will further bank regulation torpedo the economy even further?

#1
D

droski

Well-Known Member
Joined
Jan 24, 2007
Messages
21,914
Likes
3
#1
Jamie Dimon seems to think so.

News Headlines

At Basel, regulators agreed to more than double the minimum common equity requirement for banks to 4.5 percent from 2 percent, with an added liquidity buffer of 2.5 percent. That means banks will have to have total risk reserves of 7% of weighted assets. Regulators did not reach a consensus on proposals for an additional buffer—or "surcharge"— for "systemically important financial institutions"—which is regulator speak for Too Big To Fail.

obviously any money needed for these purposes isn't being lended out.
 
#2
#2
droski said:
Jamie Dimon seems to think so.

News Headlines

At Basel, regulators agreed to more than double the minimum common equity requirement for banks to 4.5 percent from 2 percent, with an added liquidity buffer of 2.5 percent. That means banks will have to have total risk reserves of 7% of weighted assets. Regulators did not reach a consensus on proposals for an additional buffer—or "surcharge"— for "systemically important financial institutions"—which is regulator speak for Too Big To Fail.

obviously any money needed for these purposes isn't being lended out.
Click to expand...

So risk reserves are what the banks have to keep on hand against what they've lent out, right (btw, I thought it was 10%)?

I personally think they should have to have 100% on hand. Fractionalized banking is just another way to devalue the dollar. Yeah, eliminating fractionalized banking would cause some growing pains, but in the long run we would be fine. Fractionalized banking helps create the boom-bust cycles. The logic is: If it's good stimulus to allow the banks to create money out of thin air, why don't we allow private citizens to practice fractionalized banking (rather than throwing them in jail for the practice).
 
#4
#4
I don't know that we have to further regulate the banks...but we should more harshly punish those responsible for this dumpster fire. Still don't know how those in charge of the mortgage departments aren't in jail. Infuriating.
 
#7
#7
droski said:
if they had 100% on hand they wouldn't be able to loan out any money.
Click to expand...

I realize that. Banks can still lend out their own money. And in my world they can also take money for the purpose of lending it out, they just can't use your checking account balance for that.

I see easy credit as a big issue in the boom-bust cycle as well. This takes care of that problem.
 
#9
#9
I thought lack of regulation in the derivatives market played a role in the collapse.

Droski, are you for complete lack of regulation?
 
#11
#11
nbakerld said:
I realize that. Banks can still lend out their own money. And in my world they can also take money for the purpose of lending it out, they just can't use your checking account balance for that.

I see easy credit as a big issue in the boom-bust cycle as well. This takes care of that problem.
Click to expand...

so how are they supposed to make money on checking accounts? i.e. why would they bother even offering that service?
 
#13
#13
rjd970 said:
I thought lack of regulation in the derivatives market played a role in the collapse.

Droski, are you for complete lack of regulation?
Click to expand...

The housing collapse caused teh derivatives collapse not the other way around. Deriviatives of this variety have existed for at least 20 years and let's face it the regulators are too stupid to understand the derivatives market. so i'm not sure how one regulates that.

i'm for prosecuting anything that is illegal. i.e falsifying documents, lying to customers, etc. Personally i see the housing collapse as a typical bubble which just happened to be a bubble in the worst posible area for the american economy. we've been trying to regulate bubbles for as long as this country has existed and it always happens in the rear view mirror.

basically my belief is the long term benefits of deregulation and the derivatives market to the american people greatly outweighs the cost of a once in a lifetime bailout.
 
#16
#16
rjd970 said:
I thought lack of regulation in the derivatives market played a role in the collapse.

Droski, are you for complete lack of regulation?
Click to expand...

i can't speak to derivatives but my take on regulation is not that we shouldn't have any but that it should be focused on transparency and accurate reporting of data so the market can price risk. I'm not for the type regulation that prevents certain of financial products/lending, etc. provided those products meet the transparency guidelines.
 
#17
#17
droski said:
The housing collapse caused teh derivatives collapse not the other way around. Deriviatives of this variety have existed for at least 20 years and let's face it the regulators are too stupid to understand the derivatives market. so i'm not sure how one regulates that.

i'm for prosecuting anything that is illegal. i.e falsifying documents, lying to customers, etc. Personally i see the housing collapse as a typical bubble which just happened to be a bubble in the worst posible area for the american economy. we've been trying to regulate bubbles for as long as this country has existed and it always happens in the rear view mirror.

basically my belief is the long term benefits of deregulation and the derivatives market to the american people greatly outweighs the cost of a once in a lifetime bailout.
Click to expand...

The collapse wasn't some typical bubble. A bunch of greedy pos's thought it would be a great idea to loan out millions that they knew wouldn't be paid back.
 
#18
#18
droski said:
i'd imagine they'd have to charge a lot to make it profitable. seems like letting them lend out the money is a win win for both parties?
Click to expand...

Not in my opinion. I also think a checking service would be very cheap.
 
#19
#19
nbakerld said:
So risk reserves are what the banks have to keep on hand against what they've lent out, right (btw, I thought it was 10%)?

I personally think they should have to have 100% on hand. Fractionalized banking is just another way to devalue the dollar. Yeah, eliminating fractionalized banking would cause some growing pains, but in the long run we would be fine. Fractionalized banking helps create the boom-bust cycles. The logic is: If it's good stimulus to allow the banks to create money out of thin air, why don't we allow private citizens to practice fractionalized banking (rather than throwing them in jail for the practice).
Click to expand...

what?
 
#23
#23
KiffinKiller said:
The collapse wasn't some typical bubble. A bunch of greedy pos's thought it would be a great idea to loan out millions that they knew wouldn't be paid back.
Click to expand...

if they knew they wouldn't be paid back then why did they hold hundreds of billions of these loans on their balance sheets (including instruments that cost them billions if these loans defaulted)? doesn't seem very bright does it?
 
#24
#24
nbakerld said:
Because they can charge for it.
Click to expand...
they can only charge a very limited amount. In fact, the transition to free is because the service has become so turnkey that it's easy to replicate.

Banks, as community lenders, are the backbone to our capitalist culture. Without them, your average guy has no access to the capital markets whatsoever. Just because they've ceased lending today because of inverted capital bases doesn't mean the system wasn't a good one. Any system unchecked for too long becomes a place for loophole money makers. Unfortunately, the loopholes became the standard, but won't do so again in the housing market for decades and decades.
 
#25
#25
So we keep hearing that banks aren't lending but clearly they are - just not at the rate they were prior to the recession.

Anyone have any data on how big the drop in lending is (particularly relative to demand).
 
New posts
You must log in or register to reply here.

VN Store



Back
Top