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View Full Version : Banks are "too big to fail"



Wei Wu Wei
10-06-2011, 06:49 AM
Outrage over the bank bailouts is something I've seen in common between Tea Party activists and occupy wallstreet protesters alike. I've heard about this from regular people and political junkies.

I want to know what you guys think about this.

When arguing against more naive liberals, it's often pointed out that the financial sector, including wallstreet, major corporations, and banks are intimately tied to main street.

If corporations suddenly collapse or uproot and leave the country or for whatever reason go away, it would spell disaster for the economy, all the way down to regular working class people. The same is true of the stock market. The same is true of the banking system.

This is what politicians from both parties claimed when they rushed a series of bank bailouts amounting to tens of billions of tax payer dollars. The argument was that if the major banks and financial institutions, the veins which deliver the economic lifeblood of credit to businesses all over the America, were to fail, the stock market would tumble, money lines and credit would dry up, and it would spell disaster all the way down to regular working joe's. Stores wouldn't get their shipments in, companies wouldn't be able to pay their workers, it was said to be an impending financial apocalyse.

This may be true, however there seemed to be something deeply wrong with the idea of financial institutions that drove themselves into the ground, in part because of their own unregulated greed, and in part because of government policies, were to be bailed out when millions of regular people around the country faced foreclosures and layoffs without anyone bailing them out.

A few years later, the major financial institutions are not held to any level of accountability to the tax payers who bailed them out for being "too big to fail", and they are now even bigger than they were before.

thoughts?

Starbuck
10-06-2011, 08:52 AM
Here is a list of the bailed out banks:
http://money.cnn.com/news/specials/storysupplement/bankbailout/
There are literally too many to count, and we know that some of them did not need the money and were forced to take it.
There was 204 billion paid out, and 96 billion paid back so far.

It seems to me the much ballyhooed 'unregulated greed' belonged to the borrowers more than the lenders, and the source of such greed was the policy promoting home ownership for unqualified people.


Banks 'bigger than they were before'?
Who?
Not Bank of America. Here's the 3 year chart:

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=BAC&uf=0&type=2&size=2&sid=147233&style=320&freq=2&time=10&rand=1516979262&compidx=&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

Well Fargo? Nope.
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=WFC&uf=0&type=2&size=2&sid=3457&style=320&freq=2&time=10&rand=645688059&compidx=&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

So, who are you talking about? Who is bigger then before?

Tipsycatlover
10-06-2011, 11:59 AM
Here's a list of banks that weren't bailed out (or maybe they are on the same list) they were simply seized by the govenment.

http://www.fdic.gov/bank/individual/failed/banklist.html

So the government helped big banks become mega banks by seizing small banks and turning assets over to others making them bigger. NOW, complains about banks being too big.

The government really wants NO banks except those owned and operated by the government.

Starbuck
10-06-2011, 02:47 PM
.............So the government helped big banks become mega banks by seizing small banks and turning assets over to others making them bigger...........

Again, I challenge that notion that banks have become bigger or more profitable. Who?

Here's a 5 year chart of financial institutions, XLF. The average has gone from around 37 to around 11. That's not getting bigger. And above, I showed both Bank of America and Wells Fargo. Neither of them has prospered.
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=XLF&uf=0&type=2&size=2&sid=127183&style=320&freq=2&time=12&rand=1067187032&compidx=&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

Molon Labe
10-06-2011, 03:41 PM
I have a close friend who is a socialist. We argue all the time. I try and try to convince him he was initally wrong about the tea party and that it's intial beliefs were sound. This is what I wrote to him the other day when he said he was going to the Wall street events.

He basically told me I should not judge or lump all of these people because I see some hypocrisy in that George Soros is funding some of it and that the unions are all up in this.



Many people I know are working to make this more broad and educate others. People who are really seeking changes will be the kind of people who you can discuss real solutions with. We shall see how receptive they are.

I'm not against protesting per say.....like I said... I support the basic principle of smashing this corporatism oligarchy and restoring a sound economic system. But not a socialist one.

What I find frustrating is that the very same people who are now telling me not to suggest lumping them with BOA or GS, were dismissing the teaparty for the EXACT reasons they say "get on board" this thing and please don't judge.

How many times did progressives tell me how bad it was when AIPAC and the NEOCONS showed up at the tea party. God forbid someone point out that this movement which started out with many different politcal persuasions, is now being coopted by MOVEON, Big Government cronies and SEIU Union thugs. Was the tea party's coopeted? Yes. And is this going on again on Wallstreet? Yes.

And now, many of these jokers are saying they would vote for Obama again? (You know the Goldman Sachs shill that these protesters are supposedly against and who gave the bankers and Wallstreet all they wanted)......Shows me many have no clue who is driving this train. The GOP isn't the only one to blame for the Wallstreet fraud.

