 - 1935. Is this somehow a more desirable outcome of a financial crisis and if so, why?
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“By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” - Adam Smith
You are the only one talking about corporate media. This has nothing to do with media, this has to do with the current delegate count… which has come from voting.
It is over, Bernie is down by 15 with two outs in the 9th inning. Nobody is expecting him to give up, but do you honestly expect him to win? The only way he “wins” is if Hillary gets into legal trouble. For that reason alone it is worthwhile for Sanders to stay in the race.
Bernie, as usmc pointed out multiple times, has no idea what he’s talking about:
Yes, but think in terms of redundancy. Also, the major operational costs of a bank are the branch network and its personnel - with the growing switch to digital/ services and expected drastic cuts to the branch networks and their respective force, this is not such a big deal.
Amazingly, Hungary did the “slice-and-dice” approach - after the nationalization of major banks, you could buy a portion of a bank with it’s corresponding clientele. Not sure how this works across departments. Austria did the same with the notorious Hypo bank which was involved in basically every nefarious activity you could think of.
Also, the argument that a larger banks provide cheaper loans to a wider population is generally true - the economy of scale and the fact that bigger institutions have a larger risk appetite - they can absorb larger losses in absolute terms from bad loans than smaller banks. However there is an important caveat - the interest rate of the loan provided to the client includes, among other things, the cost of funds and the risk cost. If you deliberately underestimate the risk cost (how much bad loans cost your portfolio) you can drive down interest rates for your prospective clients and expand your customer base, not to mention the ratings scams that are covered in more detail in many, many sources.
I am sorry, but this is patently not true. Lehman brothers were the most notorious example of a financial institution misusing leverage. Before the 2008 crisis the was a strong push by major banks to reduce necessary capital required by the regulators, including inventing new make-believe types of capital (Tier III capital comes to mind).
Lehman were covering their daily liquidity needs by overnight borrowing on the interbank market, that’s why the went under in a single day. A major institution without the funds to last more that one day? Looking back, it was a miracle that it lasted as long as it did. Many people, Roubini, Taleb etc. correclty identified the problems and predicted the 2008 crash, but were dismissed as “paranoid”
Good questions. I wouldn’t worry about what you call inefficiencies when the trade off may be the destruction of an entire economy.
It would be interesting to find out the number of bank failures after Glass-Stegall was enacted as opposed to what happened before and after it’s implementation and destruction.
No you can’t change mathematics but you can be more objectionable and the corporate media has an incentive to see him loose. The WSJ ran 16 negative reports on Sanders in 16hrs. Even that is a bit excessive. But it just goes to show their fear of Sanders ideas.
It certainly doesn’t hurt for Bernie to have an opponent that anyone with a shred of decency can understand is a complete and total piece of shit. I can’t wait to see how Hillary’s interview with the FBI turns out.
My prediction is this. Because Hillary has spent so many years lying and getting away with it, dishonesty has become so deeply ingrained into her character that she can’t stop. She lies when she doesn’t even need to.
ie Her tale about dodging sniper fire. At the time she told the tale it didn’t have the ring of truth simply because it would have been gross incompetence verging on professional misconduct by the Secret Service to go there.
Years of lying to reporters throwing her softball questions and getting away with it has left her unprepared to deal with dogged questioning from the police. We saw that when Ed Henry challenged her about wiping her server and all she could come up with was her stupid “what with a cloth? I don’t know how it works.” remark. I think “I don’t know how it works” was a rare moment of honesty and candor from her.
Hillary is going to self destruct with the email scandal it is only a question of whether it is before or after the Democrat convention.