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No More Too Big To Fail?

With JP Morgan’s Jamie Dimon on the hot seat, we look at the loud call to fix American banking by breaking up the biggest banks.

People arrive at JPMorgan Chase headquarters in New York Monday, May 14, 2012.(AP)

People arrive at JPMorgan Chase headquarters in New York Monday, May 14, 2012.(AP)

JP Morgan Chase chief Jamie Dimon in the hot seat today before Congress, apologizing for the high-risk trading fiasco that cost his bank more than $2 billion.  A lot of serious players don’t want an apology.

They want Dimon’s bank broken up.  And not just JP Morgan.  Citigroup.  Bank of America.  Wells Fargo.  And watch out Morgan Stanley.  Goldman Sachs.  They’ve been called too big to fail, too big to manage, too big to regulate, too complex to understand, too risky to exist.  And when they shake, you pay.

This hour, On Point:  the call to break up – make smaller – America’s biggest banks.

-Tom Ashbrook

Guests

Nela Richardson, senior economics analyst for Bloomberg Government.

James Kwak, professor at the University of Connecticut Law School. He with economist Simon Johnson – at “The Baseline Scenario.”

Peter Wallison, fellow in financial policy studies at the American Enterprise Institute.

C-Segment: Temple Grandin Commencement Address

You can find a transcript here.

From Tom’s Reading List

Wall Street Journal “Lawmakers are set to grill J.P. Morgan Chase & Co. chief Jamie Dimon on Wednesday over how the largest U.S. bank was able to retain losses of more than $2 billion from credit derivatives trades and whether the problems it highlights are enough to push policy-makers to break up large financial institutions.”

Reuters “A need to break up big banks is one of the several lessons policy makers should have learned from the financial crisis that have either been ignored or forgotten, according to Phil Angelides, who chaired the congressionally appointed Financial Crisis Inquiry Commission.”

Bloomberg “The Dodd-Frank Wall Street reform act makes a promise: no more bailouts. It’s hard to find fault with the politics of this promise, and its economics seem promising as well. In theory, a financial firm without a state backstop will be more responsible. Unfortunately, this may not be what actually happens.”

 

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  • Roy Mac

    We already had the “no fail” solution; how do we engineer the “too big” answer?  And why isn’t Hank Paulson being called out?  Where are the indictments?  Is this question about organizations, or the criminals who run and loot them with impunity?

  • Hidan

    “With JP Morgan’s Jamie Dimon on the hot seat, we look at the loud call to fix American banking by breaking up the biggest banks.”

    Since the Crash the Bank’s have become bigger, QE1 and QE2 was used to make them profitable along with MTM accounting tricks. The Dodd/Frank bill is a piece of crap and doesn’t solve anything. And with Citizen United these banks have even more power to attack any real reform.  This does remind me of the movie “The disguise gentleman”. Than most of these banks also hold many American’s 401k and are interlinked in finance and mutual funds it’s highly doubtful that things will get better. 

    As we all know even when a majority of Americans want something like say “breaking up the banks” congress isn’t going to do anything and people who think obama will are kidding themselves. The WH pretty much hired or kept in place all the failures from Wall Street or brought on there lackeys

  • Hidan

    Also just a example as to why such reforms are pretty much not going to happen.Most likely not until things get much worst, these banks are now coming for your life insurance and creating health saving accounts by legal force who MA. sign a deal with both Cigna and JPM that the cheapest plans must have an HSA with Cigna/JPM in a sense targeting the poor and middle-class. Than when your saving account hits 1k JPM will invest for you(of course with fee’s paid at the time by your company until you no longer work there) and if you quit you will charge you fees unless you either close your account than you take the tax hit or transfer to another company that hopefully will agree to pay such fees.

    See how when JPM loss 2 billion all the Corporate Media gave face time to all the Top JPM brass and their talking points, and once the talking points were establish to more than likely work on the public, they were  than repeated by Mostly republicans and some democrats and many reporters/journalist over and over and over again.

    I love for Tom to talk about how the Federal Reserve in a sense gave free money(.25 of 1%) to the cost of 1 trillion+ between QE1/QE2(including hidden programs) and the Government backed Guarntees of Trillions on the Bank’s Toxic Debt. Just a few years after the Crash we have people complaining about too much regulation for WS and advocating for more deregulation and since the Media has adopted the Fake “fair and balance” such view will get equal if not greater footing(even know it failed to produce what it claimed)

  • Jim978

    Why not let the banks do the breaking up for us?

    Banks are subject to capital requirements.  Capital requirements could be structured so that the larger the institution, the more they would have to hold in reserve.  Since funds held in reserve can’t be invested, they produce no income for the banks.  Each bank would then have to decide whether they want to be larger and less profitable, or more profitable but smaller.

    Investors could care less about the size of the institution.  They want their investments to generate income … the more, the better.  Stockholder pressure would force a breaking up of the largest institutions.

    • GretchenMo

      I believe that’s how capital requirements are structured and requirements differ based on asset quality.  Basel III accords tighten capital requirements even more.

      • Jim978

        You are right about current requirements, but they haven’t led to any breaking up of the very large institutions so far.  Clearly the incentives to get smaller aren’t yet adequate to get the banks to do it on their own.

    • MrNutso

      I would add that banks should be taxed based on size to pay for regulation.  The larger you are the more you pay for oversight, which may encourage the splitting up of larger banks to reduce the tax.

      • GretchenMo

        I like that idea.  How about user fees like drug cos have to pay to the FDA?  You guys want your new drugs approved, well you’re going to have to pay to support the process.  The more drugs you have that need to be reviewed, the more you pay.  I believe medical device makers have to pay a tax based on sales that goes to the FDA.

        • Pancake Rankin

          Another job for E-disharmony.

      • Jim978

        Another good idea.  It is obvious more incentives are needed to get the largest institutions to act on their own.

  • AC

    can you cite specifically what laws were broken? I’m curious to know, plus, why would they only be enforced now, AFTER the many mistakes made….?

    • ana

      Good question.  It has been said that what was done on Wall Street that  brought  down the economy, though grossly immoral, was not illegal given the lack of regulation in place.

      • Terry Tree Tree

        ‘Bundling’ BAD assets, then paying ‘Rating Agencies’ for GOOD Ratings, is FRAUD!
           Fraud is ILLEGAL!

        • Still Here

          I’m not a lawyer, but that should be easy to prove, can you?  Good and bad sound pretty subjective.

          • Pancake Rankin

            As in foreign policy, both  political parties  serve the same wealthy interests, so that the law (both common and legislated) lies  dormant in the  face of obvious repeated war crimes and crimes against society. Of course, if you’ve invested (bet on) those crimes you therefore have
            a “three monkeys POV.” Do you still have the silver from when old Jesus got droned? As the Muppets say, “He blowed up real good.”

          • GretchenMo

            LOL.  You determine what’s a crime and only after it’s been committed.  Sounds like tyrany of the ignorant…

    • GretchenMo

      Just as good as your question yesterday.  Unfortunately no answer.  Hopefully we’ll get one today. 

  • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

    The more disturbing question is: does Congress even possess the political power to regulate Wall St. anymore? I’d argue that the latter is the the more powerful, the more able to put pressure on the other and the more able to control the media and get their message out (while suppressing opposing view points).

    And that is not even getting into the fact that the people who run the big Wall St. firms are often the same people running programs that are supposed to regulate said firms. Until something big changes the US tax payer is on the hook for any and all major Wall St. mess ups; just like serfs bound to their masters.

    • MrNutso

      It’s not the political power, it’s the will.  We need a government that represents human persons, not corporate persons.

      • Pancake Rankin

        Tim has a valid point. Many transnational corporations (200 to 300) have a gross and monetary net exceeding that of small to middling nations. Just the “mass and gravity” of so much offshore money negates regulation by our Federal agencies and Congress. (The “will” is an Hegelian fiction that only triumphs when the conspirators posssess power.)

  • MadMarkTheCodeWarrior

    Yet again we see reality inconveniently colliding with rightwing economic theory. Do we really need another depression for the right to abandon it’s commitment to Rand’s wild west lazy fairy mythonomics?

    My fear is that this is just a dog and pony show to demonstrate that Congress is carefully managing their image, er economy. Is there really any chance of new regulation coming out of this protect our frail economy which is the true basis of our national security?

    I call on congress to drop this deregulation nonsense and start
    protecting our economic future from all the amoral, unethical people
    taking risks with other people’s money; there is no denying it: there
    are hoards of them in Wall Street and across the nation. The 2008 collapse did not come from regulation and conservative decision making (and I say conservative in the apolitical sense as political conservatism is quite radical and fraught with risk). The right needs to stop blocking those few congressmen who are actually willing to ignore the sheisters, con men and gamblers on Wall Street and restore Wall Street back to something that resembles a vehicle for commerce and economic development and not a casino. Deregulation has only helped destroy peoples lives, bring the world economy to the brink of collapse, introduces wild fluctuations in the price of commodities and created more uncertainty than ever in our future.

    • GretchenMo

      Was it deregulation that forced Fannie and Freddie to drop their credit standards?  Was it deregulation that sought broader home ownership?

      • MrNutso

        Forced?  Probably not.  Allowed them to?  Probably.

        • GretchenMo

          Can you cite the specific piece of legislation that allowed them to drop their credit standards?

          • jimino

             That’s like asking “can you show me the law that allows someone to steal your money?”  You apparently don’t understand the concept of non regulation.

            Can you identify the specific credit standards you claim were dropped?  Then tell us why.

          • jimino

             I didn’t think so.  As someone you obviously agree with has asked: “If you can’t answer the simplest of question what’s the point of listening to you?”

