No More Bailouts!

[DVS]

Sorry, but we can't afford to bail out any more banks!

 

[Netzach]

I'm still confused why we're stuck rescuing these entities without thereby OWNING them?

I mean isn't that actually how a free market works? I give a failing business capital, I get something?

 

[Stella_Omega]

I mean isn't that actually how a free market works? I give a failing business capital, I get something?

No, that's socialism. Or something.

 

[DVS]

What I really don't like are the banks that our government says can't fail. Those are the ones we have to bail out, because if they do fail, our economy will go into the dumps. I don't now if that is true or not, but the big economists say it's so. This is one of those banks.

So, they invested money in a bad stock and it tanked. They don't have to worry, because we will bail them out. Now that's the kind of job I'd like to have. If I invest my money in something and it doesn't do well, I don't have to claim bankruptcy, because taxpayers will bail me out. There has to be a limit to our bottomless money bags.

 

[BiBunny]

I'm still confused why we're stuck rescuing these entities without thereby OWNING them?

I mean isn't that actually how a free market works? I give a failing business capital, I get something?

This times a million.

 

[DVS]

This times a million.

This times $2 billion.

 

[midwestyankee]

JPM Chase will be eating the $2 Billion. In fact, they have enough cash on hand that it's not a huge problem, though it's one they'd rather not have. This is not money that they got from Uncle Sam. It was depositor money, and they'll have to cover the losses from the rest of their capital.

The real problem here is that, in spirit, what JPM Chase did was in violation of the principle of the Volcker Rule. This rule is intended to keep banks from making risky bets with their depositors'/clients' money. However, it's really hard to write a regulation that works because it's so hard to define all the specific instances that qualify as breaking the spirit of the rule. So, in fact, the bank may not have broken the law but they certainly did things they ought not to have done.

But this is not cause to say that we shouldn't be bailing out banks. This is cause to try to put some smart people in charge of figuring out how to govern from principles rather than from specific regulations. It won't be easy.

 

[DVS]

JPM Chase will be eating the $2 Billion. In fact, they have enough cash on hand that it's not a huge problem, though it's one they'd rather not have. This is not money that they got from Uncle Sam. It was depositor money, and they'll have to cover the losses from the rest of their capital.

The real problem here is that, in spirit, what JPM Chase did was in violation of the principle of the Volcker Rule. This rule is intended to keep banks from making risky bets with their depositors'/clients' money. However, it's really hard to write a regulation that works because it's so hard to define all the specific instances that qualify as breaking the spirit of the rule. So, in fact, the bank may not have broken the law but they certainly did things they ought not to have done.

But this is not cause to say that we shouldn't be bailing out banks. This is cause to try to put some smart people in charge of figuring out how to govern from principles rather than from specific regulations. It won't be easy.

Well, of course Mr Dimon said the trading would not be banned by the Volcker rule. Sure...what's he going to say? He wants this to all go away. And I don't care if they have the cash to cover the loss. Stocks are reacting and I think this is just another part of the continuing saga. Before long, we'll hear of them giving massive bonuses to employees for some reason. Banks always seem to do this, or maybe a mass vacation for a whole group. Then, if this happens again, will they be able to handle the loss so easily or will they need bailing out?

I think these banks throw money around too easily and part of that is because they know they will be bailed out, if things get too dicey. Nobody is fired, in fact many can receive bonuses. Maybe not always JPM, but they are a member of that elite club.

If they can't fail because it will damage our economy, then we need much stricter regulations and they need to be enforced. I know it wouldn't be easy, but something has to be done. We can't afford any more bail outs.

 

[YourCaptor]

I'm still confused why we're stuck rescuing these entities without thereby OWNING them?

I mean isn't that actually how a free market works? I give a failing business capital, I get something?

I know a secret, a free market doesn't work. It's called entropy, a self regulating system cannot exist.

We all just got bitch slapped by the invisible hand.

 

[JMohegan]

If they can't fail because it will damage our economy, then we need much stricter regulations and they need to be enforced. I know it wouldn't be easy, but something has to be done. We can't afford any more bail outs.

Here's hoping.

http://thehill.com/blogs/on-the-mon...rgan-mess-boosts-dems-efforts-with-dodd-frank

 

[Netzach]

"If they can't fail because it will damage our economy, then we need much stricter regulations and they need to be enforced. I know it wouldn't be easy, but something has to be done. We can't afford any more bail outs.
"

Dems: about 10 who actually give a shit and actually think the rest of them are on board. The rest pay lip service and blow some business.

GOP: regulation is still the problem! Why do you hate rich people? You are jealous of winners!

