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Thread: 'Volcker Rule' Stalls in Senate

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by phattonez View Post
    Neither did the people who did lose the money. Those companies were bailed out.
    Are you talking about the people at GM who were insolvent before financial crisis hit? Yes it is amazing those unions with political connections get a pass when ripping off the public for something like $ 80 billion.

    As to the large banks and the TARP bailout, the government has already taken it's pound of flesh in interest and stock options.

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by RightinNYC View Post
    Fun chart:

    Here's another:


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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by RightinNYC View Post
    But that's not what this bill is targeting.

    "The proposal, dubbed the "Volcker rule" after former Federal Reserve Chairman Paul Volcker, would have essentially prevented any commercial bank with federally insured deposits from owning a division that makes speculative bets with its own capital."

    They're trying to limit the activities of any corporation that owns a bank with FDIC accounts, regardless of whether those activities have anything to do with the FDIC accounts or taxpayer money.

    It's the logical equivalent of banning people with families from playing poker on the grounds that if they lost a lot of money, it could hurt someone other than the poker player.

    If the bank makes investments in risky investment vehicles like CDOs and CDSs, and those go bad (like they did), the whole bank can collapse and not be able to honor those FDIC accounts. Thus even if they aren't using the capital of those FDIC backed accounts, the fact that they are unable to meet their financial obligations due to their bad investments makes them susceptible to needing to be bailed out. Too many of these banks are "too big to fail" (so would need bail-out) and thus if there are no laws on the books to prevent them from making these risky investments, what is there to prevent them from doing it again? If they want to invest in such risky investment vehicles, they should do it under another corporation that is not going to be bailed out by the tax payer if things go wrong.
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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by MC.no.spin View Post
    If the bank makes investments in risky investment vehicles like CDOs and CDSs...
    CDS's were not used as investment vehicles by banks. They were the financial sector's way of mitigating risk and hedging their bets. CDS's had literally nothing to do with the collapse in the housing sector; their failure was a symptom, not a cause.

    ...and those go bad (like they did), the whole bank can collapse and not be able to honor those FDIC accounts. Thus even if they aren't using the capital of those FDIC backed accounts, the fact that they are unable to meet their financial obligations due to their bad investments makes them susceptible to needing to be bailed out. Too many of these banks are "too big to fail" (so would need bail-out) and thus if there are no laws on the books to prevent them from making these risky investments, what is there to prevent them from doing it again? If they want to invest in such risky investment vehicles, they should do it under another corporation that is not going to be bailed out by the tax payer if things go wrong.
    That's not the problem. The Fed is the pusher, credit is the drug, and Americans are the addicts. The financial system was just responding to the perverse incentives created by monetary and fiscal policy.

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by Ethereal View Post
    CDS's were not used as investment vehicles by banks. They were the financial sector's way of mitigating risk and hedging their bets. CDS's had literally nothing to do with the collapse in the housing sector; their failure was a symptom, not a cause.
    CDSs were the big AIG meltdown cause and where much tax payer money has been spent to rescue the economy and banks.


    That's not the problem. The Fed is the pusher, credit is the drug, and Americans are the addicts. The financial system was just responding to the perverse incentives created by monetary and fiscal policy.

    So you are saying that monetary and fiscal policy is currently perverse, but don't offer up how to prevent the crisis from occurring again. I don't follow your reasoning.
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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by MC.no.spin View Post
    So you are saying that monetary and fiscal policy is currently perverse, but don't offer up how to prevent the crisis from occurring again. I don't follow your reasoning.
    Let failing companies fail and don't let credit build up when there is no savings. That's a classic bubble.

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by MC.no.spin View Post
    CDSs were the big AIG meltdown cause and where much tax payer money has been spent to rescue the economy and banks.
    And the CDS's failed because the housing market collapsed. You're treating an effect like it was the cause.

    So you are saying that monetary and fiscal policy is currently perverse, but don't offer up how to prevent the crisis from occurring again. I don't follow your reasoning.
    Well, the implication is that we must remove the perverse elements from the system, so the free-market can work as intended. What we have now is not a free-market, and please, when I say free-market, do not think that I'm talking about anarcho-capitalism.

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    Re: 'Volcker Rule' Stalls in Senate

    Those poor, innocent bankers were only doing what evil government made them do when they loaned out money to people who would never be able to pay it back!
    He touched her over her bra and underpants, she says, and guided her hand to touch him over his underwear
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    We’ll say what? Something like “nothing happened” ... Yeah, we might say something like that.

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by Deuce View Post
    Those poor, innocent bankers were only doing what evil government made them do when they loaned out money to people who would never be able to pay it back!
    Those poor, innocent people were only doing what the evil banks made them do when they took out those loans that they would never be able to pay it back.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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    Re: 'Volcker Rule' Stalls in Senate

    Quote Originally Posted by MC.no.spin View Post
    If the bank makes investments in risky investment vehicles like CDOs and CDSs, and those go bad (like they did), the whole bank can collapse and not be able to honor those FDIC accounts.
    Is there any evidence that without a bailout, that would have happened here? My understanding of the financial situation was that even if the government didn't lift a single finger to bailout any of the banks that this rule would affect, each one of them would have nevertheless been able to pay back its depositors.

    I could very well be wrong on that, but if that's the case, then I don't see how this proposal will have any effect on FDIC accounts.

    Too many of these banks are "too big to fail" (so would need bail-out) and thus if there are no laws on the books to prevent them from making these risky investments, what is there to prevent them from doing it again? If they want to invest in such risky investment vehicles, they should do it under another corporation that is not going to be bailed out by the tax payer if things go wrong.
    Because the Volcker Rule wouldn't apply to institutions like Goldman, Morgan Stanley, or AIG, three of the biggest companies involved in this ordeal, I'm skeptical about how effective it would be at preventing another situation like this.
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