obama proposes pointless regulation on banks

[droski]

Obama Proposes New Bank Regulations - WSJ.com

first off banks already can't use their deposits for proprietary trading. second why are the banks the only ones being regulated here? obama's buddies at ge issued hundreds of billions of bonds guarenteed by the govt, but aren't under these restrictions. aig, bear stearns, and lehmen weren't banks at all and still needed to be bailed out (or should have been). also isn't this going to stop the banks from lending more? this just clearly shows that either a) obama doesn't have anyone in his administration that understands wall street at all or b) this is another pointless gesture to try to gain favor from stupid poor americans for the election.

 

[volinbham]

a) and b)

 

[JTrainDavis]

Banks and bankers are evil. They take pleasure in foreclosures, and also hate puppies.
Posted via VolNation Mobile

 

[CountVolcula]

Control the flow of money, you control the people.

 

[WA_Vol]

I listened to Geither discuss some of the new regulations on the radio a few days ago.

He described it as taxing the banks for the bailout by forcing them to pay fees which would discourage the practices which led to the financial crisis. Not sure how accurate his statement, but that was the intention according to him.

 

[droski]

two different things. one is the tax, the other is this new regulation. both are stupid.

 

[volinbham]

the banks killed my ma

 

[VolInMn]

The banks took our JERBS!!!

 

[WA_Vol]

The banks need additional regulation to prevent another financial crisis. Adding fees to discourage those practices that were responsible for it seems reasonable to me.

 

[droski]

The banks need additional regulation to prevent another financial crisis. Adding fees to discourage those practices that were responsible for it seems reasonable to me.

the banks didn't cause the financial crisis. the housing collapse did. and i don't see how taxing their deposits stops them from taking undue risk.

 

[rjd970]

the banks didn't cause the financial crisis. the housing collapse did. and i don't see how taxing their deposits stops them from taking undue risk.

Yeah, that pesky free market sucks sometimes. The big guys get saved when it doesn't work out, and complain to keep their money when it does.

...if only I could invest by those rules.

 

[droski]

my restricted stock being worth zero sure doesn't make me feel like my company got saved or that i got to keep my money.

 

[rjd970]

Banks should have been allowed to fail. The market would have worked itself out. When you play the financial/stock/derivative/etc game this is a risk. This woe to the banker stuff reaks of whining.

 

[droski]

the market woudl have worked itself out after the dow tanked 80% and the economy went into a great depression. sounds good.

 

[T-TownVol]

Yeah, that pesky free market sucks sometimes. The big guys get saved when it doesn't work out, and complain to keep their money when it does.

...if only I could invest by those rules.

Are you willing to turn your personal accounts over to BHO? He will "watch over" them for you.

 

[WA_Vol]

the banks didn't cause the financial crisis. the housing collapse did. and i don't see how taxing their deposits stops them from taking undue risk.

The banks made risky loans and when those properties went into foreclosure many banks went under. They are trying to prevent banks from doing that again. Obviously they want to prevent another financial crisis like the last one.

The fees your describing, and when I heard Geither discuss it, were a penalty placed on the banks that is being used to pay back the money the govt used for the bailout. Since the banks have benefited from the bailout (look at their earnings after the bailout), they are asking the banks to pay back some of the bailout cost. Thats how Geither explained it when I listened. It doesn't seem that terrible to me.

 

[droski]

The banks made risky loans and when those properties went into foreclosure many banks went under. They are trying to prevent banks from doing that again. Obviously they want to prevent another financial crisis like the last one.

The fees your describing, and when I heard Geither discuss it, were a penalty placed on the banks that is being used to pay back the money the govt used for the bailout. Since the banks have benefited from the bailout (look at their earnings after the bailout), they are asking the banks to pay back some of the bailout cost. Thats how Geither explained it when I listened. It doesn't seem that terrible to me.

and how do these regulations stop the banks from making risky loans again?

the tarp has made a profit. there is no money needed to pay it back. all of the banks taxed here paid back the tarp, plus interest, plus the warrents (many didn't even need the money in the fist place, but took it because the govt forced them). they made the treasury billions. the places the govt has lost money or will lose money are aig, fannie and freddie, and gm. none of these guys are being taxed under the current proposal. even with these losses the tarp is still profitable. geithner is counting the money loaned and not including interest or profit on the warrents which is ridiculous. now if this new tax went into a new fund intended for future bailout then MAYBE i'd be in favor. in reality it is going into the general fund where obama can spend it however he likes. all this is is a tax raise. nothing more, nothing less.

