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Calling the "Too-Big-To-Fail" banks "one one of the greatest threats to our long-term economic...

Calling the "Too-Big-To-Fail" banks "one one of the greatest threats to our long-term economic prosperity," Jon Huntsman notes that the six largest financial institutions have assets worth over 66% of GDP, up from 20% in the 1990s. As President, Huntsman would break up these lenders; he also yearns for more community banks.
Comments (31)
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Yet another demonstration that most Politicians still do not understand the problem in the financial system. And, they do not understand that the greatest threat to our economic prosperity is Politicians, who do not understand how the economy works in the very first place.
    9 Jan 2012, 01:26 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    If someone does a good thing (breaking up TBTF banks) for a bad reason -- does that make it a bad thing?
    9 Jan 2012, 01:29 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Your comment assumes that breaking up the TBTF's "is a good thing." While it may appear to be I am not fully convinced that it is.
    9 Jan 2012, 02:04 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    So...you're in favor of bailouts of systemically critical institutions whenever they get themselves in over their heads?

     

    Or...you're in favor of letting systemically critical institutions fail, regardless of the havoc that will be wrought?

     

    Or are there other alternatives? I don't see any. Either you save them when (and I do mean /when/) they screw up, or you let them die when they screw up, or you break them up so you don't have to worry about saving them when they screw up.

     

    What am I missing? :)
    9 Jan 2012, 02:14 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    I rarely see these things as black or white. In the case of these institutions, I see them as both critically important to the global economic position of this country and systemically dangerous. I know that sound like a politician hedging his/her bets but that is the way I feel. I desire a return to Glass-Steagall. The institutions that you, I and others fear are not "banks". They are something else, a mutant monster created by the repeal of Glass-Steagall. If they were "banks" they would not be nearly as systemically dangerous. If the government attempts to disassemble them there will be utter chaos in the global financial markets. Not to mention, that the government was largely responsible for creating them. And, the government rarely does anything without self serving political motivation. Finally, the government never does anything correctly the first time. A rambling response but it states my position.
    9 Jan 2012, 03:39 PM Reply Like
  • phxcrane
    , contributor
    Comments (415) | Send Message
     
    I'm curious do you include Freddy and Fanny in this breakup of the TBTF?
    9 Jan 2012, 04:04 PM Reply Like
  • phxcrane
    , contributor
    Comments (415) | Send Message
     
    How about the big three auto makers are they to big to fail?
    9 Jan 2012, 04:07 PM Reply Like
  • Buckoux
    , contributor
    Comments (5853) | Send Message
     
    "If someone does a good thing (breaking up TBTF banks)..."

     

    In the fullness of time and the ripeness of the economy, yes. Not until. As an impulsive act of populist political theater meant to satisfy the noisy "booboisie" in BOTH political parties that results in more harm than good (the most likely), no. That would make it a "bad thing".
    9 Jan 2012, 04:16 PM Reply Like
  • Buckoux
    , contributor
    Comments (5853) | Send Message
     
    "So...you're in favor of bailouts of systemically critical institutions whenever they get themselves in over their heads?"

     

    "Or...you're in favor of letting systemically critical institutions fail, regardless of the havoc that will be wrought?"

     

    "Or are there other alternatives? I don't see any."

     

    Of course you don;t. You have not presented any other "alternatives", other than "either",or "or", choices.

     

    " What am I missing? :)"

     

    A lot!
    9 Jan 2012, 04:22 PM Reply Like
  • tigerianwinter
    , contributor
    Comments (3) | Send Message
     
    Maybe to make these "systemically critical insitutions" less systemically critical? You can do this by breaking up the banks and giving smaller regional, community banks and credit unions the opportunity to pick up that businesses. This would be more conducive to true free market values and increase competition in the marketplace. A win for consumers, a win for politicians and a win for the future of America.
    11 Jan 2012, 12:10 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > A lot!

