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Congress and Obama think there's a problem with the banks - they are too big to fail. Because they were too big to fail, the taxpayer had to bail them out. Why is that a problem? There seems to be a misunderstanding here. The expression 'too big to fail' implies a run on the banks would have occurred. These banks were big, meaning people had confidence in them. Confidence and certainty go with bigness. But a loss of confidence in the banks would have started a run. Business wise yes they had obligations to counterparties. The amounts were not small. But again it was the depositors money the government was protecting. Our money. That's why using our money to bail out the banks was appropriate.
If you are following this line of reasoning, too big to fail is not a problem. You can't be too big. Bigness inspires confidence. The banks didn't cause the financial crisis - bailing them out was not the crisis. Subprime loans caused the crisis. So why can't they just make a rule that banks, including Fannie and Freddie, can not make subprime loans. In other words, if there is no garbage going into the system, there will be no garbage coming out of the system ie. you won't have garbage CDS.
The system itself worked fine. It's still working. Why fix something that isn't broken?
I don't think the politicians know what they are doing. Listen to them, especially the Dems. They sound completely clueless. It's time to leave the system alone so things can get back to normal. All the talk of regulations is creating alot of uncertainty.
What’s wrong with telling banks not to make subprime loans?
There really is a simple answer. Liberal Theology.
Liberals believe on a religious level that giving loans to poor people will make the world better. It is an article of faith. They have even codified it in the law and waxed eloquent in its defense.
Too big to fail DOES NOT mean there would have been a run on the banks ala the Great Depression. Too Big to Fail means, they were so intertwined into the Market and the economy that their failure in the stock market would have resulted in a failure in the other segments they were in as well, thus creating an domino effect of companies who were in the top 3% of their market segments, and who also had several smaller divisions which would have failed and thus lead to other fissures within other corporations, and undermined them as well.
Congress and Obama think there's a problem with the banks - they are too big to fail. Because they were too big to fail, the taxpayer had to bail them out. Why is that a problem? There seems to be a misunderstanding here. The expression 'too big to fail' implies a run on the banks would have occurred. These banks were big, meaning people had confidence in them. Confidence and certainty go with bigness. But a loss of confidence in the banks would have started a run. Business wise yes they had obligations to counterparties. The amounts were not small. But again it was the depositors money the government was protecting. Our money. That's why using our money to bail out the banks was appropriate.
If you are following this line of reasoning, too big to fail is not a problem. You can't be too big. Bigness inspires confidence. The banks didn't cause the financial crisis - bailing them out was not the crisis. Subprime loans caused the crisis. So why can't they just make a rule that banks, including Fannie and Freddie, can not make subprime loans. In other words, if there is no garbage going into the system, there will be no garbage coming out of the system ie. you won't have garbage CDS.
The system itself worked fine. It's still working. Why fix something that isn't broken?
I don't think the politicians know what they are doing. Listen to them, especially the Dems. They sound completely clueless. It's time to leave the system alone so things can get back to normal. All the talk of regulations is creating alot of uncertainty.
They sound clueless because they really are.
Many are lawyers or career bureaucrats without a clue of how things work outside the hallowed halls of congress.
Congress and Obama think there's a problem with the banks - they are too big to fail. Because they were too big to fail, the taxpayer had to bail them out. Why is that a problem? There seems to be a misunderstanding here. The expression 'too big to fail' implies a run on the banks would have occurred. These banks were big, meaning people had confidence in them. Confidence and certainty go with bigness. But a loss of confidence in the banks would have started a run. Business wise yes they had obligations to counterparties. The amounts were not small. But again it was the depositors money the government was protecting. Our money. That's why using our money to bail out the banks was appropriate.
If you are following this line of reasoning, too big to fail is not a problem. You can't be too big. Bigness inspires confidence. The banks didn't cause the financial crisis - bailing them out was not the crisis. Subprime loans caused the crisis. So why can't they just make a rule that banks, including Fannie and Freddie, can not make subprime loans. In other words, if there is no garbage going into the system, there will be no garbage coming out of the system ie. you won't have garbage CDS.
The system itself worked fine. It's still working. Why fix something that isn't broken?
I don't think the politicians know what they are doing. Listen to them, especially the Dems. They sound completely clueless. It's time to leave the system alone so things can get back to normal. All the talk of regulations is creating alot of uncertainty.
Look to see who paid to put the politicians in office who voted for bailouts and the reason will become clear to you.
If you need more verification, look what they did with the money. The government wanted to keep bailout recipients afloat so people would keep their jobs, money would flow and the economy would keep chugging along. The recipients of bailout money took it, fired huge numbers of people, downsized signifcantly and paid it all back without their shareholders loosing a single penny and the general populace of the country gaining a single benefit from it.
Too big to fail DOES NOT mean there would have been a run on the banks ala the Great Depression. Too Big to Fail means, they were so intertwined into the Market and the economy that their failure in the stock market would have resulted in a failure in the other segments they were in as well, thus creating an domino effect of companies who were in the top 3% of their market segments, and who also had several smaller divisions which would have failed and thus lead to other fissures within other corporations, and undermined them as well.
THAT is what TOO BIG TO FAIL means.
Thank you.
None of the posters who posted before you, including the OP, got it yet they spoke with authority, as expected of them.
The problem isn't just finreg. Obama is still intent on making subprime loans and keeping people in their homes. He's subsidizing a failed idea. Lending money to people who can't afford a house leads to foreclosure which leads to bank selling which leads to lower prices which leads to walking away which leads to foreclosure and so on.
There are instances where sub prime loans are worth the risk. Why tie the hands of banks to do what they want with their money.
If they take on to much risk, and fail, well, let the bank fail.
The issue is, why do we allow banks to become so big, that they become to big to fail. Before that happens, we need to bust the bank into two halves, neither of which would be to big to fail.
Look to see who paid to put the politicians in office who voted for bailouts and the reason will become clear to you.
If you need more verification, look what they did with the money. The government wanted to keep bailout recipients afloat so people would keep their jobs, money would flow and the economy would keep chugging along. The recipients of bailout money took it, fired huge numbers of people, downsized signifcantly and paid it all back without their shareholders loosing a single penny and the general populace of the country gaining a single benefit from it.
You think the government was worried about losing banking jobs? Are you kidding me?
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