          • Pancake Rankin

            Did your parents play that crib tape from L’il Professor one time too many?

          • GretchenMo
          • Pancake Rankin

            Quit asking strangers to be your advisory board for a doctorate in backwardass economics.

          • GretchenMo

            Wow, it must be difficult to prove if you have to get all testy.  If you can’t answer the simplest of question what’s the point of listening to you?

          • Pancake Rankin

            I award you the PHD (portable hair dryer) in tangled reasoning. Go buy some mousse and blow your head off.

          • GretchenMo

            I accept your apology.  Cheers.

          • Don_B1

            Sen. Phil Gramm (R, TX) inserted the Commodities Futures Act in the 2000 year end legislation that forbid regulation of derivatives. That is not explicit authorization, but it sure represents the “anything goes” attitude in Congress.

      • MadMarkTheCodeWarrior

        This had far, far less to do with Fannie and Freddie than it had to do with Liars loans (which by the way are still illegal) and false ratings on securities by all the big ratings agencies like S&P, Moody’s and Fitch. This is where the risk was multiplied many, many times the actual risk of the value of the loans themselves. The USA could have bought all of the distressed properties on the books for a fraction of the cost of the mess that Wall Street itself created by unscrupulously bundling securities that they knew ewer crap and selling them as something else.

        Read “The Big Short”. Wall Street was a systematic criminal enterprise. Some were ignorant, but not everyone was and those who spoke out were ignored and just like Harry Markopolos who saw through Madoff’s scam in 2000 and alerted the SEC… nothing happened. When you don’t fund regulatory agencies and don’t empower them to enforce laws and regulations… you get events like Madoff and the 2008 crash.

      • Don_B1

        The ONLY, ONLY thing that LEAD to the GMEs “lowering” credit standards was when they saw that they were LOSING market share and people like CEO Mozila (sp?) of CountryWide told them that “if they didn’t take more of the mortgages he was offering, he would cut off ALL mortgages going to them.

      • GretchenMo
    • Terry Tree Tree

      The ‘Right’ have been WRONG for so long, they think they are right?
         When the poor that have been conned by the 1%, REALIZE that the 1% will come out fine, while the poor right will SUFFER, they will take action?

    • Pancake Rankin

      If crashes are really coups that increasingly weaken the electorate and distort the information People get, then “they” need another crash and bailout ASAP because the general public is learning from experience. If you updraft 40% of all middle class assets to the .01%, that really teaches a lesson. The sadistic undertone and thirst for violence (from media, war and bloody racist religion) produces a frenzied minority demand for fascism.

    • Don_B1

      I agree that Congress needs step up, but as long as Republicans control the House and can filibuster measures in the Senate, it will NEVER happen. And it is unlikely that Mitt Romney would “pull a TR” as President unless he is presiding over a Great, Great Recession, that takes GDP down 20% or more (2008 reduced GDP by only 6 or 8%, I believe).

      And even some Democrats would be reluctant or refuse to step up. So this fall’s election really is a tipping point for world stability in a great number of ways.

  • Hidan

    How much does the AEI have to be wrong before the media stops relying on them for “expert” opinions?

    • GretchenMo

      Looking forward to your tearing apart his facts with your own.  Should be easy since they are so wrong.

      • Hidan

         Wrong on,

        -Iraq
        -Water Policy
        -Tobacco
        -Iran
        -Foreign Policy
        -Supply Side Economics
        -Regulations
        -Global Warming
        -NGO’s

        and the list goes on.

        “Looking forward to your tearing apart his facts with your own. ”

        AEI don’t use facts so there nothing to tear apart, since it mainly base on lies,distortions, tested talking points and all.

        • GretchenMo

          So flesh out some of their lies on four of the topics.  Put up their lie and shoot it down.  Should be piece of cake.

          • Hidan

             1.The Crash in 08(Wallison blames it on poor minorities and excuses WS) According to him and the AEI it wasn’t CDS nor no money down loans or slicing and dicing mortages it was because the banks couldn’t discriminate against minorities.

            2.HFT(High Frequency Trading) is a good thing and doesn’t distort the market. Recall this caused the massive drop in the market where WS shut down some of the exchanges and restored the amount(highly illegal)

            3. The Dodd/Frank bill is overreaching and wide. It doesn’t address to big to fail nor does in prevent another crash and has been water down to the point of doing nothing.

            4. Mutual Funds have to many regulations so therefore congress should liberalize/deregulate.

            5. Fred and Fanni was the cause of the crash as well. While failing to talk about how both didn’t have a large share in the market until the end of the crash(because those banks where unloading they toxic mortgages on them)

          • Still Here

            Great, let’s take HFT.  So your contention is that AEI is lying about HFT being a good thing and your evidence is a single incident from 2010. Can you show me the link to the AEI piece?  Then show me the research that shows HFT was responsible for the flash crash (I assume that’s what you’re talking about) and please cite what specific laws were broken.  What amounts were restored and by whom?  Thanks for your help.

          • Hidan

            rhsmith. umd.edu /cfp/pdfs_docs/papers/ FlashCrash.pdf

            aei.org/ events/ 2012/06/18/ buying-and-selling-at-the-speed-of-light/

            wired. com/wiredscience /2012/02/ high-speed-trading/

            en.wikipedia. org/wiki/ 2010_Flash_Crash

          • Still Here

            It doesn’t sound like they have their mind made up?  At this conference, we will assess whether HFT has been good or bad for the securities markets and investors.

            If you are unable to attend this event, we welcome you to watch it live on this page. Full video posts within 24 hours. Agenda9:00 AM
            Registration and Breakfast

            9:30 AM
            Keynote Address:
            Jeb Hensarling (R-Texas), U.S. Congress

            10:00 AM
            Panelists:
            Ana Avramovic, Credit Suisse
            Richard Gorelick, RGM Advisors
            Albert (Pete) Kyle, University of Maryland
            Jim Overdahl, NERA
            William White, Barclays

            Moderator:
            Peter J. Wallison, AEIOtherwise, it doesn’t even look like a rule was broken as the SEC created a new one following the flash crash.  Broken trades appear to have offsetting cost/benefits but there doesn’t appear to be any differentiation between HFT-caused and normal volatility. 

          • Hidan

            For stocks that are subject to the circuit breaker program, trades will be broken at specified levels depending on the stock price:For stocks priced $25 or less, trades will be broken if the trades are at least 10 percent away from the circuit breaker trigger price.
            For stocks priced more than $25 to $50, trades will be broken if they are 5 percent away from the circuit breaker trigger price.
            For stocks priced more than $50, the trades will be broken if they are 3 percent away from the circuit breaker

            http://moneymorning.com/2012/02/01/high-frequency-trading-could-cause-another-flash-crash/

            http://www.wikinvest.com/wiki/Circuit_Breaker http://www.freakonomics.com/2011/03/28/should-high-frequency-trading-be-banned-one-nobel-winner-thinks-so/http://www.lyceumassociates.com/Newsletter/SelectedArticles/tabid/867/smid/2530/ArticleID/663/reftab/867/t/High-Frequency-Traders-Suffocate-Fundamental-Investors-Distort-Market-Volume/Default.aspxhttp://www.herbertsmith.com/NR/rdonlyres/712B992A-8AAF-4A9D-B5A8-F67406371F16/0/MarketabuseupdateOctober2011DRAFTDOCSoftcopy.pdf

  • Terry Tree Tree

    EXECUTEives protected THEIR money?
       IF they LOST double the percentage of the company losses they cause, would they be as reckless?  FIVE times?

  • Terry Tree Tree

    Too Big to EXIST?

    • AC

      stop talking about my behind!! lol

      • Terry Tree Tree

        WHAT can I say to a married lady, that does this to me?
            LOL!  LOL!

        • Terry Tree Tree

          I’ve only seen the above picture of you.  What does your husband say?  (I DO hate to put him in a no-win situation, to extricate myself!)  LOL!

  • Terry Tree Tree

    Jamie Diamon and the other EXECUTEives PROVE their apology is serious, by GIVING BACK ALL the money they got for their stupidity and ineptitude?

  • Victor Vito

    Whether individuals or institutions, I think history shows that wealth cannot be defeated unless it destroys itself through overreach.  Attempts by corrupt lawmakers to regulate the corrupt wealthy will always fail.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    This isn’t 2008 – were these current losses caused from illegally misrepresenting the risk of these investments? If not, I don’t see the problem – what part of “risk” didn’t the investors understand?

    As far as the crash of 2008, though, they need to shift focus from “too big to fail” to “too big to jail”. They still haven’t prosecuted anyone even though they’ve uncovered endless illegal wrongdoings.

    • Pancake Rankin

      Most voters are not investors. The majority have no financial net worth. (Would you  suggest they borrow to gamble? Again?) It is a privileged minority that tips the commons and takes from  all. (As soon as we  admit they are losers the ‘free market” religion  is debunked.) A general levy of tribute to the powerful (interest, fees and rising utility rates) is now institutionalized. Maybe it always operated in a universe of unlimited sacralized property and secret elite contract.

  • feettothefire

    Bear Stearns. Lehman Brothers. AIG. Now J.P.Morgan Chase. How much more Wall Street stupidity is necessary before the supporters of unbridled, undisciplined, and under-regulated high finance figure out that these people, if left to their own devices, will almost always go down the riskiest path, taking the rest of us with them, even if we don’t want to go.    

    • Pancake Rankin

      Does it cost anyone their home when Kardashians get all stupid? Media never explains the difference, nor does schooling. They lead people around   by the screen.