     

    Such as? You have yet to contribute anything useful to this conversation.

     

    I'm waiting. :)
    11 Jan 2012, 07:34 PM Reply Like
  • bbro
    , contributor
    Comments (9330) | Send Message
     
    Again comparison of assets to GDP is inaccurate....Last I saw the assets of the
    US is 188 trillion
    9 Jan 2012, 01:26 PM Reply Like
  • Jacob Wolinsky
    , contributor
    Comments (464) | Send Message
     
    Banking assets are 90% of GDP according to a really good hf manager i know. In France its over 400, same with Sweden and Denmark.
    9 Jan 2012, 01:35 PM Reply Like
  • bbro
    , contributor
    Comments (9330) | Send Message
     
    The 188 trillion figure comes from John Rutledge and it is old
    12/2008
    9 Jan 2012, 01:41 PM Reply Like
  • MexCom
    , contributor
    Comments (3050) | Send Message
     
    Banks are in the forefront to save the economy from disaster. JP Morgan the biggest banker of his day did it. But now we have the Federal Reserve. But even with that and all the banking and financial market regulation what happened after Lehman failed and under the specter of the collapse of the entire economy? It was Bank of America that saved the day in taking over Countrywide and Merrill.

     

    Now a crack pot wants to eliminate the possibility of future rescues. Make them small and let them fail? Give me a break!
    9 Jan 2012, 01:46 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > even with that and all the banking and financial market regulation

     

    The regulation that had been officially weakened and unofficially ineffective since the late 90s (or before)? That regulation?

     

    > It was Bank of America that saved the day in taking over
    > Countrywide and Merrill.

     

    Precisely what day did Bank of America save? They may have prevented a few more shocking headlines, but otherwise all they did was conveniently concentrate more of the mess into one place, but they didn't fix any of the mess, in fact they're still in it to this day.

     

    > Make them small and let them fail?

     

    Absolutely! Remove the moral hazard. Remove the incentive for banks to mismanage themselves with the belief that they'll be bailed out.

     

    If you bail out banks when they screw up, you get more screw ups.

     

    If you let banks die when they screw up, you get less screw ups.

     

    The catch, is what happens to the rest of the economy when one goes under, which a few inevitably will? Do they drag all of us down with them? If they do, something was probably wrong with the system in the first place.

     

    Free market theories only hold up when there are a relatively large number of competitors -- not six colluding organizations. :)
    9 Jan 2012, 02:22 PM Reply Like
  • bill d
    , contributor
    Comments (1879) | Send Message
     
    Re: D_Virginia - An excellent reply. And the recent disdain with which they treat their "clients" is disgusting.
    9 Jan 2012, 04:20 PM Reply Like
  • Buckoux
    , contributor
    Comments (5853) | Send Message
     
    "Absolutely! Remove the moral hazard."

     

    Doe that include ACORN?
    9 Jan 2012, 04:26 PM Reply Like
  • Buckoux
    , contributor
    Comments (5853) | Send Message
     
    "If you let banks die when they screw up, you get less screw ups."

     

    Does that include presidential administrations, figuratively, as well?
    9 Jan 2012, 04:29 PM Reply Like
  • bbro
    , contributor
    Comments (9330) | Send Message
     
    What about TSTS??? Too small to survive
    9 Jan 2012, 01:50 PM Reply Like
  • torahislife
    , contributor
    Comments (400) | Send Message
     
    Banks don't make an economy, don't make a market, don't increase output, don't add value, don't reduce costs, don't increase profitability... Banks can't save anyone anymore than stock traders can save this economy.

     

    Wake up. You and I, the taxpayer, WE are saving the banks on Wallstreet.
    9 Jan 2012, 02:21 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Those defending these huge banks are immoral. These banking oligarchs leech and pillage the wealth created by the productive sector of our economy.

