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We would have had some failed banks, rich people losing a lot on their hedge funds, and we would have been trillions less in debt as a nation.
Other more responsible banks would have picked up the slack, and would have been a lot more willing to lend than the banks who took TARP funds. That's the way capitalism is supposed to work.
i'd really be interested to find out as many diverse opinions as possible. what do you think would've happened immediately after the runs on the banks? what would've happened to all our systems? utilities, food supplies, energy supplies, education, healthcare? who would be worse off, rich people or poor? what would happen to the media? how would we communicate? what would the military do? do you think the gap between rich and poor would grow wider or shrink? what would happen to corporations? who would assume the greater role, federal or local government? what would happen to asset prices? real estate, gold, machinery etc.
lastly, how do you think you'd cope? were you prepared for any dislocations back then? do you think the new reality would've suited you? etc
what would the world look like.....about the same, the smaller banks and credit unions would have taken up the slack and made money....but no we would rather have big monopolies have controll of everything....1000 banks failed during the 90's....not much different now.
the biggest problem is we ALLOWED this to happen, we ALLOWED monopolies
look at the auto companies....chevy pontiac, buick, and olds USED to be INDIVIDUAL companies.
our systems would have been fine, and the rich would have lost more than the poor...but politicians want you to believe they are for the people and the 'other' party is against.....neither party will admit they are bought and paid for by big bisiness (the repubs are bought by big business, the dems are bought and paid for by big FOREIGN business)
ovcatto, i'm kind of disappointed with your answer. i know we have vastly different ideas on how to achieve a more egalitarian society but you don't seem to understand that in order for us to have real and meaningful change, we are going to have to endure some pain.
Who is this we? Perhaps you and I could survive that little lesson in frugality but I certainly wouldn't wish depression depth misery on the rest of the country. Sorry.
[quote]I really just don't buy the 'we had to save them' story.[quote]
I read this argument often but I never read any supporting data.
what would the world look like.....about the same, the smaller banks and credit unions would have taken up the slack and made money....
Goodness knows that smaller bank haven't failed over the past year. Again, I'd like to see some numbers to back what so far only appears to be wishful conjecture.
Goodness knows that smaller bank haven't failed over the past year. Again, I'd like to see some numbers to back what so far only appears to be wishful conjecture.
not sure what you are saying
the fact is we allowed these mega banks to become 'too big to fail'.
in my years I have had many banks, and MOST of them have disappeared because of MERGERS (williamsburg bank, seamans bank, nat west, chemical, fleet, etc)
many, many people 'bank' with credit unions and LOcal banks,...if the 'mega' banks had failed the smaller banks/credit unions would have bought the debt for pennies on the dollar, the fdic would have secured the savings of the regular people out there who 99% of them have less than 10-20k in savings at a BANK.
some banks fail, some dont,,,we had thousands of banks fail or be bought out during the supposed 'great economy' of the 90's.
if bank A fails, bank B can buy its assest/debts for pennies on the dollar, this includes failed mortgages and even the socalled 'toxic' mortgages....if bank A has a bad (nonpaying) mortgage for 200k( and yes that is the actual value) and bank B is able to BUY it for 100k, even if it SELLS the property that is worth 200k for 150k it will still make a 50k PROFIT.
why should we 'save' or bailout a FAILED company...just for what???? the sake of saying we did????
This is what I am saying, there have been 94 bank failures during this recession. 94 banks, not branches, banks and non of them were anywhere approaching the large regional or national banking concerns.
Of course this doesn't include small banks which are near failure, or just merely struggling. It is also interesting that the banking crisis didn't start from the bottom up but has flowed downward, the big banks taking down the entire system. As Paul Kedrosky put it:
"But the reason why all these banks had the opportunity to so quickly make so many bad loans, and why so many banks and loans failed so fast, is because of the systemic problems in banking, many of which were tied to loan exotica. In other words, it didn't matter that the failing banks didn't pee in the pool, other banks did. And in banking, like life, the notion of a peeing and a non-peeing section in a swimming pool is meaningless."
So I am dying to know who these small banks, after years of bank consolidation, who were going to rise from the ashes and rebuild the banking system.
Quote:
the fact is we allowed these mega banks to become 'too big to fail'.
This isn't a point in contention.
in my years I have had many banks, and MOST of them have disappeared because of MERGERS (williamsburg bank, seamans bank, nat west, chemical, fleet, etc)
Quote:
if the 'mega' banks had failed the smaller banks/credit unions would have bought the debt for pennies on the dollar, the fdic would have secured the savings of the regular people out there who 99% of them have less than 10-20k in savings at a BANK.
Nothing personal, but you haven't a clue about what you are talking about. The bailout wasn't for commercial banks, but investment rather investment banks whose assets, what they were, were not insured by the FDIC. Most of their assets were in the form of commercial instruments, paper, back by more paper and at the end of the day most of that paper wasn't worth the paper that it was printed on.
Quote:
if bank A fails, bank B can buy its assest/debts for pennies on the dollar, this includes failed mortgages and even the socalled 'toxic' mortgages...
Again, nothing personal, but I asked for some concrete facts not wishful conjecture, so instead of facts you provide even more wishful conjecture.
