Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
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
1:10 PM
big bank breakup
Unknown
banks , cnbc , sanford weill
Are the big banks too big. Are they too much to too many people? On CNBC's Squawkbox this morning, Sanford Weill, former CEO of CitiBank, said yes they are. He stated that the investment banking parts of the big banks should be separated from the other units. This would make balance sheets easier to read.
Mr. Weill said banks need to be depositors of money and make commercial loans. He also added that they need not put taxpayer money at risk. Very simple words for a very complicated time. That's what we need more of.
Mr. Weill said banks need to be depositors of money and make commercial loans. He also added that they need not put taxpayer money at risk. Very simple words for a very complicated time. That's what we need more of.