I think the main problem is that the voting populace seems to have the attention span of a squirrel who's been in a meth stash. "in favor of tighter regulation" is going to poll strongly. For a week.

We just might be getting the government we deserve. And the government we want. By the people has its drawbacks.

 

[waaitg]

This is all my opinion, so feel free to disagree:

When you have a system that is so fundamentally broken and unmanageable, you need to come up with wholesale solution to save the system itself. Think of a dam with 100's of holes. In order to keep the whole damn dam from breaking, you may need to throw a ton of mud on it to stop all the individual leaks.

My take on this is that all these banks are making these "leveraged risks" in such a way that if they guess right, they reap the rewards, and if they lose, they ask the government to bail them out. That is completely ridiculous.

But the government cannot stop these leveraged risk bets from occurring (and yes, they are bets no matter how "researched" they are just like gambling is still gambling no matter how well you can count cards). So the government should step in and limit the amount of rewards individuals can profit from these ridiculous bets (since they are not on the hook for the losses).

Off the top of my head, I would say impose a few conditions, such as:

1. No more bailouts, period.
2. A salary cap on all people working at these institutions. After all, if you won't make money for taking these risks and the profit goes to the company, then your incentive to take stupid risks goes way down.
3. If a company still wants to reward people for taking stupid risks, give them shares of stock. This way if the company still wants to take the risk, the employee will benefit from the increase or decrease in the price of the stock.

Once a measure like this is in place, then you can go back and start fixing the individual holes that have lead up to this current mess (aka reinstating the Glass-Steagall Act which has contributed to increases in oil prices).

 

[Netzach]

You can't cap salaries here from a legislative standpoint because Stalin and Fidel or some moron logic like that - but I think that what caps salaries of execs in other countries and cultures - a sense of "what's acceptable" in a culture is going to become more potent as things get worse. There's no LAW in Japan that says the guy at the head of the company can't make more than whatever, 300 percent of the least paid guy working there. Versus I think it's to the power of 10 here. It's a sense of "what's acceptable" - to stakeholders, to workers, to other people.

Maybe this is the self regulation that people talk about. I don't understand why we have become essentially sociopaths, even to the point where the one percent doesn't give a fuck about it's own interests past the end of the month.

People are starting to turn to smaller banks. People are starting to buy untainted groceries. People who actually still have anything to invest are looking into ethical mutual funds.

I think that the feeding frenzy is becoming unacceptable to a lot of people.

Question is, how far can people be pushed before they actually "get it?"

 

[JMohegan]

The real problem here is that, in spirit, what JPM Chase did was in violation of the principle of the Volcker Rule. This rule is intended to keep banks from making risky bets with their depositors'/clients' money. However, it's really hard to write a regulation that works because it's so hard to define all the specific instances that qualify as breaking the spirit of the rule.

It's really, really hard to write a regulation that works when the risk-takers are in charge of the regulating.

http://elizabethwarren.com/news/press-releases/elizabeth-warren-calls-on-jp-morgan-chief-to-resign

 

[JMohegan]

What I really don't like are the banks that our government says can't fail. Those are the ones we have to bail out, because if they do fail, our economy will go into the dumps. I don't now if that is true or not, but the big economists say it's so. This is one of those banks.

So, they invested money in a bad stock and it tanked. They don't have to worry, because we will bail them out. Now that's the kind of job I'd like to have. If I invest my money in something and it doesn't do well, I don't have to claim bankruptcy, because taxpayers will bail me out. There has to be a limit to our bottomless money bags.

If a commercial bank goes under, we'll be left holding the bag even if we refuse to extend an '08-style bailout.

Why? Because of the FDIC. We'll be on the hook for making the depositors whole.

The demise of Glass-Steagall was a catastrophe for this country. For anyone wondering what the heck I'm referring to, here's a nice, short summary of the history:

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

 

[Keroin]

Regulation.

A dirty word to Americans, I know, but it works. The 'free market' is really just a 'free pass' for high level crooks to fuck you over again and again and again...

 

[midwestyankee]

It's really, really hard to write a regulation that works when the risk-takers are in charge of the regulating.

http://elizabethwarren.com/news/press-releases/elizabeth-warren-calls-on-jp-morgan-chief-to-resign

Regardless of the regulatory capture that has made this situation particularly dangerous, it's simply very hard to write regulations that can't be sidestepped by smart people with a ton of money and motivation.

 

[BiBunny]

Regulation.

A dirty word to Americans, I know, but it works. The 'free market' is really just a 'free pass' for high level crooks to fuck you over again and again and again...

Agreed 100%. But blah, blah, socialism, blah, blah.

