Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

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I agree with him.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

Click to expand...

Real glad they are still trying to get this passed! I sure don't want us in the same position again where taxpayers have to bail out the banks. Godspeed to their efforts!

While we're at it, we should find out exactly who is responsible for them not being broken up in the first place and deport them to someplace horrible, like South Dakota.

eliminate the annual $83 billion in corporate welfare provided to the too-big-to-jail bankers
Why Should Taxpayers Give Big Banks $83 Billion a Year?

publicly disavow any willingness for our government to offer an explicit or implicit guaranty against loss to any bank
and watch what the shareholders will then do
motivate the shareholder/owners to secure their personal investments and nothing more needs to happen at the governmental level (other than routine bank examination oversight)

An idea whose time is long overdue.

Damn, where's Teddy Roosevelt when we need him?

Catawba said:

Real glad they are still trying to get this passed! I sure don't want us in the same position again where taxpayers have to bail out the banks. Godspeed to their efforts!

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The government did have to bail out the banks. The government wanted to bail out the banks. They forced most of the bail out money down the throats of banks that didn't want it.

ChunkySalsa said:

While we're at it, we should find out exactly who is responsible for them not being broken up in the first place and deport them to someplace horrible, like South Dakota.

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That would be Congress. Prior to legislation in the 1980's, interstate banking was illegal.

fmw said:

The government did have to bail out the banks. The government wanted to bail out the banks. They forced most of the bail out money down the throats of banks that didn't want it.

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Those poor old picked on banks. And that mean nasty old government forcing those nice little bankers to take all that money.

It would make an interesting upside down fairy tale in the mold of WICKED. You should write it. :roll:

danarhea said:

Damn, where's Teddy Roosevelt when we need him?

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And bring back the Glass–Steagall Act while they are at it.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

Click to expand...

As far as I am concerned if they are too big to fail then they too big to exist and therefore should not exist in the first place.A company going out of business should not be a threat to the country or its economy.

Even old Ayn Rand protoge' Alan Greenspan is on the list. Bit of a shocker to see.

While the government is in control yes they should be, however I what would really eliminate "systemic risk" is free banking.

If the right and the left in public want it and our representation is about as far away from doing it as possible... doesn't say much for the representation we have... don't have up there.

fmw said:

The government did have to bail out the banks. The government wanted to bail out the banks. They forced most of the bail out money down the throats of banks that didn't want it.

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If big banks fail...

Citi is something like 20 percent of US bank assets. By contrast, back in the Savings & Loan crisis, ALL of the S&L's COMBINED were less than 10 percent of US bank assets.

Here's what happens if a company as large as Citi fails:

- Investors and depositors, fearing failure of smaller banks, would take their money out, triggering further bank failures across the country.
-There would be less money available for loans to support economic recovery"

http://ac360.blogs.cnn.com/2009/03/09/if-big-banks-fail/

Catawba said:

And I have a bridge in London that you may be interested in.

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I believe it's in Lake Havasu City, AZ these days.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

Click to expand...

I think it's sweet (a little sad, but sweet) that you honestly think that either of those two individuals are interested in a vibrant banking sector made up of many competing entities, vice a few big players that are closely "regulated" and donate "regularly" to the "regulators".


So much for Dodd-Frank saving us all from Too Big To Fail, eh? :roll: Gosh, if I were a cynical fellow I might suspect that was never the intent.

Wiseone said:

And bring back the Glass–Steagall Act while they are at it.

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Why? Do you think it would have made a difference to (say) Bear Stearns or Lehman Brothers? What about Countrywide, Washington Mutual, Wachovia? The first two were pure investment banks. The last three were commercial lenders that managed to mismanage themselves to destruction without going into investment banking.

Break up the too-big, too-dangerous banks

WASHINGTON (MarketWatch) March 01, 2013— "There’s not much that the far left and the far right can agree on, but here’s one thing that both accept: The biggest banks are still too big and too dangerous.

Quite a few knowledgeable people in the middle also agree that the largest banks are still too big to fail, that they receive an implicit subsidy from the taxpayers, and that they remain a threat to the global economy.

It’s not yet a mainstream view, but there is a renewed recognition on the left, the right and in the center that the only way to end “too big to fail” is to simply make it impossible for banks to get too big. Keep banks small.

The largest U.S. banks — J.P. Morgan Chase (US:JPM), Bank of America (US:BAC), Citigroup (US:C), Wells Fargo (US:WFC) and Goldman Sachs (US:GS) — have gotten larger since the crisis. These five banks have assets equivalent to 55% of U.S. gross domestic product, up from 43% of GDP in 2006. They dominate the U.S. financial system, with more than 40% of bank deposits and assets.


