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| Name: |
water_watcher
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| Subject: |
Obama kills more jobs
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Date:
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1/22/2010 6:54:17 AM
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No one mentioned the worse than expected jobless claims, and now the Obama admin is lowering their GDP growth forecast for 2010 and 2011. At the same time he is proposing another tax on banks which means they will not be hiring and will lend less. Plus he is proposing penalties and more regulation on banks for risk taking, while at the same time he is complaining that banks are not lending enough.
Ok so you are a bank ... you see the disasterous policies, taxes, and more regulation. If you make a higher risk loan to a small business that may create jobs, and it does not work out as planned, you will be penalized by Obama.
So what are you going to do. Of course not make the loan.
I think if Obama takes his head out of his back side and uses some logic he may have a chance of doing something right.
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| Name: |
wix
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 8:28:58 AM
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I do feel that banks need more regulation, but more taxes will not serve the purpose of regulation, as o-BAMA thinks. o-BAMA is so stupid he'll soon be coming up with crap like Chavez. Having international banking corporations operate in the US is not in the best interest of the country. Banks should be banks; not development companies, not brokerage houses, not one stop shopping for the entire financial world. Maybe with some of the new credit card rules banks will have to get out of the loan shark business and get back to the business they should be in.
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation-not
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Date:
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1/22/2010 9:35:15 AM
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I have a different view about the need for more regulation. Despite the false statements about deregulation, the banking industry is by far the most regulated private industry in this country bar none. I defy anyone to identify another industry that is so influenced and controlled by the government. For example, I can only point to the Federal Reserve as exhibit 1. Unlike any other business I know, banks are required by the government to keep a certain amount of their cash on hand. Every aspect of their business is heavily regulated by the state and federal government. The cause of the financial crisis was government distortion of the market and not by the banking industry, and not by banks broadening their business offering.
That is not to say there weren't cases of predatory lending, focus of too much risk in certain areas (i.e., real estate in Florida or Nevada) or other bad business decisions. But the markets correct for these bad decisions, unless the government steps in and bails them out of the consequences, thereby perpetuating the willingness to make the bad decisions. As for lending, I believe in personal responsibility and at the end of the day no one was holding a gun to a person's head forcing them to enter into a loan that they could not repay or put tens of thousands of dollars on a credit card.
There may be need for some form of regulatory reform but more regulation and more government intervention is not the answer to the problem, it is the problem. And no I am not advocating complete deregulation, I am advocating sensible regulatory reform that doesn't turn the banking industry into an arm of the government via regulatory fiat.
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| Name: |
wix
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 1:07:05 PM
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Over the past twenty many regulations were relaxed for banks that led to today's problem. Why would an intelligent person, bank, lend money to a real estate developer who has structured his corporation so he personally has no skin in the game and can walk away from the loan scott free if he needs to. Banks made those loans for years and it came back to bite them and put many out of business. Bankers need to treat the money they loan as if it were their own. Deregulation has hurt that aspect of banking.
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 3:10:59 PM
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Bankers have always made bad loans and there is no amount of regulation that will fix that problem and deregulation didn't cause the problem. Most of the deregulation simply allowed banks to do other things that they historically did not do (i.e. brokerage, credit cards, etc.). This was partly a response to other entities getting into banking (Merrill Lynch, etc.).
No regulator is going to sit in with a loan committee and tell them to make this loan and don't make that loan nor do you want them there or commerce will come to a halt. I just can't ever agree that more government regulation is needed and definitely not in banking. What is really needed is for the government to let the markets correct this bad behavior. As long as they always come to the rescue bankers and other big businesses will continue to engage in risky behavior because they know there are no consequences.
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| Name: |
GoneFishin
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 3:24:48 PM
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WIX, you have some valid points for once.
You will find insurance companies highly regulated by the states and they are required to maintain certain reserves that are dictated by the states. Also, Property and Casualty companies are restriced as to how they can invest the reserves. They must be maintain their reserves in a more liquid investment such as stocks and bonds. AIG Insurance remains solid which is different from the holding company that received the bailout through risky unregulated investments.
The depositors in banks are insured by the feds and as insurers the feds have a right to regulate the banks. Let the banks become private banks with no FDIC
insurance and then I will say no regulation for them.
Martini, it is interesting that Goldman became a bank and accepted increased regulation.
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 9:49:18 PM
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GF, who do you think pays for the FDIC insurance? The depositors. You continue to operate under the misunderstanding that corporations pay taxes or pay fees or pay for government insurance. A corporation pays for nothing, it is all paid by individuals who provide the financial resources for companies to pay for anything. So when you say let banks go without FDIC insurance you act as if that would be the end of them. You are so wrong. They pay FDIC insurance because they have no choice!!! They are forced to pay for that insurance by the government. If it weren't for that I can assure you that the markets would force them to insure deposits or people would put their money under the mattress out of fear. You are so quick to slavishly look to government for the solution even though it is the worst possible mechanism for solving almost anything.
As for your point about Goldman, I don't get it. What is the point of that?