 

[Keroin]

Agreed 100%. But blah, blah, socialism, blah, blah.

LOL!

Ohhh, socialism...scary!!

 

[DVS]

Regardless of the regulatory capture that has made this situation particularly dangerous, it's simply very hard to write regulations that can't be sidestepped by smart people with a ton of money and motivation.

I think we need to put term limits on all of congress, anything that the taxpayer ends up bailing out should be strictly regulated and no high bonuses, no company picnics, and no language like, "we have to pay our CEOs big salaries because that's how you get the best applicants" bullshit. I think we can see through that statement, by now. And if some bank fails to follow set guidelines, they pay a hefty fine. Oh, and that fine can't be sent on to be paid by depositors, either.

And if I'm elected, everybody is going to get a big pay raise! Trust me. You'll see it on your paycheck as soon as I'm elected. Really! Honest!

 

[waaitg]

You can't cap salaries here from a legislative standpoint because Stalin and Fidel or some moron logic like that

Just like you can't charge people for using your ideas.
Just like you can't impose a general tax on income.
Just like you can't detain people without due process.

Look at the legislation that has been passed, and you will find that almost any piece of legislation can be passed. Once it is passed, enforcement mechanisms will come into play.

* Intellectual property and licensing fees.
* Making collecting information regarding salaries paid by companies to employees mandatory solved the income tax issue.
* The Patriot Act and all the other varieties of legislation surrounding it have pretty well done away with due process by having a government agency designate someone a security risk.

If you want to tell me what is impossible, you might want to examine these previous "impossible" scenarios and re-think your opinion. If 51% of the population votes for representatives and force them to pass this legislation or be voted out, watch how fast it gets passed. (Hell make it 35% since you had 63% voter rates overall with 68% voter turnout in some ethnic groups).

Regardless of the regulatory capture that has made this situation particularly dangerous, it's simply very hard to write regulations that can't be sidestepped by smart people with a ton of money and motivation.

Someone once described Capitalism to me as "If it's illegal, then let them stop me". This appears to be truer and truer everyday and financial criminals have realized that the easiest way to get around "being caught" is to lobby to have legislation changed so that what they do is no longer "technically" a crime.

 

[midwestyankee]

Someone once described Capitalism to me as "If it's illegal, then let them stop me". This appears to be truer and truer everyday and financial criminals have realized that the easiest way to get around "being caught" is to lobby to have legislation changed so that what they do is no longer "technically" a crime.

Yes, regulatory capture is a problem. But beyond that, how do you propose writing specifics-oriented regulations that some smart guys with a lot of money and motivation won't be able to get around? Even if the bank lobby doesn't lay a hand on the regulation-writing or enforcement process, this is not likely possible. Bank robbers will always find a way around the most sophisticated protection systems.

 

[Stella_Omega]

Yes, regulatory capture is a problem. But beyond that, how do you propose writing specifics-oriented regulations that some smart guys with a lot of money and motivation won't be able to get around? Even if the bank lobby doesn't lay a hand on the regulation-writing or enforcement process, this is not likely possible. Bank robbers will always find a way around the most sophisticated protection systems.

and -- what, we don't bother?


The best get-around the bank robbers have discovered, is to inculcate a fear amongst private citizens that other private citizens might benefit in some way when they don't deserve one. Thus the tea party; ignorant folk who are so paranoid that someone might get an undeserved extra month of tax-payer funded bennies, they are willing to let the big corporations trample them in the mud to prevent it.

 

[BrentCrude]

If the executives who make these bad judgment calls went to prison (not one of the country club federal prisons) for a decade or so, maybe other bank execs would start paying closer attention. As it is now, there are no incentives to manage the business as a business that could fail.

 

[midwestyankee]

and -- what, we don't bother?


The best get-around the bank robbers have discovered, is to inculcate a fear amongst private citizens that other private citizens might benefit in some way when they don't deserve one. Thus the tea party; ignorant folk who are so paranoid that someone might get an undeserved extra month of tax-payer funded bennies, they are willing to let the big corporations trample them in the mud to prevent it.

No. The answer, in my humble opinion, is to craft regulations that are blunt and based on principles rather than regulations that are precise. Precision always leaves an exit point. Thus, the Volcker rule would depend on the principle that a bank shall not engage in market-making or other investment tactics that involve depositors' money. Then it's up to the regulating agency to determine if a particular trade follows the rules. To do this successfully would require more regulators with more leeway to hold banks accountable for their actions. The regulators would also probably have to be paid far more than they are now in order to attract people with enough skills and knowledge to catch the equally smart and very-well financed folks at the bank whose job description is "fool the regulators so we can steal more of our customers' money."