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Brits Reject 'Too Big to Fail'
In a move that may come as early as Tuesday, the British government will be chopping up its major banks that were bailed out by taxpayers. Under pressure from European regulators, Britain will be forcing the Royal Bank of Scotland, Lloyds Banking Group, and Northern Rock to sell off parts of their operations. Across the pond, the U.S. has been reluctant to make similar moves, arguing that there needs to be a solution for liquidating large banks that go bust. Advocates of downsizing say that large financial institutions take enormous risks because they assume the government will bail them out. America's three largest banks, Bank of America, J.P. Morgan Chase, and Wells Fargo, control about one-third of the nation's deposits and are the main players in providing mortgage loans and credit cards. Experts are piping up, and most seem to support nationalization of the banking system.
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This is great news and I hope the US soon follows in their footsteps.
Now, watch the "conservatives" attack Obama for "not taking action like Britain" then accuse him of being a Marxist who want to take over everything all in the same breath with no recognition of the inherent contradiction.
Spot on.
Of course if he had broken up the banks, the conservatives would have accused him of destroying the free-market and micromanaging the economy.
"Good news" would be when the USA abolishes the privately owned and operated Federal Reserve system. It has ruined this country and Alan Greenspan should be in jail. No longer should the Federal Reserve system be allowed to suck the blood out of us.
The USA needs to nationalize the banking system.Chase and
the other banks are a bunch of crooks.Their CEO's need to be
prosecuted.The USA is going down the drain.The banking,
Healh, and political systems stink.Why? Because greed.
All these entities are becoming like the crooked republican
senators -----> they worship money instead of worshiping
god.If the USA leaders keep being greedy.In the future
other countries will not respect the USA.And what is more
important the USA taxpayers will not respect their own country.
Octavy, tell us how you really feel.
Nationalize the banks? Are you nuts? Just what we need is another micromanaged bureacratic Venezuela / Mexico on the planet!!!!! Hell, that would make the "bank" the biggest, and that is the real problem here.
We "bailed" out these banks to help them instead of holding them accountable, and in the results we got bigger banks, not more competitive ones.
Breaking up the banks because they are becoming monopolies would be the best solution. More, smaller banks are more competitive. Washington Mutual was a terrific bank until it got too big for its britches and joined in the stupid housing mortgage mess which was designed and endorsed by the Democrats by the way (Maxine Waters and Barney Frank were key architects of that one).
Once you have "one" bank, all the nonsense that is going on right now will happen more secretly, more widely and more aggressively.
Nationalizing anything is a terrible idea that puts too much power into a few, non elected peoples hands. That is a breeding ground for corruption and mismanagement. And, that is another reason for being strongly against the health care "solution".
Yeah. Break em up and separate deposit banking from investment banking. Then make it clear there will be no bailouts except for FDIC regulated and insured banks.
If people want to take risks, so be it, but risk means you can lose your investment - all of it.
ConstitutionalRights: We have already put too much power into the hands of a few non-elected people: the CEOs of our five biggest banks.
It is time for us to take away their power.
Bad news on both fronts. The first is going to push the UK back into recession. The second is a complete abbrogation of everything the US has stood for for the past 80 years.
The real problem is that the banks were allowed to grow too large before breaking them up on anti-trust grounds.
I don't agree with the class hatred demonstrated by Octavio and many of the Dems. OTOH, what we have now is an oligarchy (The last step before monopoly) and the only way to fix it is to break up the oligarchs.
I wouldn't say that so-called "class hatred" is a uniquely democratic issue. People the world over are disgusted by the incomprehensible amounts of money that a few people made before the fit hit the shan.
"that a few people made before the fit hit the shan", and that those same few individuals continued, and are continuing to make after the fit hit the shan.
Perhaps if we re-implemented hanging the cretins in the public square we could keep the fit from hitting the shan in the future. Alas,
Class hatred or a cold dose of reality? In the United States, wealth is highly concentrated in a relatively few hands
As of 2007, the top 1% of households owned 34.6% of all privately held wealth, and the next 19% had 50.5%. That means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%
That bottom 80% happen to be the people without whom America collapses, but on whom Americans apparently place no value. Try going to a grocery store, if no one is there to stock the shelves, cut the meat, bake the bread or run the cash register. Try getting your dry cleaning done, going to a movie, a drug store, a department store, a restaurant or a bar without that 80%, who are hard-working people working for so little that they often must have two jobs.