      • Drew (GA)

        “They lead people around by the screen”

        Only those that allow themselves to be led. The topic is Too Big To Fail, perhaps it should be Too Stupid To Succeed.

        • Pancake Rankin

          So how rich are you?

          • Drew (GA)

            I don’t understand this comment, please clarify.

        • MadMarkTheCodeWarrior

          The newspaper was the fourth estate in the government envisioned by the founding fathers. News media ownership was regulated in and effort to ensure as fair and balanced coverage as is possible… until news corporations owned enough senators and congressmen to deregulate ownership. Now, more than ever, the public doesn’t get the truth, but opinion: opinion designed and manufactured to sound like news to anger the majority of the public to move opinion in the direction of those contracting for the message to get out. 1984 is here today with Fox News: propaganda and opinion that sounds like news: an endless stream of lies and gross distortions that make you angry at the government, liberals, moderates and epitome of evil: teachers.  Some of the rubbish I’ve heard there is stupefyingly idiotic and I am amazed that some people actually believe it….

          yes, people are lead around by the screen:
          go read up on framing.

          • Drew (GA)

            Did I imply that people are not led around by the screen? That certainly was not my intention. I only meant that while the Media is constantly the lead Lemming WE still have the choice to step out of line.

            I doubt I need to read up on framing, I didn’t stop watching Television well over a decade ago without good reason.

          • Terry Tree Tree

            LBJ still at it?

      • feettothefire

         I’m not sure I understand your reply. When I say “taking the rest of us with them,” I’m not referring to the dopes who let themselves get tangled up in investments they didn’t understand and loans they couldn’t afford. I’m referring to “the rest of us,”  whose economic well being was greatly effected by Wall Street excesses with which we had nothing to do. You know, the entire U.S. economy.

  • Worried for the country(MA)

    Restore the Glass-Steagall act.

    Repeal Dodd-Frank.  We should never enact 2000+ page bills that create bureaucratic leviathans.  Good parts of Dodd-Frank can be re-enacted in smaller chunks.

    Repeal SarbOx.  Overreaction to Enron that costs US jobs and competitiveness.

     

    • Pancake Rankin

      How can a Libertarian mind become so enthralled with “legalized tyrannies” (mega-corporations) so far beyond human scale? Somehow a psychotic break is indicated. But if the “strong and frugal Father figure” is to dominate the family (religious and sexist fixation) then everyone under government control will remain “Junior and Cissy.” This Sunday as we kiss up to the Old Man, remind him that Hamilton did not design  the USA to operate on a nuclear family budget, but used debt and interest as a Capital magnet. That may have been mistaken but you must flip the Monopoly board and start a new game with new rules to change it. The vaunted individuals cannot be held responsible so long as the TBTF retain a license to mow them en masse like blades of grass.

  • Tina

    Don’t just break up the big banks:  bring back Glass-Steagall!!!

    • Hillarion

       Agreed! However, If it needs updating, we can hope that that will be done intelligently.

  • wauch

    I have Dimon’s CSPAN testimony on mute and am listening to OnPoint because I can’t bare to listen to more arrogant, myopic, phony, and elitist bluster and promises to do better from Dimon AND those questioning him. Both sides are doing nothing more than presenting a front while hollowing out what is left of Volcker Rule and the SEC, CFTC, FDIC oversight capabilities, while simultaneously loading on these regulators more responsibilities with less and less money.

  • Prairie_W

    It’s a rigged deal.  The Senate Banking Committee is, um, kind of tainted… (And this is just an excerpt from a long list.)

    Dwight
    Fettig, who currently serves as a top aide to Johnson as the Banking
    Committee’s staff director, is a former lobbyist at Porterfield &
    Lowenthal who did work for JPMorgan in 2009 and 2010. In addition, a
    former top aide to Johnson, Naomi Camper, is one of JPMorgan’s chief
    lobbyists.

    Sean
    Oblack, a Banking Committee spokesman, released a statement Tuesday
    defending Johnson’s record with respect to JPMorgan, noting the South
    Dakota Democrat was the first committee chairman to call Dimon to
    testify about the firm’s trading loss. “While Senate and House
    Republicans, along with Mr. Dimon, have fought to weaken or repeal the
    Wall Street Reform Act, no one has been a stronger defender of the law
    than Chairman Johnson,” the statement said.

    The
    statement also noted: “Dwight Fettig has served for more than 16 years
    on Chairman Johnson’s staff, and the chairman has complete confidence
    in his integrity, judgment and independence.”

    It
    is not just Johnson who has close ties to JPMorgan, which declined an
    opportunity to comment on the record for this article. In-house
    lobbyists for the bank include Kate Childress, a former aide to Schumer,
    and Steven Patterson, a former Republican staff director of a Senate
    banking subcommittee.

     http://www.americanbanker.com/issues/177_113/jmporgan-chase-builds-vast-web-of-staff-money-connections-to-lawmakers-1050063-1.html?zkPrintable=1&nopagination=1

  • TyroneJ

    The Federal government should audit these banks world-wide operations annually, and determine via a transparent procedure, the banks size in relation to the US GDP. If the bank ever exceeds a certain size compared to the US GDP, the bank should be required to bifercate within 12 months even if the bank shrinks back below that triggerpoint.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    “broken up” is not the right thing – if these banks want to “invest” (bet?) freely, decouple them from FDIC and other government supports. Then let investors decide if they want safe investments protected by government supports or want to play the risk. These banks will become smaller just from the shift of investments.

    • Pancake Rankin

      Chains around the columns and hop on the bulldozer.
      (Sampson was blind.)
      I say nationalize…

  • Dan

    21st Century Economics: 1. Rampant fraud and reckless mismanagement in the financial sector 
    2. Public bailouts of the worst actors in the financial sector, 
    3. Private debt and liability imposed on taxpayers, 
    4. Monetary policy aimed at recapitalizing insolvent and recidivist banks, 
    5. Promotion of business leaders and policy-makers who are chronically compromised, 
    6. Conglomeration of Systemically Dangerous Institutions into a more empowered menace.

    http://www.capitalismwithoutfailure.com/2012/05/bill-black-geithner-channels-greenspan.html

    Bill Black!

    • Pancake Rankin

      Control Fraud is the crime Black blames.
      The experts always lie.

  • paul

    in the days when the big banks were partnerships, they never got into this kind of trouble because it was their own capital at risk.  now? [1] increase capital requirements to something like 20% and have the bank absorb first dollar losses up to their capital requirement before any government aid, e.g., insurance, kicks in.  and as soon as they run into their limits, the government directs a zero-cost ownership change. [2] the bank should have some skin in the game, i.e., they must own a piece of every security that they originate.  dodd-frank may have some sophisticated rules, but smart people always can outmaneuver a set of rules.  you don’t want to be in the position of having to constantly revise the rules.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    The market is stiil “the market” – if the market as a whole takes a big hit, what difference will it make if 2 or 3 big banks all fail, or if 20 smaller banks all fail? Either way, the government will have to come along and bail them out.

  • Dan

    How many times are we going to talk in circles about this stuff? Why do we keep asking questions, answering them, and then re-asking them again and again, ignoring the answers?

    Yes it makes good radio to keep trotting out the never-ending quest, but its time to take the answers, and focus on the execution.

    Bring back Bill Black again, listen to what he says, and then lets just go all in against the machine.

    • Fhghghg

      great comment

    • Pancake Rankin

      When the baby gets cranky take him for a car ride to nowhere. Tom’s buckling us in our safety seats.

  • AC

    what are the benefits of big banks?

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      Ask a bank CEO.

    • J__o__h__n

      More ATM locations is the only one I can think of. 

    • Terry Tree Tree

      BIGGER pay for CEOs!

    • Steve_T

      More people to come up with ideas, on how to steal your money.

    • Markus

      Massive economies of scale are a significant factor. Banks operate more or less the same so when one buys another, they consolidate people and systems and automate everything they can. This translates to lower costs for the bank which may or may not translate to lower prices for services (or more profits or more internal investment – you get the idea). Obviously, this is not the only benefit.

      I also think the banks have gotten far too big, but it’s important to understand why they got big.

  • Terry Tree Tree

    You can’t lose $2 BILLION to $20 BILLION, if you’re small?

  • Jriberdy

    I don’t think that we don’t need to have big banks just a mechanism for pooling assets on large deals… like the syndicated system used for IPO’s

  • potter

    James Kwak makes such an open and shut case about making our banks smaller that I don’t know why we have to talk about whether to do this. The problem is HOW?

  • Dan

    Time to Tar and Feather everyone linked to the financial cabal, from Dimond to the media sycophants who defend too big to fail.

    There is NOTHING, that more, competing banks couldn’t provide and achieve for our real economy.

    An absolute dictatorship would be far more efficient and potentially effective than liberty and democracy, but we reject it for a GOOD reason.

    Same for too big too fail.

    • MadMarkTheCodeWarrior

      Heads on pikes should line Wall Street! Then you’d see a great reduction in risk taking and real management by these C levels filled with entitlement, hubris and narcissism .

  • Fred Jensen

    What if we removed the government support for these banks?  I mean, what if we stopped insuring them through the FDIC?  If their accounts were not insured, they would lose customers, and thereby get weakened.

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      Exactly – government supports should require following some government rules. But give any bank the option to opt out.

      • Terry Tree Tree

        REQUIRE that the bank REVEAL this to investors and depositors in LARGE print?

      • TFRX

        I don’t know that I trust that idea if it were put into action.

        Too many bankers know too many politicians and regulators.

        Would we really end up with a genuinely Galtian set of self-sufficient banks who would live by their decisions, or if the spit hit the fan would they just end up banging on the door of the fallout shelter, like in so many Twilight Zone episodes, begging their friends to let them in?