Who is bank B? As we've seen bank B didn't materialize in the case of Leahman Brothers and Bank of America had to be blackmailed into buying Merrill Lynch. The bailout wasn't about commercial banking!
Andrew Gray, a representative for the FDIC, told MarketWatch on Tuesday 25 March 2008 "Gray reiterated that with only 76 banks on the agency's "watch list," possible problem banks remain at historically low levels, despite a tumultuous year on the capital markets. "
"Our problem bank list has 76 institutions, low by historical standards," Gray said. "In 1990, there were close to 1,500 on the list."
There have been five bank failures over the last 12 months: Metropolitan Savings in Pittsburgh ; Douglass National Bank in Kansas City, Mo., Miami Valley Bank in Lakeview, Ohio; NetBank in Alpharetta, Ga.; and Hume Bank in Hume, Mo.
In contrast, more than 800 banks failed between 1991 and 1995 after a severe recession, brought on by the savings and loan crisis, proved to be too much for many overleveraged smaller banks.
--------------------------------
Federal Reserve Chairman Ben Bernanke raised some eyebrows last month(Feb 2008) when he suggested during congressional testimony that the U.S. will likely see some banks fail in upcoming months due to increasing writedowns and a tightening credit climate.
But recent data from the FDIC support the idea that these days, most U.S. banks are well positioned to ride out any approaching storm.
"The industry as a whole is coming off a golden period of record profits," FDIC Chairwoman Sheila C. Bair said in the agency's Quarterly Banking Profile, published Feb. 26. "Because of this financial strength, the overwhelming majority of banks and thrifts remain well-capitalized and profitable."
you offer two examples ML and LB....NEITHER is an actuall bank, they are (as per wiki on ML) """Merrill Lynch provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related financial services worldwide""".......and LB did go into bankrupsy ....and remember it wasnt just "lehman Bros" is was as of 1975 Lehman Brothers, Kuhn, Loeb Inc., the country's fourth-largest investment bank, behind Salomon Brothers, Goldman Sachs and First Boston, then in 1984 is was brought by Shearson/American Express, to become Shearson Lehman/American Express.[28] In 1988, Shearson Lehman/American Express and E.F. Hutton & Co. merged as Shearson Lehman Hutton Inc, until 1993 American Express began to divest itself of its banking and brokerage operations. It sold its retail brokerage and asset management operations to Primerica[32] and in 1994 it spun off Lehman Brothers Kuhn Loeb in an initial public offering, as Lehman Brothers Holdings, Inc.[33]
the simple fact is that as far as BANKS go (and any other BUSINESS) is a big one fails, the little ones will pick up the pieces
is the airline industry gone just because panam and eastern are gone...nope small ones like jet blue and southwestern picked up the pieces
is the departnment store industry gone because TSS, gimbles and woolworth are gone,,, nope
you say
Quote:
The bailout wasn't for commercial banks, but investment rather investment banks whose assets, what they were, were not insured by the FDIC.
yet....
On Saturday September 13, 2008, Timothy F. Geithner, the president of the Federal Reserve Bank of New York called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets.
if they were not FDIC insured they why was taxcheat geithner (president of the Fed Reserve Bank) involved?????????
the fact is the FDIC does not insure stocks and bonds, or mutual funds,, but it DOES insure all bank savings deposit accounts....and the stocks, bonds and munis are insured under the SIPC
oh and btw,, the largest bank failure is Washington mutual....total assets of 307 billion dollars,,,and wamu had bought williamsburg bank in 1990, american saving bank in 1996, fleet in 2001, and dime in 2002 (all banks that I had banked with) along with about 20 others.....jpmorgan chase bought most of the assets and liabilities, including secured debt for 1.9 billion.......a prime example that other banks would buy the assets and liabilities, including secured debt for pennies on the dollar, as I said before...you asked for "" "concrete facts not wishful conjecture"""
Who is this we? Perhaps you and I could survive that little lesson in frugality but I certainly wouldn't wish depression depth misery on the rest of the country. Sorry.
.
not wishing depression length misery on anyone? whether we like it or not, millions are going to experience it and the more our govt supports this crony capitalist structure the longer that misery will last. we currently have millions of unemployed and many who've seen their pensions obliterated.
they can try and re-inflate the bubble but that would mean a return to the easy money policies which got us here. then what?
i'd really be interested to find out as many diverse opinions as possible. what do you think would've happened immediately after the runs on the banks? what would've happened to all our systems? utilities, food supplies, energy supplies, education, healthcare? who would be worse off, rich people or poor? what would happen to the media? how would we communicate? what would the military do? do you think the gap between rich and poor would grow wider or shrink? what would happen to corporations? who would assume the greater role, federal or local government? what would happen to asset prices? real estate, gold, machinery etc.
lastly, how do you think you'd cope? were you prepared for any dislocations back then? do you think the new reality would've suited you? etc
Very interesting question.
The mantra was "the banks cannot be allowed to fail" and on one level I would agree with that viewpoint.
The structure of the financial markets is such that the banks are more intertwinned than ever before.
Therefore the problems of one bank, are effectively, the problems of many other banks too, due to the interconnectability of the modern structure.
On the other hand, my heart would say let the banks fail because they would never bail out failing institutions.
Interesting question.
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