In 1965, U.S. CEOs in major companies earned 24 times more than an average worker, and everybody seemed to get along pretty well. That ratio grew to 35 in 1978 and to 71 in 1989. The ratio surged in the 1990s and hit 300 at the end of 2000. By 2005 the average CEO was paid $10,982,000 a year, or 262 times that of an average worker ($41,861).
In 2005, a CEO earned more in one workday (there are 260 in a year) than an average worker earned in 52 weeks
So! Your point being what?
Johnnyappleseed: I think Connie's point was that it is time to bring back the 90% marginal tax rate that we had in the 1950s for the wealthiest Americans, along with a 50% inheritance tax (or "death tax" for you conservatives).
Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.
E pluribus unum is surely an ironic motto to inscribe on the currency of this Utopia gone bust, for every grotesquely rich American represents property, privileges, and pleasures that have been denied the many. An even more instructive motto, in the light of history made by the Noah Rosewaters, might be: "Grab much too much, or you'll get nothing at all."
K.V., Jr.
God Bless You, Mr. Rosewater
Yuck; you said it.
This is the current status quo version of gop Amerika.
When corporate aligns with gov't you have fascism, i hear.
I'm glad the dumb US government hasn't tried that here. i was just wondering if i was the only person who worked for a living? seem like a bunch of noise from people looking for the government to take care of them. dose the government need to take over your bedrooms to satisfy your spouses to?
Since you WAS the only person who worked for a living, this means you are currently unemployed, and our "dumb" government is most probably taking care of you (and your wife) with unemployment benefits. Have you sent them a thank-you note?
DH I'm retired at 49 after serving the city of NY for 28 years. how about you?
NewyorkerR is one of those people whose pensions are bleeding New York dry, retired at 49. No wonder he doesn't want to see change.
remember i will not be getting a SS check but i will be starting my new career. i mean someone need to work to pay for your Liberal projects and payoffs.
Nobody works but you, right? I've been self employed for 40 years and still am. My husband was a Navy fighter pilot for 25 years and now works full time at another job.
connie so you are getting a government check. i working union all my life and will continue to in a new field I would benefit more from the Dem's in office. but what we have here in office are Communists and a government with to much power never works.
Exactly how am I getting a government check please?
did you not say your husband was retired NAVY? or are you just full of BS
Looks like the union worker thinks he should be paid for his work, but the people who fight our wars should not.
Yeah, you're a real patriot and in a fine position to be calling people "communist."
And you served when and where?
ANSWER THE QUESTION. if your husband served as a officer in the US military for 25 years unless he was dishonorably discharged he gets a pension check from the government. and he would deserve every penny.
My husband was honorably discharged and receives compensation for his 25 years of service.
He has no need of your approval or disapproval. You are a vile person.
Thank you husband for his service. if he still talks to you but, i suspect he divorced you.
You continue to make my point about you. We're very happily married and he's quite open about the fact that he did not serve for people like you.
He declines your thanks.
I'm glad that someone has learned to conjugate verbs and has mastered the art of pluralization. Indeed your grammatical mastery is surpassed only by your spelling. Maybe you would like to make a cogent argument? But I suppose that is hard when others thoughts just seem like "noise".
They cant balance a check book so let let them run the banks. ya makes sense to me.
The banks you refer to took excessive risk and almost destroyed our entire economy. They had to be stabilized at a cost to us taxpayers of billions. So yes, simple common sense dictates that they be regulated by the people's representatives to prevent this from happening again.
Can we all agree to permanently retire 'across the pond?' Please?
This has nothing to do with this subject..... .....France and Germany did not go along with Great Britain and the USA on the stimulus package, they are now out of their recession.
I think this should be telling us something.
And what pray tell is it they should be telling us?
Obama made a big mistake by passing this stimulus pkg. it did absolutely nothing to enhance the economy or getting job growth going. My point is Germany and France reneged on the stimulus because they learned from past mistakes it did not work.
Now France and Germany are out of their recession and we are still spiriling down.
Do you get it now? You will in your taxes.
It tells us nothing..French and German banks were not leveraged 100xtheir assets
There is no comparison whatsover.. The French Natoinal banks did not need bailed out, they held assets at 75% of each loan the made..0.75 euros to every euro they loaned out.