        (Yeah, the metaphor gets a bit out there.)

    • jefe68

      You would have more runs on banks in a downturn.
      The reason the FDIC was created was to keep the average person from losing all their savings as they did in the years after the crash of 1929.

      This goes back to the question are the banks to big?

      When we had Glass-Steagall investment banks and commercial banks were not allowed to be one and the same. As they are now. 

  • Worried for the country(MA)

    Is it a coincidence that both AIG and JP Morgan’s problems centered in their London office?
     

  • wauch

    Did not Wallison et al prove themselves so unashamedly focused on Fannie and Freddie during their petulant participation on he Financial Crisis Inquiry Commission?
    I have a very difficult time listening to Wallison given he and his laissez-faire team’s focus on verbiage in the FCIC’s white paper.
    We must reevaluate completely free-markets! Kwak, Wallison, Johnson et al don’t want to look behind them at the real elephant in the room.

    • Pancake Rankin

      Scoundrels need talking points.

  • http://www.facebook.com/drpmeade Paul S Meade

    All banks need to be regulated. The larger the bank the more risks they are willing to take.

    Simple logic as Mr. Kwak is espousing is lacking in our current financial system. Greed is always present. Look at what has happened in Greece and Spain. It doesn’t seem that anyone was listening to NPR this morning and the interview with Angel Borges who tried to change the course in Madrid’s banking system. Human nature is hard to control.

    • Pancake Rankin

      On Day One a Romney Presidency would implement the demise of credit unions. (How can a vulture pick our bones with  all those little birdies in the way?)

      • Pancake Rankin

        Hooray for “bidness acumen”!
        (Obama’s still trying to find the marble under the three walnut shells.)

  • ThisIsNotBritannica

    Aren’t the real problems here:

    1. the network of so-called “central banks,” which artificially set interest rates that have no bearing at all on — in fact, prevent –market discovery, and

    2. the fact that the Fed is giving big banks free money per 0% interest that they then immediately recycle back through the US’ financial system to make huge profits for doing nothing and at the taxpayers’ expense?

    • Dan

      Yes. That simple truth deserves a weeks worth of shows from Tom.

      • Pancake Rankin

        Pump up da debt! Let society tote d’ note.

    • GretchenMo

      The Fed sets two rates, the Fed Funds and the discount rate.  Everything else is determined by the market.

      How does lending money that’s paid back cost the taxpayers money?

      • ThisIsNotBritannica

        Without accepting your underlying premise per what the Fed actually does (as opposed to its mandate), I’ll offer the point that the US does not make money when the Fed lends money to a bank at 0%, which that bank then immediately uses to buy US bonds — backed by the US taxpayer (the same source as the  original free money) – at 1 or 2%.

        This is as crazy as the latest EUSSR plan to bailout Spain using “member” funds that, for instance, Italy must borrow at 5+% to loan to Spain at 3%.

        This, also, is a (European) central bank-created situation.

        This kind of arbitrage situation will always work against the sovereign and their people who facilitate/allow it, and in favor of the bank in the middle of it.

        • GretchenMo

          Is the Fed’s mandate to make money? 

          • ThisIsNotBritannica

            “The Congress established the statutory objectives for monetary policy–maximum employment, stable prices, and moderate long-term interest rates–in the Federal Reserve Act.”

            http://www.federalreserve.gov/faqs/money_12848.htm

            Although, the truth is that nobody outside the Fed has any idea what the Fed is actually doing, since, even though it is a private and un-Constitutional bank, it won’t allow Congress to audit it.

          • GretchenMo

            So the answer would appear to be no and therefore the Fed must be lending to banks at nearly 0 in pursuit of one of the above.  In any case, where’s the cost to taxpayers?  Moreover, there are bond markets all over the place where price discovery is taking place every moment of everyday.

          • ThisIsNotBritannica

            “In any case, where’s the cost to taxpayers?”

            I’ve already explained this to you.

            Thanks.

          • GretchenMo

            I don’t see it.  But how much was it last year?

            Why are you avoiding the fallacy of your first point?

          • thisisnotbritannica

            “I don’t see it.”

            “I’ll offer the point that the US does not make money when the Fed lends money to a bank at 0%, which that bank then immediately uses to buy US bonds — backed by the US taxpayer (the same source as the original free money) — at 1 or 2%.”

            “But how much was it last year?”

            Was what?

            “Why are you avoiding the fallacy of your first point?”

            What fallacy?

          • GretchenMo

            What wsa the $ cost to taxpayers?

            THe mrket determines rates.

  • Ayn Marx 666

    By threatening us with a metaphorical gun held to their own heads, the big financial institutions echo Cleavon Little’s character in “Blazing Saddles” by screaming, ‘One more move and the banker gets it!’

    • Pancake Rankin

      AG Holder as Sheriff Bart? 
      (You do understand that the Oligarchy appointed him?)
      I think you better go back to town for another s**tload of dimes, because you’ve had quite enough  beans.
      In the remake Mel Brooks travels to Niger to buy yellowcake, and the mock town is devastated by drones.

  • Steve_T

    It’s all blah,blah,blah. And while talking about it, their growing to the point of to big to do anything with, that is what they want, to become so big they run it all. then tell the gov go spin on it.(The finger) WE OWN YOU.

    • http://www.facebook.com/drpmeade Paul S Meade

       They already own us, the general populace and the government. We created the system but are unwilling to change it. Face it, we like our cheap credit and love to spend more than we have.

      You’re right Steve, I’m afraid we’re past the point of no return. It’s rather depressing to think our politician’s would even think of doing anything. And they want to give our retirement funds to the bankers?

      The Tea Party and the rest of us need to wake up!

  • http://www.facebook.com/profile.php?id=100001436729213 Wes Nickerson

    Break up the big bad banks! Too big to fail is too big to exist! Break them up now! End moral hazard now! Separate the consumer deposit banks from the speculative investment banks, as well as shrink the size of the banks. Alan Greenspan now says, “If they’re too big to fail, they’re too big,” Break up the big bad banks now!

  • Robbie

    You are all making this too complicated. Totally disallow investment banking mixed with consumer banking. If the single investment bank fails too bad. limit consumer banks to regional operations say the size of a BB&T. And require nation wide ATM use free of all fees.

    • AC

      this seems reasonable to me….? what am I missing?

      • Dan

        The Democratic and Republican parties….

        • Pagassae

          Correction:  The CORRUPT and BOUGHT Democratic and Republcian parties.

        • I<3NPR

           hahaha i like it

    • Pagassae

      BRING BACK GLASS -STEAGALL.

  • Hillarion

    Google on [quadrillions derivatives] for some interesting hits. That quadrillion refers to dollars.
    Afaik, the amount of money sloshing around in derivatives and such is something like $3 trillion a day.
    (One quadrillion is 1,000 trillion, just in case…)

  • Dan

    A C C O U N T A B I L I T Y

    What does it spell?

    RULE OF LAW is Central to our Country, Society, Freedom.

    The fact that the Washington/Banking Cabal lives above it is Crisis #1 for our country.

    Remember the Bill Black, Glenn Greenwald show?

    We have to get back to that and keep the focus.

    We STILL haven’t had our ACCOUNTABILITY show, Tom. About how it is absent from our power circles these days, and we don’t seem to care, or see why it is self-destructive.

    • GretchenMo

      What laws were broken?

      • Pagassae

        If it has to be spelled out for you…then you are part of the problem.

        • GretchenMo

          We can’t take the bankers word for it, nor yours either.  Rule of Law and all that.

          • Pagassae

            I fail to see how your reply is relevant to my comment. Please enlighten me…..

          • GretchenMo

            Enlighten me as to what laws were broken?

          • Terry Tree Tree

            FRAUD is illegal!

          • GretchenMo

            So is POSITION OF A CONTROLLED SUBSTANCE WITH INTENT TO DISTRIBUTE!  WHAT fraud, specifically?

          • GretchenMo

            (POSSESSION)

          • Terry Tree Tree

            For one, JPM represented this as ‘hedging’ when they bought the same type of stock.

        • Pancake Rankin

          Every con game involves shills who are paid to act stupid.

          • GretchenMo

            You seem to be the unpaid kind however.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Big problem is lack of transparency – back in 2008, AIG and the banks had no idea how deep they were in, much less the government. So the only fix possible was bailouts.

    • Pancake Rankin

      C’mon, can’t these Big People have some privacy?!
      You’re sawing on the Constitution according to the Justice Roberts gang.

  • Dennis O’Connor

    Credit default swaps must be banned. They are bets only, not hedges. They caused the MF Global failure. They caused the AIG failure. The 4 biggest US banks had $250 TRILLION exposed to CDS as reported by the NY Times last October. 

    • Pancake Rankin

      They are unregulated insurance by another name, illegal by definition  already.

      • GretchenMo

        I’d ask you what law applies but that would be futile. 

    • GretchenMo

      They can be hedges as well if you own the underlying bonds.  Quoting a notional amount makes no sense.

  • Dan

    Its NOT about Regulation, micromanagement of banks or business by outside “wise panels” etc, as that is an illusion. It’s about COMPETITION AND ACCOUNTABILITY.

    TOO BIG TOO FAIL is self evidently corrupt. Its that simple. Make the stakeholders accountable, absolutely and behaviors will change.

    • Pagassae

      And make the law breakers pay with HUGE fines, and LONG prison terms at a hard time facility. The usual slap on the wrist and prison time at a mininum security Camp Fed should be banned. Let these theives suffer.