The biggest banks in other developed countries are even more dominant in their markets, which is a big reason the euro crisis and the stagnation in Japan have festered for so long. Fixing the problem would hurt the banks, and you can’t hurt the banks without trashing the economy.

These large institutions were at the core of the 2008 global financial meltdown, responsible for most of the losses, and all of the systemic risk. As they began to implode, they received trillions of dollars of bailouts, emergency loans and other taxpayer support to keep them alive. The bailouts were necessary, we were told, because the failure of the biggest banks would have been catastrophic."

"Lehman’s collapse set in motion a cascading wave of failure that brought the global economy to its knees in a matter of days."

- See more at: Break up the too-big, too-dangerous banks - MarketWatch

Catawba said:

Break up the too-big, too-dangerous banks

WASHINGTON (MarketWatch) March 01, 2013— "There’s not much that the far left and the far right can agree on, but here’s one thing that both accept: The biggest banks are still too big and too dangerous.

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cpwill said:

Why? Do you think it would have made a difference to (say) Bear Stearns or Lehman Brothers? What about Countrywide, Washington Mutual, Wachovia? The first two were pure investment banks. The last three were commercial lenders that managed to mismanage themselves to destruction without going into investment banking.

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No it would not have made a difference to every case. What my concern is that FDIC insured savings will be used by banks as investments, so if your bank dabbles in commercial and investment banking like JPMorgan Chase and uses your personal savings to fund investment banking if those investments go under then so does your money, which being FDIC insured is bailed out to the tune of 100,000 which would mean the bank gets a bailout as well.

Also in my opinion, and I am willing to hear dissenting opinions, if there is a corporation be it a bank or any other kind of company that is so large that if it were to fail it would have a national economic impact to require government money to avoid further economic disaster, then it needs to be broken up now. The Glass-Steagall Act would have a double effect of separating personal savings from investment banking as well as breaking up banks that may be too big to fail based on their sheer size.

Yeah....government is more of a solution...but they created this problem.

Investment banks were hurting, meaning they werent giving credit. Commercial banks were beginning to hurt but were fine with federal deposit backing. The problem was the Fed could not help the investment banks, they had no legal method. So they put commercial and investment banks together through mergers or aquisitions and then gave them capital under federal deposit rules. The government endorsed and encouraged these mergers even if the companies did not want them because in some cases there were some toxic assets on the books---thats part of what the capital was meant to clear.

So now the banks that were too big to fail are even BIGGER than they were before. The lack of competition is not healthy, too few players are controlling too much of the pie. I suspect the only way back out is to bring back Glass Steagel, stiffen up CDS and Derivative legislation (one of the few regulatory actions I favor), and maybe consider forbidding co-mingling depository fed funds with investment sectors of that same bank---sending the signal that the fed wont cover investment losses.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

Click to expand...

i agree with this. too big to fail is too big to exist.

poweRob said:

Democratic Senator Renews Call To Break Up Banks That Are ‘Surely Still Too Big To Fail’

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.​

Between Sherrod Brown and Elizabeth Warren, I sure hope we can get some traction on moving this along. Whining that we can't do anything about a bank that is too big to fail is basically saying that they are guaranteed backed with future taxpayer bailouts no matter how they perform their business.

Click to expand...

Lol...nonsense. " The Whole Too Big To Fail " narrative only stands if you blame the banks for the sub-prime crisis. It's a Media backed nonsensical term that doesn't take into account the actions of the Federal Govt in the 90's and the Congress in the mid 2000's.


Too Big to Fail (Cue dramatic music) Da da duuuuuhhhhh....


Start with Carter's Community Reinvestment Act. Prior to 1989 it was just a law that tried to force banks into compliance but had no real enforcement powers. Enter in the 1989 Bush 41 Act ( Financial Institution Reform Recovery and Enforcement Act ) that increased regulatory power on banks by reinforcing the CRA.

FDIC: FDIC Law, Regulations, Related Acts - Miscellaneous Statutes and Regulations
"It required the agencies to issue Community Reinvestment Act (CRA) ratings publicly and do written performance evaluations using facts and data to support the agencies' conclusions. It also required a four-tiered CRA examination rating system with performance levels of "Outstanding," "Satisfactory," "Needs to Improve," or "Substantial Noncompliance."[4] These rules increased pressure on banks to make mortgage home loans to inner-city and rural areas"

In 1992 The Boston Federal Reserve released a Compliance Manual that was distributed the lenders. It was called " Closing the Gap " A Guide to Equal Opportunity Lending " In 1992 The Boston Federal Reserve released a Compliance Manual that was distributed the lenders.
http://www.bos.frb.org/commdev/closing-the-gap/closingt.pdf

" Even the most determined lending institution will have difficulty cultivating business from minority customers if its under writing standards contain arbitrary or unreasonable measures of creditworthiness.