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| Name: |
GoneFishin
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| Subject: |
Banks need regulation
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Date:
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1/22/2010 10:39:41 PM
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"So when you say let banks go without FDIC insurance you act as if that would be the end of them. You are so wrong. They pay FDIC insurance because they have no choice!!! They are forced to pay for that insurance by the government. If it weren't for that I can assure you that the markets would force them to insure deposits or people would put their money under the mattress out of fear."
And just whom do you think would be willing to insure the banks? Another AIG deal?
As to Goldman, my point is they are now a bank and the regulations did not stop them from converting.
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation
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Date:
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1/23/2010 4:38:50 PM
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Millions of businesses get their insurance from private insurers, including AIG. The only reason they don't offer it is they can't. And as for the AIG slam a little research would educate you that the insurance arm of AIG was, is and will continue to be very healthy. All their problems were at the holding company level where the they invested and lost on the risky financial instruments. And besides, AIG only represents a small portion of the insurance market as I am sure you know well.
I still don't understand your point about Goldman. Sorry....
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| Name: |
GoneFishin
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| Subject: |
Banks need regulation
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Date:
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1/23/2010 5:48:03 PM
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Martini, read what I wrote about AIG "AIG Insurance remains solid which is different from the holding company that received the bailout through risky unregulated investments." We agree on that point totally.
As to Goldman, I am sure you are aware they became a bank holding company in Sept 2008 similar to Citi, Chase, Wells, etc. If banks are the most regulated industry, why did they convert? They wanted some of the protection from Treasury. The following is an exerpt that outlines one possibility for Goldman and Margan Stanley to avoid the additional regulations:
"President Obama wants to limit the scope of risk-taking by barring banks with federally insured deposits from trading securities for their own accounts and from owning hedge funds and private equity funds. The plan, policy makers said on Friday, would effectively require bank holding companies — which Goldman and Morgan became at the height of the financial crisis — to divest themselves of these lucrative operations.
But Treasury Department officials are also seeking to give banks that do not like the proposed rules the option of dropping their status as holding companies to keep their trading and other investment businesses.
The move is likely to turn the spotlight on Goldman, which could be one of the biggest potential beneficiaries because it makes sizable profits from proprietary trading and runs many private equity and hedge funds. Goldman traders are known for taking large trading positions, even as they manage trades for clients."
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation
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Date:
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1/24/2010 12:28:04 PM
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OK, I know understand the Goldman point and no, I was not aware they converted to a bank holding company in 2008. Regardless, I assume they made this switch because they perceived some business benefit. Considering half of the political appointees in Treasury come from Goldman I doubt they fear the regulator and probably weighed the pro's and con's of the switch and decided the upside was sufficient.
That Goldman switched to a bank doesn't negate the fact that there are a total of thirty four separate subparts to the Code of Federal Regulations (CFR) that apply to the banking industry (12CFR). From Wikepedia: "In the United States, the banking industry is a highly regulated industry with detailed and focused regulators." From a recent paper written by PhD candidate at NUS Business School: "Banking is the most highly regulated industry in the U.S." From Business Week who apparently read Wikipedia: "The banking industry is a highly regulated industry with focused regulators." I could go on and on but the only point it would prove is that Goldman switching to a bank has zero bearing on whether the industry is or is not heavily regulated. It is just a fact that banking is highly regulated in this country, a fact being one of those stubborn things that drive liberals crazy.
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| Name: |
GoneFishin
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| Subject: |
Banks need regulation
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Date:
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1/24/2010 1:29:34 PM
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The regualtions are tough because banks take your funds and play with them like a casino and then advertise for funds with we are FDIC insured. With the insurance comes tough regulations. As a successful businesman, I assume you expect your bank to be prudent with their use of the funds you deposit into your corporate checking account. After all, you are only insured for $100,000 for your checking account. Would you sleep better with less regulation for your bank knowing you may have uninsured funds deposited with them?
Martini, the Federal Reserve granted a request from Goldman Sachs and Morgan Stanley, the two remaining major investment banks in the US, to change their status to bank holding companies.
The move allowed both banks permanent access to emergency funding from the Fed but also means changed to the ways they are regulated.
The US central bank did extend its emergency lending facility to investment banks back in February, after the collapse of Bear Stearns, however investment banks were not granted the same terms as commercial banks, putting them at a disadvantage to the commercial banking sector.
The conversion to commercial bank status also allowed Goldman Sachs and Morgan Stanley to bolster their funding through deposits.
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| Name: |
MartiniMan
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| Subject: |
Banks need regulation
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Date:
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1/24/2010 3:47:35 PM
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I understand why banks are regulated and I was responding to the comment that the banks need more regulation. I don't agree with that assertion. As for the FDIC insurance it indeed serves a valuable service for your average consumer but for many businesses it provides limited value as their accounts often exceed this amount. They rely on other mechanisms to protect their money being held by banks.
So the millions of businesses that have more than $100K in cash in the bank don't rely on FDIC insurance to make them comfortable with the banking system. And I still maintain that absent the FDIC the markets would force the banks to insure their deposits and yes, evil insurance companies would gladly step into the void. The difference would be they would enforce common-sense requirements on their insureds like they do with our business lines of insurance. If a bank doesn't behave they lose their insurance and most consumers will elect to deposit their money in banks that have insurance. Of course we will never know because the government won't ever give up that stranglehold.
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