  • http://www.facebook.com/drpmeade Paul S Meade

    Mr. Wallison, we already know what the problem is. There is an out of control banking and credit system. If we continue on the same course that we our now headed in, even those who think they are protected now will be in the tank.  Even money in the mattress or buried in the coffee can will be worthless.

    • Pancake Rankin

      It isn’t out of  control for the .01%, just the inverse, as their income stream swells. It’s hard to make a solar panel from a drilling rig. Our economic system, whatever you call it, is working just as intended for the Oligarchy that built it.

  • feettothefire

    This conversation is a grand waste of time. Since the word “Politician” is synonymous with the word “Coward,” we can’t possibly expect the fools on Capitol Hill to actually DO anything. It’s been four years since the debacle of 2008 and we’re still having this debate. It seems to me that the gravest economic threat to our country in seventy years would have deserved rapid, drastic, bi-partisan action of real substance. That’s a laugh.

    • Zing

       Of course…it’s who we are…nothing is going to change in any way to make the daily commenters comfortable.

  • Dan

    Tom, why are you wasting time, quasi-defending the compensation of the bank oligopolist/cartel?

    • Pancake Rankin

      He wants to remain on WBUR, and not be begging Carnegie to buy him a slot on APM like Bill Moyers.
      If George Carlin  were alive he’d list the 7 political truths you can’t mention on  radio, and we’d all  bootleg the MPEG, and laugh and cry at the same time.

      • Pancake Rankin

        He already exhibited a defanged Chomsky…
        what greater spectacle can there be?

  • Dan

    The Bailout Reader

    http://mises.org/daily/3128

  • GretchenMo

    Canada has even bigger banks relative to the size of its population and economy.  Maybe we should follow their lead. 

    • Pancake Rankin

      Canada has fewer residents than Florida, and is already a de facto appendage of our Empire. Don’t pretend Pringles ain’t potatoes. They run our soot powered gas station.

      • GretchenMo

        Wow, I hope there aren’t any Canadians here today.  They have different banking laws so I’m not sure where you’re coming from. 

    • J__o__h__n

      They are run more conservatively and weren’t at risk.  I’m quite happy banking with TD Bank. 

      • GretchenMo

        Cool, sounds like we could learn something from them.

    • jefe68

      You forgot that they are regulated better. That Canadian banks are not allowed to do what large American banks, such as Bank of America has done and is doing.
      They are also very conservative when compared to our banking system in terms of risk.

      However right now in Toronto there is a housing bubble that is very similar to what we had.

      • GretchenMo

        Are they better regulated or just run more conservatively?  Housing bubble, that doesn’t sound good.  Why didn’t their better regulation prevent it?

  • http://www.facebook.com/luke.held.9 Luke Held

    Thanks for having Peter on the show.  He really showed that there is no argument against breaking up the banks, his arguments were so hollow.  Waiting and “responsibility”  is not an answer.  James was very thoughtful and reasonable, Peter, afraid of any change.  The crisis was 4 years ago, and there has been little to no effort at serious reform.  Action is needed now!

    • Pancake Rankin

      There’s a new APP to make us forget, and go it  again.

  • Dan

    We have to boil down the essences of the Tea Party and the Occupy Movements, and build on a consensus and common ground, that preserves the American ideal, and hope that we can self-govern and be free, within a Constitutional Rule of Law, that protects us from the 21st Century Tyranny that is the collusion between Washington and Finance.

    The power needs to be diffused back to the people and wrested away from the cabals and unaccountable colluding groups and technocratic “technicians” playing with our lives, for academic sh!ts and giggles and personal profit.

    Liberty and Rule of Law, the original Peanut Butter Cup.

    • Pancake Rankin

      Don’t get chocolate  on my Exxon shares.

  • Steve_T

    With more people thinking like Temple Grandin, we  may have a chance to get somewhere, but that’s just a wish.

    • Pancake Rankin

      She thinks we can enjoy execution if we have a big hug.

  • Worried for the country(MA)

    Gotta love Temple Grandin.

    Nice juxtaposition of her “let’s make real stuff” vs. excesses of Wall Street.  I’ve bemoaned the brain drain away from engineering to Wall street for years.
     

    • GretchenMo

      We make more than we ever have, it just doesn’t take as many engineers as it used to.

      • Worried for the country(MA)

        I’m all for free markets but would you rather have the latest genius working on the cure for cancer or working on energy independence inventions  instead of creating the latest financial derivative?

        The money flowing through the financial industry distorts the intellectual capital markets in a perverse way.

        • GretchenMo

          I’m not for stifling innovation wherever it occurs, but systemic risks should be mitigated.

        • JGC

          I agree with you on this.  And one more thing that the financial folks did was to rebrand themselves as running the financial “industry”, further obfuscating their real contribution to the U.S. economy. 

  • http://www.facebook.com/profile.php?id=100001436729213 Wes Nickerson

    Why are the Democratic and Republican parties dragging their heals on this issue? It’s because their largest financial contributors and their advisers are the big banks. Don’t expect any leadership from them. They will only do what needs to be done if we the people put pressure on them. That’s why I support the Green Party. The Green Party is committed to breaking up the big bad banks now.

  • jimino

    I think Mr. Wallison fundamentally misstates the real “run on the banks” that was at the heart of the 2008 crisis.  It was NOT individuals pulling their money out like the prior instances from the early 20th century he cites.  It was the banks themselves, with their worry over how credit default swaps would play out, who tried like hell to get their money before the proverbial shit hit the fan. 

    The real problem is that the amount of these side deals, which we eventually learned dwarfed the size of the entire global economy, was utterly unknown, even to its participants, as was the identity of who actually held the risk.  The only known was that there was not enough money to pay off those obligations.  THAT, not grandma trying to withdraw her money, was the cause of our economic meltdown.  And it still has not been adequately addressed.

    • lodger

      The ‘run on the banks’ is a complete lie and distraction. Edward Conard also uses this idea as a way to spread the blame — unfairly — for what happened.  Mom-and-pop depositors emptying savings accounts didn’t have anything to do with it.   FDIC insurance pretty much guarantees there won’t be a run on the banks like we had in the 30s. 
      It was criminal fraud pure and simple that caused the mess.

      • GretchenMo

        Then why did they increase the FDIC limit during the crisis?

        • lodger

          That was in 2010, way after the crisis.

          And they did it probably for the same reason they did it originally: to protect CDs and savings accounts. What’s your point?

          • GretchenMo

            Wrong, that’s when they went permanent but they temporarily went higher during the height of the crisis to forestall an imminent bank run. 

          • lodger

            If there was any risk of a bank run, it was CAUSED by banks overleveraging due to fraud and causing panic among their customers who felt their hard-earned savings were at risk.

            The savings customers did not cause the meltdown. This is a misinformation talking point, lies the right wing trots out, along the lines of “Barney Frank forced the banks to give mansions to poor black people” or “ACORN was involved in a child prostitution ring”. Absolute and vicious lies. 

            Risk of depositors withdrawing cash was an effect, not a cause. 

    • julie mendlowitz

      I wholeheartedly agree. The magnitude of collateralized mortgages which were and continue to be sold and their ownership evades detection due to the likes of MERS
      electronic registry system, has helped the banks to get away with illegal foreclosures and all manners of fraud. I personally don’t know why these operations haven’t been shut down in favor of the old way of recording property records (with the county clerk). There have been so many lawsuits against Mers, including one which the govt. joined with an individual. It boggles the mind that such a travesty of justice can be allowed to continue.

                                   Any thoughts,  Julie

    • julie mendlowitz

      I wonder if you read my post and understood it. I am
      facing a situation similar to what I described. Do you have any advice as to what government entities I can contact who are trustworthy?

      I really need help. Thanks, Julie

  • Victor Vito

    If anyone was serious about solving this, Glass-Steagall could simply be reinstated, WORD FOR WORD as it was.

    Instead, we’re offered some “new” version of it.  We are hopelessly immersed in greed and corruption.  It is the ugly stepchild of under regulated capitalism and democracy.

  • TomHagan

    Holding a hearing on breaking up banks to prevent another fiscal collapse is like debating what kind of sound proofing should have been used in the Titanic to prevent the ugly roar that resounded through the ship when it hit the iceberg. Maybe we should change the soundproofing for ships, or break up the banks, but neither addresses the source of the problem it is supposed to solve.

    I couldn’t get through to ask James Kwak the question he and Simon Johnson have avoided answering on their blog: 

    For insuring a stable banking system, an issue more important than breaking up banks is total debt (not just federal debt). Do you think total debt can just keep increasing, as it would if we succeed in “getting the banks lending again”?  Or do you think there is an upper limit on total debt, now $600,000 per family of four in the US? If there is an upper limit, what determines it?  How do we know we have hit it?  How can a family of four handle more than $600,000 of direct and indirect debt?

    (And BTW, why do we have any federal debt at all, about 1/3 of that total, when we could easily retire our national debt altogether, either with Treasury-issued Greenbacks, or by the Fed buying up all US bonds and simply never redeeming them ?)

  • I<3NPR

    You people need to get over this accountability nonsense. Do any of you honestly believe that withholding TARP or the stimulous  would punish the people responsible for this mess? No one knows what would have happened without government action but by all accounts we narrowly avoided financial catastrophe. Who do you think would have come out ahead in such a scenario? Some guy working at staples or Dick Fuld. Sure Fuld lost his position as CEO, but he still advises there, hes still building a new company, and hes still rich. Did any of you see the last jobs report? Have you been watching the news? How many people do you know personally who have been dealing with unemployment?

    I’m not saying Fuld is responsible for the current state of our economy or even that he isn’t. What I’m saying is that the movers and shakers would have made it out of a TARPless 2008 alright. Would the rest of us have been so lucky?

