Showing posts with label banking. Show all posts
Showing posts with label banking. Show all posts
10:58 AM
the big banks
Unknown
banking , bernanke , fed , industry , macro-economics
The notion of "bank" is expanding. There is an ever-growing macro-economic risk in having larger entities like we have today. An intertwining of the industrial economy and the supply chain with the financial system creates systemic risk.
Does this relatively new corporate structure contribute to the likelihood of industrial supply shocks?
Morgan Stanley, according to its investment documents, is engaged “in the production, storage, transportation, marketing and trading of several commodities, including metals (base a nd precious), agricultural products, crude oil, oil products, natural gas, electric power, emission credits, coal, freight, liquefied natural gas and related products and indices." Goldman Sachs, according to its own recent investment reports, is engaged in “the production, storage, transportation, marketing and trading of numerous commodities, including crude oil, oil products, natural gas, electric power, agricultural products, metals (base and precious), minerals (including uranium), emission credits, coal, freight, liquefied natural gas and related products and indices.”
The root story.
How is the Federal Reserve responding to the shift?
Does this relatively new corporate structure contribute to the likelihood of industrial supply shocks?
Morgan Stanley, according to its investment documents, is engaged “in the production, storage, transportation, marketing and trading of several commodities, including metals (base a nd precious), agricultural products, crude oil, oil products, natural gas, electric power, emission credits, coal, freight, liquefied natural gas and related products and indices." Goldman Sachs, according to its own recent investment reports, is engaged in “the production, storage, transportation, marketing and trading of numerous commodities, including crude oil, oil products, natural gas, electric power, agricultural products, metals (base and precious), minerals (including uranium), emission credits, coal, freight, liquefied natural gas and related products and indices.”
The root story.
How is the Federal Reserve responding to the shift?
10:08 PM
ending too big to fail
Unknown
banking , banks , dood-frank , federal reserve , too big to fail
Banks deemed "too big to fail" were behind the financial crisis of 2007-2009. They were thought to be immune from self-destruction. hey are not thought to take bankruptcy. Their risks are huge to make big profits. The "too big to fail" comes from taken-for-granted government-sanctioned programs.
The "too big to fail" banks interfere with the transmission of monetary policy. Congress thought it would address the issue through Dodd-Frank. Dodd-Frank has not done enough to restrain the big banks and exacerbated weak economic growth. It has increased economic uncertainty by increasing regulatory uncertainty. It has helped out many lawyers and created new layers of bureaucracy.
Despite the good intention, it has been counterproductive. Smaller banks need relief from some of the Dodd-Frank components. Financial institutions need to be restructured into multiple business entities. Only the downsized commercial banking institutions would benefit from the safety net of federal deposit insurance and access to the Federal Reserve's discount window. These two items would not be available to shadow banking affiliates.
See “Financial Stability: Traditional Banks Pave the Way,” Federal Reserve Bank of Dallas Special Report, January 2013, www.dallasfed.org