TelecomFreq
You are right that big banks are not monopoly, but they are in the form of Oligarchy. We are not pursuing perfect competition here, but we shall not let several big banks kidnap the whole economy. As a tax payer, I definitely don't want to bail out them again - Most likely Fed & Benanke is preparing for another round of bail out.
We already has Fed, Treasury, FDIC , SPIC, why do we need these big banks? We can have a good life with small regional banks like PNC, MTB, ZION. Actually these small banks are doing much better than BAC, Citi, Chase.
I think the major reason we still have these monsters is they are big contributors to the Politicians and have strong lobbists in the Congress.
Scott, What's the short explanation for this dichotomy? Does it stem from the creation of the Fed in 1907? Weren't policies put in place after the crash in 1929? I just end up perplexed trying to understand how the hell we allowed this mess to grow not only unchecked but with the tacit approval of legislation and regulation that favors The System.
Re: Too Big to Fail
Dex
10/4/2011 2:49:06 PM
Disturbing commentary all around about the priority we have set -- an agenda basically skewed against the average person.
ValueHiker,
You make a great point. We have almost bankrupted FDIC and yet the banks got all the money -- so they could start incinerating it again, apparently...
--Scott
I think its unfair to compare the large banks to AT&T, I think the government was right to break up that monopoly. I think there are enough big banks so that it is not a monopoly.
dont get me wrong, I am not for the big banks, or helping them do what they want, but at the same time I dont think they are a monopoly and we should not treat them as such.
TelecomFreq
If we dismantle the big banks, we may see some shocks inside the market, but I doubt it will bring the system down. The main street investors get the insurance from FDIC & SIPC. If the government put the TARP money into FDIC & SIPC, I don't see there is much risk to regular people.
On the contrary, Fed put most of the money onto these big banks, and extend these monsters' life, so they can do more damage to our economy. Think about what happened to AT&T, if the government did not dismantle the Monster, we may still pay $2 per minute for a long distance call.
It is unfair game for main-street investors
Value Hiker
10/4/2011 12:21:32 PM
Good article, Scott. I want to add one more point
The System likes: Head I win, tail you lose
Investors like: Fair Play
Re: Too Big to Fail
ProfR
10/4/2011 11:58:11 AM
TelecomFreq, You are correct. This is not a black and white problem. We got into some of this trouble because banks were pushed to give mortgages to buyers who should not have had mortgages. Pushing too hard now will just get the banks to pull back more and get more mortgages foreclosed and more businesses not able to get loans.
I agree that we need to fix "The System" but it will be interesting to see how this would be done.
I am on the fence when it comes to letting the big banks fail. I like the reasoning behind it, you have to pay the price for your actions; but that being said I worry that it would cause more harm than good.That is my fear for letting them fail...
If there were no safty net, I am not sure the risk vs. reward model would be enough to keep banks out of trouble.
Re: Too Big to Fail
PAW
10/4/2011 10:24:54 AM
I agree. Let them (big financial institutions) fail.
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