    When these people at the top screw up they take us all down with them. You want accountability? You don’t want to deal with their mess? Than you don’t let them start flinging poo in the first place. To do that you need government oversight. Real government oversight with teeth, not five guys in a room getting payed by the people they are supposed to be watching.

    • Gregg

      TARP may have prevented a disaster, I’m not smart enough to know for sure. The “stimulus” made everything much worse.

      • jefe68

        How so?

        • TomK in Boston

          He probably means that it saved the jobs of so many public sector workers. 

          • Terry Tree Tree

            He didn’t lose his piano?

          • Gregg

            Huh?

          • jefe68

            Well in Reading PA they are now laying off hundreds of teachers.
            This OPED from the NY Times kind of shows the GOP up for what they really are.

            http://www.nytimes.com/2012/06/13/opinion/the-beleaguered-middle-class-pink-slips.html

          • Gregg

            All the ones in Wisconsin kept their jobs. How could that be? Are they in a different country?

          • Gregg

            Public sector jobs do not stimulate the economy because money has to be confiscated, printed or borrowed to create them. It’s really quite simple.

            Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
            http://web.econ.ohio-state.edu/dupor/arra10_may11.pdf

          • Gregg

            The second paragraph should have been in quotes, it’s from the link. Sorry.

          • TomK in Boston

            So you think it’s better for $ to accumulate in the bank accounts of people like me than to tax us so states and cities can pay teachers, police and fire, who then spend those $ in their communities as well as providing important services? What a bizarre idea.

            You might want to think about how massive funding of government employees in the armed forces terminated the Great Depression and launched us on the greatest broad prosperity in the history of the world. The big bad debt was lost in time, like tears in the rain.

          • Gregg

            The money is not the governments and it doesn’t just sit in banks. If wars were an economic boon then Obama should have us in good shape. How’s that working out?

          • TomK in Boston

            Very funny. 

        • Gregg

          The easy answer is it was supposed to keep unemployment below 8% but it went up to over 10%. So, at least on that level it not only failed but things got worse. We added $814 billion in debt which is not chump change. It led to the downgrade of our credit rating. Any stimulus it provided ($814T damn sure should provide something) was temporary and just kicked the can down the road. Now the problems have festered. Here’s the radical right wing view:

          http://www.npr.org/templates/story/story.php?storyId=129031780

          BTW, if you want to say “it would have been worse without it” then that’s pure speculation. Possibly, that argument could be made for TARP but I’m not certain about that either.

          • TomK in Boston

            Geez, 100% talking points. All you guys can see is that they over-estimated the effect it would have. So what? CBO says it had a big effect, even after your side loaded it up with tax cuts. It’s not easy to recover from something as evil as Reaganomics on steroids!
            Our credit rating, LOL. The markets really cared about that downgrade, huh?  10 year T-bonds at 1.5%, lowest since 1946. Our credit is SOOOO bad, ROTFL.And BTW, the main threat to our credit was the TeaOP talk of default, not our spending. The debt is no big deal, except as a club to scare the middle class into giving up more.

          • Gregg

            What tax cuts? Are you talking about tax credits? Or the defunding of Social Security (Payroll tax cut)?

          • Terry Tree Tree

            ‘W’ campaigned that he would make the Budget Surplus BIGGER!
               ‘W’ campaigned that he would make us SAFER!
                ‘W’ campaigned in front of the jet he was AWOL from, as if he was an honorable Millitary man.

          • julie mendlowitz

            How is it possible that, apart from the magnitude of subprime mortgages which were manipulatively executed, that an electronic property transaction registry system (MERS) can be used to further banks fraudulant behaviors and make lenders vulnerable to foreclosure?

          • julie mendlowitz

            I  meant to say that “borrowers” are made more vulnerable to foreclosure. Greg, I’m sorry if I did not respond to your comments, but they felt a little too academic to me,
            and I am consumed with trying to obtain bank documents which may potentially help me forestall a threatened foreclosure.

    • feettothefire

       This congress is toothless, as will always be the case. They are politicians first and foremost, with genuine concern for doing something meaningful and principled landing well down the list of their priorities. Obama, who could have used the bully pulpit of the presidency to loudly advocate for substantive change, failed to do so. They should all be ashamed of themselves for putting their love of campaign donations above their responsibility to the public whose best interest they’re supposed to serve. It’s enough to make a tired old liberal re-think the idea of a monarchy.

    • Roy.Mac

      Congress, as well as the other 2 branches, have been bought and paid for by the financial services industry.  Occasionally–like today–one delegate travels in from Wall St. to make sure Washington stays bought.  I’m checking YouTube for the cell-phone video of Dimon walking around the hearing dias, distributing checks to the finance committee members.

      Fuld was no better or worse than any of those other guys; he just lost in a corporate takeover engineered by Hank Paulson from the office of Treasury Secretary.   Goldman ended up with Lehman’s book of biz; they got Bear 6 months previously.  The only remaining fight is now between Goldman and Morgan Stanley; the survivor of that one will then own uncontested rights to Washington.

    • Dan

      You need Rule of law. Rules, and harsh Consequences. Not corruptible, technocratic micromanagement of the economy for our “own good”.

      Set the framework, no cheating, corruption, collusion, monopoly, then set the tigers free within it to compete, win, lose, fail, produce, innovate etc. When the Rules are violated, Prosecute hard.

      Let the markets be as organic and ACCOUNTABLE to risks/reward as possible (no too big to fail).

      Free markets within a set of clear, evenly applied rules will work. Centrally Planned economics won’t, and will continue to be corrupted by the power elite of Washington/Finance.

      Aside from Defense, the main role of the Federal Government should be to MAINTAIN THE RULE OF LAW THAT MAKES MAXIMIZING FREEDOM POSSIBLE.

      Understand the goals and historical wisdom that our founders used to set up our self-governence.

      Today we have Corporatism, State Capitalism, total corruption of our Markets by the power of government and the discretion of revolving door, industry/government appointees and Central bankers and technocrats. THAT IS THE TYRANNY WE ARE SUFFERING FROM TODAY. That is NOT Free Market capitalism under the Rule of Law. That is a corrupt hack-job of top down “management” of our society from at best well-meaning but bumbling, and at worst scheming and criminal members of the power elite populated by puppets of both parties.

      Limited government and limited discretion, limits their power. The government need not be huge, or micromanage our lives, in order to enforce the core Rule of Law.

      Accountability to rule of law, real prosecution and real punishments, and real market feedback for the vampire finance gamblers supported by too big to fail, would be vastly more effective than fantasies of a well-managed top down economy. That is a scam that is used by government and finance to always keep their hands at the helm.

  • TyroneJ

    Unfortunately, this whole discussion is framed incorrectly. What is really the issue is the present structure of the US & global financial network, yet the discussion never views the issue that way. Whether one is talking about a computer network, biological network, electrical power network, or financial network, you have two competing issues to manage. You want the network to be as efficient/responsive as possible yet you want the network to be as stable as possible. A huge aspect of the stability part of the problem is how to limit the spread of stress or contagion when things go wrong. Good networks do that two ways. First, the nodes are structurally organized to withstand (or fight off) a large amount of stress or (equivalently) contagion. (Toxic assets would be one example of a contagion in a financial system.) Second, the coupling between the nodes is either weak enough so that when a node fails the “problem” does not propagate to the other nodes, or the links between nodes can be severed with minimal damage to the network as a whole. As we saw in 2008, that aspect is sorely lacking as the entire system was in danger of falling like dominoes.

    Cutting the size of banks when they get above a certain size is only one small part of creating a robust financial system. Recognizing the financial system is a network subject to the mathematics of network theory, and then organizing the system accordingly, is really the main issue.

    • Hillarion

      Especially for people concerned with computer networks (notablly the Internet), this should make a lot of sense. I have a modest knowledge of that field, and it looks like excellent advice.

      Perhaps if Europe’s financial system had been designed with such principles, the current mess would have been significantly less severe.

      It helps to be decently educated to understand this; unfortunately, countless youngsters who were the topic of Chas. Sykes’ _Dumbing Down Our Kids_ (published about a generation ago) are now adults, some with kids of their own.

  • JGC

    From a book review in Bloomberg Markets, the book being The Hedge Fund Mirage, by Simon Lack:

    “Where’s my yacht?…(Investors) need a clear picture of hedge fund performance before forking over any money. Lack measures hedge funds with an index weighted by assets…then turns to the real profit killer: fees.  He calculates the total profit hedge-fund investors received from 1998 through 2010 minus the return they could have had in U.S. Treasuries.  After the amounts paid to the managers, plus funds of funds and investment advisers, the investors got $9 billion, while the industry amassed $440 billion in fees.

    Never in the history of finance was so much charged by so many for so little.”

    Banks are also in competition with the hedge funds, escalating their risks for a piece of that tasty fee pie. The whole financial “industry” need to be reined in.

  • Ellen Dibble

    Very interesting.  Kwak was saying that banks raise money by issuing bonds, with banks (other banks I suppose) as underwriters.  I had been thinking why can’t the big banks, if they are “public,” with shareholders, raise money from those interested parties, to wit the shareholders, especially the investor class, the “1 percent,” who presumably would be most immediately affected if the grease in the financial system suddenly clogged up.  Why make the taxpayer do this back-stopping?  We have the proverbial secretary of Warren Buffett bailing out the financial system, rather than Warren Buffett himself (with the many loopholes and deductions and 15% capital gains rates that come into play).  I suppose the likes of Buffett think they have used their power and their lobbyists to insulate themselves form this very form of risk, and they are glad to let the government, in this sort of situation, be “big.”  