Our banking problems were over leveraging on fixed assets. When the devil called in his bets (Hedge Funds) our financial system did not have the cash.
So what is your point winston1?
we will be seeing the stimulus money spent in 2010 to help the Dem's election attempts. it was never meant to help the economy just a massive pork bill are grandkids grandkids will be paying.
If the stimulus money spent in 2010 does not help our economy, how will it help the Dems be re-elected?
NewyorkerR- If you came here just to be an asshole, you really should learn to write at better than a third grade level before putting your foot in your mouth. No "guessing" at which word to use in Spell Check would be a fine start.
What it tells us is that their stimulus packages must have worked! Germany passed a $66 billion in Jan 09 and France passed a $40 billion package in Dec 08.
France and Germany have solid and generous social safety nets and universal health insurance. That should tell you something.
Well at lease the Brit's give a damn about their citizens unlike the US you has a government for the corporations based on a right wing Supreme Court ruling stating Corporations are people & therefor giving them the right to buy all of the Senate & the house....
Every member of our so called government for the people should have every member of the Senate & House were shirts with the mane of the Corporations that they really work for, every shirt should have the amount of money they get say just from the top 10 donors plastered on them......
As for the ignorant right wing republicans that support these corrupt fools more then the Democrats, there should be an opt out in the health bill, let the stupid ignorant religious right wing tea party imbeciles see their elected folks say no to it... OH yes, I forgot the vote should be the Senators & the governors & the State houses combined....
Nationalization of our banking system is not the answer. Government regulation gave us the problems of the "too big to fail" syndrome. Conservatives don't believe in the "too big to fail" crap. You screw up, you fail. It's that simple. Pain will be short and well deserved instead of the long drawn out trip we're on now. Government intervened and you now have banks scared to death and unwilling to lend, so government will again step in and tell them they HAVE to lend and we'll be right back to where we started from, which was government telling banks they had to lend money to people who were bad credit risks. Thank you government idiots who love control and vicious circles for throwing away taxpayer dollars instead of sound proven fiscal policies.
GrannyRob: It was the lack of government regulation that allowed banks to grow "too big to fail".
Check out the Republican repeal of the Glass-Segal Act in 1999. Republicans seemed to think that America was "too big to have another depression". Boy, were they wrong...
I would only support partial nationalization, even though I'm a democratic socialist, I do not want the government to control the ENTIRE banking system.
I think AIG should stay nationalized and be run as a public service, providing insurance to low and moderate income people, with all the junk assets dumped in a bad bank somewhere.
Some of teh big US banks should also stay nationalized and be run as a public service for low and middle income consumers and small businesses, but others should just stay in private hands, as long as they are regulated.
I would not want to give the government TOO much power over the whole financial system, but at the same time it should not stay completely under the control of private capitalists.
I also think we need a national investment bank, funded by the federal government and the states.
They seem to have figured out how to do it. But we can't? Another blog on the greedy banking industry is at; http://wp.me/py8nt-34
The Britts show themselves willing to do what we here in the United States are too idiotic to do due to ideological absolutism.
I don't agree with these bailouts we gave the banks. I think we were sold a convenient lie that the entire financial system of the entire world was going to collapse if we didn't start handing out billions of dollars because these banks were "too big to fail".
They were too big, yes, which is why they should have been broken up before they got to those stages but "conservatives" won't allow such 'government interference with the free market'. Still, I don't think they were "too big too fail". Note how quickly they've bounced back, showing record profits and bigger bonuses than they gave out in fat times. If what they said before was true, then what we see today would not be possible.
Either way, we gave them the bailouts but at the very least these should have came with the sort of regulations that had kept this sort of thing from happening for decades and on the condition that they must break up.
So here we are today and they truly are too big to fail. And taking the same, if not worse risks than before, with nothing to lose in the bargain.
We didn't avert financial armageddon last year but one is coming. That is if we don't have the sense to STOP THEM NOW! Break them up before it's too late.
You nailed it Dragon.... Either break them up or go back to older regulations.. A bank is a bank, it must maintain a reasonable amount of $$$ assets per loan. NO specualtive investing..
Reinstating the Glass-Segal Act would be a good first step, DragonScorpion.
