cove3

Bad Mortgages Are Only the Beginning

Nobody seems to realize the cost implications of going after debt on a mass scale. The legal system....courts, lawyers, prisons, etc is designed for a tiny amount of defaults, just like FDIC was disigned for the occasional rougue bank. What we have is default on a epic scale.

It's expensive and time consuming. The system won't get 10 cents back on it's debt by the time all is done. The prisons are full with 2 million people...where will you put 10 million more?

As more and more people realize they can walk away from debt, they will do it. The sheer mass of numbers are on their side. The leverage of the American financial system, and this includes the government should never have been allowed to go beyond 3:1

Ron

Winners and Losers in the Bailout Bonanza

I am confused as to leverage/capital regulation which has existed for both investment banks and bank holding companies.

I thought investment banks were exempt and that only the deposit bank and brokerage subsidiaries of bank holding companies were regulated as to leverage.

Yet I saw that a few years ago, Goldman, JP Morgan etc were allowed to increase their leverage, implying some regulation existed.

Also, the argument for Goldman becoming a bank holding company was that it would have access to depositor money. I thought that the deposit bank of a bank holding company could not play games with moving depositors money out to it's investment bank subsidiaries.

Anybody know the answer to this?

Ron

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