Consistency in evaluating loan applications is also critical to ensuring fair treatment. Since man mortgage applicants who are approved do not meet every underwriting guideline, lending policies should have mechanisms that define and monitor the use of compensating factors to ensure that they are applied consistently, without regard to race or ethnicity.

The Board of Directors should establish a policy to detect and eliminate biases in underwriting standards and practices. As part of this policy, management should be directed to review existing underwriting standards and practices to ensure that they are valid predictors of risk.

Special care should be taken to ensure that standards are appropriate to the economic culture of urban, lower–income, and nontraditional
consumers. The Board should require management to define acceptable compensating factors and to monitor their use by loan production staff.

The Board may also wish to establish a written policy on equal opportunity lending, in which its underwriting guidelines are explained.

This policy can describe the institution’s commitment to the community and to minority and lower–income consumers and explain how its products can meet home buyers’ needs.

Management should review both underwriting standards and practices.(See also the sections on Second Review Policies and Testing Fairness in Lending Practices.)
Underwriting Standards "
The study was critiqued as poorly written and researched with questionable data, but ultimately was the initiative for new laws and regulations created in the 90's that forced the lowering of underwriter standards on Home Mortgage loans and on loans the GSE's could purchase. It also warned of possible civil legal action if these new standards were not followed.

In 1992 an Affordable Housing Mandate was put on Fannie and Freddie ( in Title XIII of the Housing and Community Development Act of 1992 ) which was enforced through HUD ( Housing Urban Development ) regulations by placing them under a Quota System which started at 30% , then 40% and 50% under Clinton and then 55% under Bush. That's out of their total share's of Mortgage Debt Purchased an increasing mandated percentage HAD to be low quality mortgages ( LMI ) and in 2000 the HUD director Andrew Cuomo pledged 2 trillion dollars to of "affordable mortgages".
http://www.huduser.org/Publications/PDF/gse.pdf

The 1994 National Home ownership Strategy, published at the request of President Clinton.......

- HUD, "Partners in the American Dream", May 1995

“In 1994, at the President’s request, the U.S. Department of Housing and Urban Development (HUD) began work to develop a National Homeownership Strategy with the goal of lifting the overall homeownership rate to 67.5 percent by the end of the year 2000. While the most tangible goal of the National Homeownership Strategy was to raise the overall homeownership rate, in presenting the strategy HUD pointed explicitly to declines in homeownership rates among low-income, young, and minority households as motivation for these efforts.” - U.S. Department of Housing and Urban Development Office of Policy Development and Research website

"At the request of President Clinton, HUD is working with dozens of national leaders in government and the housing industry to implement the National Homeownership Strategy, an unprecedented public-private partnership to increase homeownership to a record-high level over the next 6 years.” - Urban Policy Brief Number 2, August 1995

“Federal institutions, policies, and programs alone cannot meet President Clinton's goal of record-high levels of homeownership within the next 6 years. HUD has forged a nationwide partnership that will draw on the resources and creativity of lenders, builders, real estate professionals, community-based nonprofit organizations, consumer groups, State and local governments and housing finance agencies, and many others in a cooperative, multifaceted campaign to create ownership opportunities” - The National Homeownership Strategy

Some of the strategy's outline in the Home OwnerShip Strategy..

Action 11: Removing Barriers to Mortgage Financing for Starter Homes
Action 29: Alternative Approaches to Homebuying Transactions
Action 35: Home Mortgage Loan-to-Value Flexibility
Action 36: Subsidies to Reduce Downpayment and Mortgage Costs
Action 44: Flexible Mortgage Underwriting Criteria
Action 45: Public-Private Leveraging for Affordable Home Financing


From a 2000 Fannie Mae Foundation Report

"Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. …
When necessary—in cases where applicants have no established credit history, for example—Countrywide uses nontraditional credit, a practice now accepted by the GSEs."

HUD in 2004:
"Over the past ten years, there has been a ‘revolution in affordable lending’ that has extended home ownership opportunities to historically underserved households. Fannie Mae and Freddie Mac have been a substantial part of this ‘revolution in affordable lending’. During the mid-to-late 1990s, they added flexibility to their underwriting guidelines, introduced new low-downpayment products, and worked to expand the use of automated underwriting in evaluating the creditworthiness of loan applicants. HMDA data suggest that the industry and GSE initiatives are increasing the flow of credit to underserved borrowers. Between 1993 and 2003, conventional loans to low income and minority families increased at much faster rates than loans to upper-income and non-minority families."


Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 - Wikipedia, the free encyclopedia
In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency Act tied a Banks CRA ratings into whether or not a Bank could acquire new acquisition's.