 

[WA_Vol]

and how do these regulations stop the banks from making risky loans again?

the tarp has made a profit. there is no money needed to pay it back. all of the banks taxed here paid back the tarp, plus interest, plus the warrents (many didn't even need the money in the fist place, but took it because the govt forced them). they made the treasury billions. the places the govt has lost money or will lose money are aig, fannie and freddie, and gm. none of these guys are being taxed under the current proposal. even with these losses the tarp is still profitable. geithner is counting the money loaned and not including interest or profit on the warrents which is ridiculous. now if this new tax went into a new fund intended for future bailout then MAYBE i'd be in favor. in reality it is going into the general fund where obama can spend it however he likes. all this is is a tax raise. nothing more, nothing less.

I agree it probably will end up being a tax to generate revenue to lower the ridiculous budget deficit Obama has agreed to.

 

[rjd970]

the market woudl have worked itself out after the dow tanked 80% and the economy went into a great depression. sounds good.

Wouldn't have bothered my any. I don't gamble in the stock market and even though I had absolutely no control over the circumstances of how everything tanked my 401k still bottomed anyway. I have a job where I actually make stuff that we need whether we are in a depression or not. I still have savings at a local credit union, and I didn't (and still don't) live outside my means. My situtation wouldn't have changed anyway.

I can understand why the Wall Street types that made millions over the last decade would want the bailout though. If they weren't too big in the first place it shouldn't have mattered.

 

[BigPapaVol]

The banks need additional regulation to prevent another financial crisis. Adding fees to discourage those practices that were responsible for it seems reasonable to me.

so the fees are going to be judiciously administered?

Come on. This is more garbage to force bank consolidation, which is absolutely death to small business. It's a terrible plan, especially from a guy that gave us a faux stimulus plan under the guise of emergency.

 

[shootermcgavin7]

first off banks already can't use their deposits for proprietary trading. second why are the banks the only ones being regulated here?

It is pretty simple actually. Commercial banks have an economically viable function of lending, investment banks have an economically viable function of speculative investments.

Separately, both functions are beneficial to the economy.
When it is the same company (especially when the I-bank is underwriting speculative debt, guaranteeing put options on said debt, and managing hedge funds invested in said debt), there are conflict of interest problems that create issues in the lending.

In other words, there are logical, economic reasons for commercial and investment banking to be separated. And they were.....from the early 1930s to the late 1990s.


Perhaps you'd like to compare bank failures on either end of that window to the aggregate bank failures inside of that window.

 

[shootermcgavin7]

my restricted stock being worth zero sure doesn't make me feel like my company got saved or that i got to keep my money.

Then you, as a shareholder, (the residual owner of the company), should have done something.

Surely you are not claiming that a company's management is not fully aligned with shareholders like yourself? That would be completely contrary to the free-market mantra.

 

[droski]

It is pretty simple actually. Commercial banks have an economically viable function of lending, investment banks have an economically viable function of speculative investments.

Separately, both functions are beneficial to the economy.
When it is the same company (especially when the I-bank is underwriting speculative debt, guaranteeing put options on said debt, and managing hedge funds invested in said debt), there are conflict of interest problems that create issues in the lending.

In other words, there are logical, economic reasons for commercial and investment banking to be separated. And they were.....from the early 1930s to the late 1990s.


Perhaps you'd like to compare bank failures on either end of that window to the aggregate bank failures inside of that window.

AIG, bear stearns, lehman, GM, Chrysler

none of these would be covered under the new regulation. whoops.

Then you, as a shareholder, (the residual owner of the company), should have done something.

Surely you are not claiming that a company's management is not fully aligned with shareholders like yourself? That would be completely contrary to the free-market mantra.

management by and large lost a bunch of money too. the greatest housing collapse in history is going to torpedo banks with any amount of regulation. end of story. this theory that management intentionally torpedoed the economy just to get rich is ridiculous and completely unfounded.

 

[shootermcgavin7]

AIG, bear stearns, lehman, GM, Chrysler

none of these would be covered under the new regulation. whoops.

The first three would (or would have been).

The last two we have no business getting involved in, however the title of YOUR post is about banking. Specifically, splitting commercial and investment banking (which is the way it was from the early 1930s to the late 1990s)..

management by and large lost a bunch of money too. this theory that management intentionally torpedoed the economy just to get rich is ridiculous and completely unfounded.

Of course they did. That is not my point. My point is one that anyone should recognize. Convex payoffs in the form of stock options encourage risk-taking. For most companies, this is a good thing........... .undiversified managers need such incentives.

For banks, this is not such a good thing. Their risk-taking can spill over to other firms and consumers which rely on them.

the greatest housing collapse in history is going to torpedo banks with any amount of regulation. end of story.

I want to make sure your point is clear. Are you saying that unregulated banks are better off in a crisis than regulated banks?

 

[droski]

"Convex payoffs in the form of stock options encourage risk-taking"

are you in your first or second year of undergrad business school? and 0 as a potential outcome stops options from being convex.