    But I’m thinking that the real backstop of financial bubbles is the financial heft of the nation at large, its productivity and its institutional organization of that heft.  Why not let America use that (private sector) heft in self-correcting?  ”Top 1 percent, feel free to buy X million shares of Citi, Chase, Bank of America, AIG, because if you don’t (effectively loaning it to them to bail themselves out), we will all have egg on our face, and worse.”  (Ask Greece; ask Germany.)    I am also thinking that not only the compensation terms for bank employees are to blame for the inconsiderate management of liquidity.  To some extent it is the government itself.  It was the government that told Americans hey, you can have a big tax deduction for all that mortgage interest you will be paying to the banks.  We are glad to let you become patrons of the banks.  We will underwrite your homeownership, even when you overreach.  We consider homeownership as American as apple pie, go for it.  It will make you rich.  Bankers didn’t come up with that.  Maybe their lobbyists did, but this urge to splurge seems to come down from the IRS on their 1040s.

    • Terry Tree Tree

      Ellen, What makes you think that banks didn’t come up with the mortgage interest deduction, as a marketing bonanza?

  • Alan in NH

    As with most affairs of men (and women), when any institution, agency, agent, corporation, nation, government becomes too powerful, it needs to be counter-balanced, brought down to manageable size, otherwise abuses and corruption ensue. I don’t know that there are exceptions to this.

  • Tfmailman

    Regarding yesterday’s program on the Pentagon going green, I thought the comment that the Cato Institute gentleman made about going green constitutes taxpayers subsidizing a small group of private businesses was kind of silly and hypocritical.  Arms dealers as subsidized by taxpayers, since our tax money pays for weapons, from rifles to drones.  Taxpayers pay for toilet paper, uniforms and anything else the military uses. In my view paying for “green” fuel is no different than paying for weapons and is no more a subsidy than the payments made to the arms dealers.  In addition, it is laudable that the military is being pro-active and not waiting for legislation to start looking for alternatives to polluting and finite fuel.

  • One percenter at the Bottom

    The arrogance and greed of the financial community shows its ugly face yet again in the J P Morgan/Chase episode.  Their resistance to regulation can be compared to a bully child who doesn’t want to answer to his parents for boorish or dangerous behavior.  The financial institutions are ruining this country, redefining capitalism as blatant greed satisfied by manipulating intangibles at the expense of the rest of us.  The recent Citizens United decision, a boneheaded blunder that is blatantly political and an embarrassment to the judiciary system, has only ensured that the nation is for sale to the highest bidder and future abuses will go unchecked.  

  • Bob

    The banking industry is not the only industry that needs to be broken up.  Large corporations decreases competition, creating monopolies.  They also employ savings from the size to cut back on the workforce, so any industry with only a few large players, will ultimately employ fewer people.  The road to economic recovery is partly depended upon managing the menace of large corporations.  

    Banking, communications, oil, all examples of industries that are populated by a few large corporations and working against the interest of the consumer and the country as a whole.  Congress should mandate a minimum number of players or regulate the percentage of the over all industry that can be held by any group of companies. 

    • RolloMartins

      The cloning of Teddy Roosevelt might be a solution. Bring him back–as a Republican. The irony would be immense.

  • Gotmercury

    No matter how you look at it, the financial sector is a GIANT leach on America.  It contributes absolutely nothing and destroys productive enterprise and capital markets.  Somebody pull it off, god pull it OFF!

    • TomK in Boston

      Please! 

      “In a crash, wealth is not destroyed, it’s redistributed”. The middle class is sinking because all the wealth is going to the giant leech.

    • GretchenMo

      So you’re going to loan me money to buy a house, car, groceries …

      • TomK in Boston

        The point of that question being???

        • GretchenMo

          These are all activities of the “financial sector” that have value and there are many more.  Far from being a leach, the financial sector distributes cash from those with too much to those with not enough, making dreams come true.

          • TomK in Boston

            You’re deliberately ignoring the point. The financial sector did all those good things it was supposed to do while it was heavily regulated and not 30% of the economy, and it can do so again. It did those things better, as it was not running scams and causing crashes. Nothing you mention requires fancy derivatives and computers trading thousands of times a second.

          • Pagassae

            Only the dreams of the CEOs…..greedy beyond all reason.

          • Terry Tree Tree

            You have evidently MISSED the financial news, for the past ten years.  The ‘financial sector’ has been taking money, homes, and whatever else they can, from Millitary on deployment (a CRIME), working-class people that paid their mortgages, and other VICTIMS, and giving it to the 1% GREEDY RICH!
               Like Jamie Diamon and his cronies, they got their jobs by claiming to be the BEST, and when their CRIMES are exposed, like sex-abusing clergy, they claim they are ’human and make mistakes’.    Their ‘mistakes’ ALWAYS hurt someone else but them? 

    • Terry Tree Tree

      Moda?  NO, the writing is WAY more concise, and the punctuation, too!

    • Pagassae

      Worse than a leech…  I would call it a cancer, driving the patient to a painful death.

      • Zing

         You and Gotmercury should get together

        • Pagassae

          Perhaps you should take your meds and retire for the night.

    • Zing

       Gotmercury in your brain…you’re going to have to pull yourself off

      • Pagassae

        Zing? More like Ding…Dong.

        • Zing

           Whatever…..

          • Pagassae

            As HST said:  If you can’t take the heat, stay out of the kitchen.

  • TomK in Boston

    This is such a screwup.

    In 1929 we had the first big peak in inequality with all the $ going to the casino, and the resulting crash. Then we thoroughly investigated the causes of the crash and put regulations in place that served us extremely well through a period of amazing prosperity of the middle class.

    In 1980 we adopted Reagan voodoo econ and started stripping away the regulations. Even when they remained, since “gvt is the problem”, we simply appointed agency heads with a mandate to do nothing. So, In 2007 we had the second big peak in inequality with all the $ going to the casino, and the resulting crash.

    Shockingly, this time we are determined to learn no lessons from the crash. The result will be the redistribution of even more $ to the top, and another crash.

    It’s so simple! We don’t need a new system, we had a great one. Please, please, just restore what we had before the radical GoP and Clinton destroyed them.

    • mikey

      1000 Prosecutions from the OTC for the Savings and Loan Crisis with a Republican president. Zero under Obama. 

      • Pagassae

        That was 20 + years ago, and before the corporate takeover of the government. If you think Romney will be any better you are delusional. In fact, as the DESIGNATED CORPORATE FRONT MAN, Romney will be far worse for the average American.

        • TomK in Boston

          Yes, Etchasketch will be worse and yes, Reagan performed better than Obama. Of course, as Jeb Bush said, Reagan would be a RINO hated by the TeaOP today.

          • Pagassae

            Exactly on target.

        • Dan

          That’s why little “r” republicans were for Ron Paul. They can walk and chew gum at the same time. Liberty and Rule of Law.

      • Dan

        We’re too cool today for Constitutional Rule of Law. That’s so… 1800′s.

        Who needs Rule of Law to curb our darker sides, when we have…….. texting!

    • Pagassae

      And George Bush. Never forget that criminal.

      • Zing

         no crime, no time – get over it

        • Pagassae

          Crimes and blunders of historic proportions. Deal with it.

          • Zing

             Deal with what?

          • Pagassae

            The fact that the criminal Bush was never punished for his CRIMES AND BLUNDERS OF HISTORIC PROPORTIONS…

            Got it?  Deal with it.

          • Zing

             Deal with what, other than your fantasies…

          • Pagassae

            Another Republican AMNESICAC pops up, what a surprise.

        • Terry Tree Tree

          CRIMES since he was in his 20′s, from being drunk when he had Millitary Duty!

          • Pagassae

            Indeed. And how is it that Dubya was denied admission to the U. of TX law school, then by some form of  magic was admitted to Yale law school 3 years later.  Isn’t that just amazing??

          • Dan

            All president’s seem to “do a little blow” at least. Dem drug use is cool, Repub, repugnant. The D-R nonsense so old and tiring.

  • Hidan

    Bill Black: Uninvited for ‘bank bashing’

    http://rt.com/programs/alyona-show/black-uninvited-bank-bashing/

    “William K. Black. He was supposed to be briefing a bipartisan group of Congress members on derivatives and the role they played in our financial crisis, the continuing role they play in risk to our economy, but ended up getting uninvited”

  • Roy Mac

    The accounts of this hearing reminded me of that Texas congressman apologizing to the BP executive for dragging his sorry ass in front of Congress to explain the Maconda blowout.  Those senators couldn’t line up fast enough to kiss Dimon’s ass.

  • RolloMartins

    Jamie Dimon on the hot seat? Pathetic. His corporation has already given $2 million to those political whores–was it last year they gave $7 million? They were begging him to tell *them* what they should do. Which is appropriate, I guess, seeing as he owns them. 
    We could wait till hell freezes over before this Congress does squat to real in these lunkers.

    • Bryan

      Excellent
      point. Couldn’t agree more. See my post above. Today’s
      “Democracy Now!” show with Amy Goodman has an excellent analysis of
      the warm and fuzzy treatment Dimon received by the committee. Goodman interviews Nomi Prins, a former
      investment banker and managing director of Goldman Sachs. Prins easily points
      out the misleading statements if not outright lies in Dimon’s testimony. The vast majority of the Congress is in
      thrall to the financial industry, as is President Obama, who got it shamefully
      wrong last December when he claimed Wall Street misconduct was not illegal.
      See the following analysis about Obama’s mistaken notion by economics
      professor William Black, who has dedicated his professional life to
      understanding and combating fraud:
      http://www.benzinga.com/general/politics/11/12/2214616/president-obamas-view-of-fraud-from-40-000-feet-without-an-oxygen-mas

      Fraud, fraud, and yet more fraud has been standard
      operating procedure for years in the financial industy. And no one at the top is being held
      accountable

  • Roy Mac

    Nela Richardson thinks a bank must be big enough to finance any customer?  Where did she learn about finance?  Did she ever hear of lending syndicates?  Please, On Point!  If you’re giving away air time, at least provide someone who knows what he or she is talking about.