For those who would compare the US financial/Bank system melt down to those in France and Germany, you are not comparing Appless to Oranges..
The French and German Banking systems held assets at 75 and 60% respectively . Using France as an example, this means that their loan exposure was backed up with 75 euros to every 100 they loaned out. The had not over leveraged themselves like the US system had.
Also both countries had invested in mature markets and avoided most of the risk that US banks embraced. Both had write downs to be sure but they were at much lower percentages (France 3% Germany 9%) than US banks (55%)
Therefore, they did not need any bailout..
On the other hand, slmpirate, Paul Krugman said that Germany's recession was much more severe than ours was. So did they still have banking problems of some sort, or was their problem in other areas, such as a drop in exports?
Good question AlanD2,,, I work for a german company and we have been very big on maintaining a hig level of liquidity versus floating stock to raise money for expanding business (Wall street has always chastised us for that). We have seen a big decrease in earnings over the last year and half as the downturn has hit our product sales and contracts just like everyone else. I will tell you that my company had been seeing this coming since 2006.. and we have been preparing.
I did read that the French banking system DID get some infusion of money over two years (2007-2008) from the government and that the money offset 18% of their exposure to the global market risks.
People, the fact is... Barney Frank has already proposed very reasonable legislation that balances the need to unwind failing institutions without turning the clock backwards to pre-glass segal.
I am glad The Daily Beast readers are not legislators
read barneys proposal at
http://www.house.gov/frank/pressreleases/2009/10-29-09-resolution-author ity-heaing-geithner.html
it basically gives the government the power to unwind these giants, but only when the giants are sick and in trouble.
laughorcryagain: Why are you talking about "turning the clock backwards to pre-glass segal."
The Glass-Segal Act was passed by Democrats after the Great Depression to curb questionable banking practices that led to the depression.
After Republicans repealed the Glass-Segal Act in 1999, banks went back to these questionable practices. And guess what? We got the same result - the worst recession since 1929, which could easily have been Great Depression II if the stimulus bill had failed.
It's time to reinstate the Glass-Segal Act and force banks to sell off their speculative financial operations.
AlanD2
I find it facinating that you want to take power away from one group (the banks) and give it to a bigger group (the government).
With the banks, they have to report to the stockholders, the banking commission, the deposit holders. But with the governement, there is unelected bureacrates nominated to control them. Hmmm, are you thinking clearly?
Taking power away from one greedy group and giving it to one unresponsive, unaccountable, historically paralyzed and poorly performing group like the government suggests you have not thought through this clearly.
It is the government that has created this mess, the banks are just playing within the rules they are given. The fact that the banks succeed at our expense is a direct result of our government.
Ask yourself this:
1) Who allowed interest rates to be raised to the levels they are today?
2) Who oversees the banks?
3) Who gives the banks their licenses?
4) Who allows the banks to have one division for credit cards and another for traditional banking?
5) Who created the Fannie Mae housing mess that was thrust onto the banks by force?
6) Who gave some banks bailout money while allowing other banks to fail?
The problem is the government, and putting them in monolythic control of the banks would just make us that much more enslaved to them.
I have been reading your posts for some time. You seem like a intelligent person, but I am stunned that you consistently seem to endorse policies that restrict us or force us to be more endentured to "the man".
Your devotion to the Democrats is surprising, as you fail to recognize that this history of the "party of the people" is one that restricts freedom, punishes innovation, eliminates competition, and tries to dominate the people through regulation.
If you take an honest review of the practices of the Democratic Party, and the results of their efforts, you may want to rethink your position if you really want to protect the people and their freedoms.
ConstitutionalRights: The banks virtually destroyed our economy. For the time being, I would prefer to minimize their ability to repeat this.
I hate to say it, but the rest of your post just sounds like Fox News. The Republican Party has consistently restricted our freedom - Patriot Act, allowing the CIA to spy on all Americans, ignoring habeas corpus, etc.
As for eliminating competition, this is the tradition of big business, supported by Republicans.
And regulation? Which party wants to abolish abortion and make gay marriage illegal everywhere?
If you take an honest review of the practices of the Republican Party, and the results of their efforts, you may want to rethink your position if you really want to protect Americans and our freedoms. Think about it, CR. You seem like an intelligent person too.
Thank you.
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