     

    Stop protecting these cronies.
    9 Jan 2012, 02:30 PM Reply Like
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    Dont they provide wealth...loans and such.....to the economy. They are the reason we are able to produce things.
    10 Jan 2012, 12:37 PM Reply Like
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    Dont these bank provide the capital (loans & lines of credit) and wealth needed to produce things for the economy.
    10 Jan 2012, 12:43 PM Reply Like
  • Ted Bear
    , contributor
    Comments (575) | Send Message
     
    I fail to see why Assets to GDP is of any relevance. So what?

     

    If the banks are allowed to flounder in their own stink, the worthy assets will flow to new or solvent institutions, and the old dogs which the taxpayers are carrying will die a warrented death. So what?

     

    A good cleansing might just be the answer to the standoff. In four years the banks have not been able to improve their balance sheets in spite of ownership from the taxpayers and fees of every imaginable sort to their customers. Let em go. Paulson was absolutely wrong in imploring Congress to save his friends. The time has long come to reverse this horrible woring.
    9 Jan 2012, 02:32 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Amen!

     

    Agree 100%.

     

    Enough of being held hostage by the scare tactics of banks. They are just dead weight to our economy.
    9 Jan 2012, 02:38 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Try running the US economy without a strong banking system. Even our Fore Fathers understood the necessity of a strong financial system. Yes, changes are needed but you need to preserve or create, if you will, a strong core financial system.
    9 Jan 2012, 03:42 PM Reply Like
  • Will Foster
    , contributor
    Comments (86) | Send Message
     
    Correct- we need a strong banking system as our forefathers envisioned... Not a weak house of derivatives cards we have now.

     

    If we had a competitive system it would be more efficient for all AND the big deals could still be done through syndication... Which would serve as proper underwriting, something NOT being done now.

     

    CDS are NOT insurance- by DEFINITION they are uninsurable portions of risk.

     

    Mortgages should be non-recourse, again, back to underwriting... that would prevent bubbles.

     

    MBS should be Covered vehicles so each tranche is incrementally paid out at an individual failure... As opposed to the dark pools of robosigning morass we have now.

     

    The oligarchy must go now- the longer we wait the worse the problem will get. Proof: the TBTF banks are even larger now then 2008.

     

    9 Jan 2012, 09:23 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Do not, for one minute, think that you can will away the derivatives, MBS's, CDS's and other seemingly casino-like investment vehicles. And do not think for the same minute that a $10.0 billion line of credit used as a commercial paper back up line by an international conglomerate having annual revenues of $50.0 billion can be syndicated by a Regional Bank with only $40.0 billion in assets and a legal lending limit of $400 million. It will never happen. There are very real and legitimate reasons we need these very large banks in the Global market in which we live.
    10 Jan 2012, 05:23 AM Reply Like
  • ericmsft
    , contributor
    Comments (93) | Send Message
     
    Just look at all the small banks that are in trouble.
    9 Jan 2012, 09:17 PM Reply Like
  • Jo56
    , contributor
    Comments (6) | Send Message
     
    Is this why the left keeps pushing Huntsman? Sounds like a lefty sounding point. By the way, the single most reason for the collapse was the Democratic party. Clinton's Community Reinvestment Act, the 2004 Banking Committee directed by Barney Frank and Chis Dodd, SEIU's physical attack of local branches demanding they eliminate their tried and true qualifications for mortgages, pushed by Dodd and Frank through those semi banks, Freddie and Fannie. Well they got what they wanted. They just were too stupid to understand the consequences. Many did and warned us all including President Bush at least 4 times. He was poo pooed by the talking heads on CNBC and the lame stream media and most importantly by the Democrats. Keep in mind dummies, when they let the banks fail in 1929, the REAL depression descended on this nation and it was crushing, long lasting and devastating. By the way the banks were keep from going under by TARP I and II which has been paid back with the exception of AIG and even that is on its way to being paid back.
    10 Jan 2012, 11:41 PM Reply Like
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