  • LoganEcholls

    As an accountant I see the direct effect of these banks on small businesses.  The amount that is payed by small companies in electronic transaction fees (or “merchant fees”) is usually equal to thier profit margins.   This doens’t even take into account standard bank fees and interest charges payed for business loans.  When you add it all up, the total payed by small business to banks is several times what they pay in taxes.  In my experience, the banking system is a huge albatross around the necks of small business owners and is stiffling the growth that it was intended to produce. 

    If the banks aren’t benefiting society, why are they getting money from the FED at extremely low rates?

    • jefe68

      Excellent points, and we know the answer to this question.
      It’s called greed. When I hear the Republicans go on about small businesses I’m in mind to give up my lunch.
      It’s the height of BS in my view. They have a lot of nerve.

    • Still Here

      The guy above would say your opinion has no value because you’ve made some unfortunate spelling errors, but I won’t go there.  Who gets merchant fees?  I thought it included credit card processors, interchanges, and banks to pay for things like instant fraud protection etc.  

  • Roy Mac

    OK, Tom.  You have a journalist who has no understanding of the situation, and two academics, both of whom say, “let’s not be hasty here, we need more analysis.”  Why am I listening to this?

    • Me

      And then Tom, taking himself very seriously, intones that the banks almost took us down “on their own volition.” Well my not so learned friend, the phrase is “of it’s own volition,” not on. Why is this man on the air?

      • Still Here

        Off with his hair!

    • Soygevalt

      Yes, right it’s all so academic and has nothing to do with the families suffering, some suicidal.  Why don’t you interview some of them?  This intellectual discussion is almost insulting.

    • Still Here

      Yeah, more peanut gallery input please.  You have no understanding and have done no analysis, let’s hear more from you!

      • jefe68

        That’s rich, coming from a charter member of the peanut gallery.

  • Terry Tree Tree

    JPM may take back HALF of their BONE-USes?  If they LOST money, why doesn’t JPM take ALL of ALL the involved officers’ pay, BONE-USes, and other compensation, and give it to the investors they stole it from?
        FRAUD is a crime?

  • Anacharsis

    Consider THIS!!
     http://readersupportednews.org/news-section2/318-66/11895-sanders-releases-explosive-bailout-list

  • Guest

    Remember AT&T ??  If it were not for corruption, those laws might still be in place. It never works and has always resulted in some one stealing money, stocks, or something to which they are not entitled.  Hummm, does anyone think this has changed?  

  • Sylvia Mendel

    Why can’t you have an ordinary citizen who is at risk of becoming homeless with her two young children because of the scams invented by Bank of America.  One method is not providing the original document of sale so that her property can’t be sold.  She cannot get help from anyone neither can she afford a lawyer

  • James

    As a former bank officer, I feel that there are several changes to our banking system that absolutely need to be made.

    1. Separate investment banking from retail banking. The two are completely different worlds with different focus and specialties. There is no reason that a bank primarily devoted to people’s accounts and personal loans should be dealing with products like CDS on behalf of multibillion dollar industries.

    Please note that this doesn’t mean the total lack of investment, as offering personal investment advice to an individual is not the same thing at all.

    2. Institute integrity clauses that make it a criminal offense for investment banks to mislead their clients or bet against the success of the investments of their clients. If they take out the equivalent of an insurance policy to protect against that failure, limit it to, say, 3/4 of the investments being made with them so that there is always an element of risk and possibility of loss.

    • Pagassae

      We had the separation you refer to before the Glass-Steagall law was repealed by the criminal Republicans….

      • jefe68

        You’re on about the Gramm–Leach–Bliley Act (GLB), also known as the Financial Services
        Modernization Act of 1999. The bill passed the Senate along party lines, 54–44, with only one Democrat voting with the Republicans. The House vote was more bi-partisan, 343-86.

        While it was mostly a Republican bill there is plenty of blame to hang on the Democrats. Bill Clinton signed it into law. It was done on his watch. He now admits it was a huge mistake, well hindsight is always 20/20…

  • Palouse_Fine_Art_Photog

    We need to reimpose *ALL* provisions of the Glass-Steagall Act if we wish, as a society, to avoid more banking problems that can ruin the country’s — and the world’s — financial and economic systems.

    As it stands, we the public, are privatizing the wealth and socializing the losses incurred by Big Business, and it will only get worse if things such as Glass-Steagall are not (re)made into law.

    • Pagassae

      Exactly. That and very stong criminal penalties and huge fines for these CEO theives.

  • Mary

    WE need to break up the big banks otherwise we have socialism for banks and capitalism for every one else. !

  • wrightdda

    Question for the American Enterprise Institute – it was clear you had no answers yesterday but I wonder, if you are a “think tank” what have you been doing for three years? Cynically, it sounded like the spokesperson was reading from the PR handbook – and attempting to cloud the issue as much as possible to stave off any action. Fear, uncertainty and doubt (the FUD factor) is a proven technique for delaying action and it was clearly the strategy yesterday. Surprised no one pressed him on this.

  • Roy-in-Boise

    Comparing this issue to the break up of AT&T is apples and oranges. AT&T was divested (Jan 2, 1984) due to the loss of a law suite with IBM based on data transmission by IBM to customers brought in the mid 1970′s. AT&T began the suit and lost. This had to do with legal monopolies of utilities and statutes that dated back to the birth of the telephone and telegraph industry. IBM proved that the service that they provided to their customers was outside of the realm of products offered by Ma Bell.

  • Bryan

    Jamie Dimon on the “hot seat?”
    Really?
    I must take issue with OnPoint’s characterization here, repeated several
    times by Tom Ashbrook. The facts are
    glaringly otherwise. Sen. Jim DeMint
    spoke for many on the committee when he said the members weren’t there to pass
    judgment on Dimon and JP Morgan Chase. Why? The answer is simple: because so many of the senators receive
    campaign contributions – in the millions of dollars – from the likes of Dimon
    and other bigwigs in the financial industry.

    I recommend people see the
    film “Inside Job” by Charles Ferguson, which emphasizes that none of the top
    officials of all the companies implicated in the economic collapse of 2008 have
    been prosecuted for the massive fraud they committed. There is no question that their actions were
    crimes. President Obama was flat wrong
    when he said in a “60 Minutes” interview in December 2011 that Wall Street misbehavior
    may have been unethical but was still legal.
    I agree with one of the protestors at Dimon’s hearing who yelled that
    Dimon was a criminal. The fraudulent “casino
    capitalism” he and his ilk enthusiastically engineered has directly caused
    incredible suffering for untold millions around the world. And the effects continue to this day.

    In a just world, Dimon would be
    summarily hauled off to jail and treated with the contempt he deserves. It is an insult to our intelligence to claim
    that the kid-glove, sycophantic treatment he received instead by the
    bought-and-paid-for members of the committee amounts to anything like a “hot
    seat.”

  • Dee

    How easily Jamie Dimon passed the buck to his staff at the Con-gressional Hearing –instead of taking the blame for his own misjudgement in the 2 billion loss at his bank.

    I recall reading about him in the Wall Street Journal and New York Times pushing to exceed the limits of the Volcker Rule. Well, today, I say sock it to him. He has gone over the line–and no more.
    Here’s Volcker saying bankers like Dimon can’t have it both wayshttp://billmoyers.com/episode/full-show-gambling-with-your-money/

  • Dan

    We need Rule of law. Rules, and harsh Consequences. Not corruptible, technocratic micromanagement of the economy for our “own good”.
    Set the framework, no cheating, corruption, collusion, monopoly, then set the tigers free within it to compete, win, lose, fail, produce, innovate etc. When the Rules are violated, Prosecute hard.
    Let the markets be as organic and ACCOUNTABLE to risks/reward as possible (no too big to fail).
    Free markets within a set of clear, evenly applied rules will work. Centrally Planned economics won’t, and will continue to be corrupted by the power elite of Washington/Finance.
    Aside from Defense, the main role of the Federal Government should be to MAINTAIN THE RULE OF LAW THAT MAKES MAXIMIZING FREEDOM POSSIBLE.
    Understand the goals and historical wisdom that our founders used to set up our self-governence.
    Today we have Corporatism, State Capitalism, total corruption of our Markets by the power of government and the discretion of revolving door, industry/government appointees and Central bankers and technocrats. THAT IS THE TYRANNY WE ARE SUFFERING FROM TODAY. That is NOT Free Market capitalism under the Rule of Law. That is a corrupt hack-job of top down “management” of our society from at best well-meaning but bumbling, and at worst scheming and criminal members of the power elite populated by puppets of both parties.
    Limited government and limited discretion, limits their power. The government need not be huge, or micromanage our lives, in order to enforce the core Rule of Law.
    Accountability to rule of law, real prosecution and real punishments, and real market feedback for the vampire finance gamblers supported by too big to fail, would be vastly more effective than fantasies of a well-managed top down economy. That is a scam that is used by government and finance to always keep their hands at the helm.

    Progressive Values, Libertarian Principles

    http://progressivelibertarian.org/about/

  • Dee

    Here is Volcker telling Jamie Dimon he can’t have it both ways http://billmoyers.com/episode/full-show-gambling-with-your-money/

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Apr 18, 2014
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