George Soros is part of the problem. I know his money is not given freely for the reasons some believe. The establishment's biggest fear is that average people from all political persuasions form an alliance against them. And they are trying their hardest to keep us divided by any means possible. So, as long as people tolerate putting a Socialist/ Marxist label on this then you are going to find that many people sitting on the fence are going to just watch as the Police brutalize and the media marginalize. That's too bad.

The tea party started out as people against the bailouts too and then it morphed into all that you hated. I wonder if those who tried to marginalize them would have sought out to educate, find common ground, with "all hands on deck" in that cause would find some cooperation now?

I'm also getting tired of some conservatives who seek to justify corporate welfare and mistake it for capitalism. It's the same thing as QE1 and QE2, just packaged differently.

If a bank is involved in imprudent practices, it should go the way of the do do.

When they bailed out the banks they did it on the back of you and me and our kids.....the taxpayers. Using tax money to fund welfare goes against the heart of our beliefs and reeks of everything conservatism is supposed to be about.

Yet there are some in this thread praising the filching of American taxpayers by the government to give to Banks.

Lager
10-06-2011, 04:05 PM
I don't think the banks should have been bailed out. Thinking the government would be protecting them from risk, caused them to take on more than they should have. I think the government should do what is in the best interest of all businesses, to a point. But I don't believe in corporate welfare.

fettpett
10-06-2011, 05:03 PM
no bank was too big to fail....if they fail..there was a reason. they should have been allowed to file bankrupcy and move on WITHOUT the Government stepping in like they did with GM and Chrystler

Odysseus
10-06-2011, 05:50 PM
When a large corporation fails, it's not always a bad thing. Creative destruction is part of the business cycle. If GM were to go under, the assets would be purchased and used by other companies that want to buy into the US auto market. Some of those assets wouldn't be picked up, mostly because they are in mandatory union states, but those that are competitive would be, and they would continue to function. The dislocations that occur are difficult for the people involved, but so is an industry's death spiral. Also, the idea of "too big to fail" perpetuates failures on a grand scale, as companies become complacent about their bottom lines. Chrysler's last bailout didn't improve the quality of their vehicles or the attitude of their unions, it just slowed their eventual demise and gave them the idea that government would do it again for them. Now that they've burned through their second bailout, what's next?

Oh, and the difference between the Tea Partiers and the Wall Street protestors is that the TP folks want to be free to engage in commerce. The WS folks want to burn down Wall Street and have no idea what to replace it with. It's the difference between productive adults and whiny adolescents.

fettpett
10-06-2011, 05:57 PM
When a large corporation fails, it's not always a bad thing. Creative destruction is part of the business cycle. If GM were to go under, the assets would be purchased and used by other companies that want to buy into the US auto market. Some of those assets wouldn't be picked up, mostly because they are in mandatory union states, but those that are competitive would be, and they would continue to function. The dislocations that occur are difficult for the people involved, but so is an industry's death spiral. Also, the idea of "too big to fail" perpetuates failures on a grand scale, as companies become complacent about their bottom lines. Chrysler's last bailout didn't improve the quality of their vehicles or the attitude of their unions, it just slowed their eventual demise and gave them the idea that government would do it again for them. Now that they've burned through their second bailout, what's next?

Oh, and the difference between the Tea Partiers and the Wall Street protestors is that the TP folks want to be free to engage in commerce. The WS folks want to burn down Wall Street and have no idea what to replace it with. It's the difference between productive adults and whiny adolescents.

exactly, Saturn never should have been allowed to go the way of dodo because this stupid ass administration pulling the plug on the deal with Pennzoil

Wei Wu Wei
10-06-2011, 06:30 PM
Here is a list of the bailed out banks:
http://money.cnn.com/news/specials/storysupplement/bankbailout/
There are literally too many to count, and we know that some of them did not need the money and were forced to take it.
There was 204 billion paid out, and 96 billion paid back so far.

It seems to me the much ballyhooed 'unregulated greed' belonged to the borrowers more than the lenders, and the source of such greed was the policy promoting home ownership for unqualified people.


Banks 'bigger than they were before'?
Who?
Not Bank of America. Here's the 3 year chart:

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=BAC&uf=0&type=2&size=2&sid=147233&style=320&freq=2&time=10&rand=1516979262&compidx=&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

Well Fargo? Nope.
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=WFC&uf=0&type=2&size=2&sid=3457&style=320&freq=2&time=10&rand=645688059&compidx=&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=335&width=579&mocktick=1

So, who are you talking about? Who is bigger then before?

Those charts are looking at stock prices. The value of their assets may have dropped, but they acquired far more assets overall.

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082704193.html

Starbuck
10-06-2011, 09:44 PM
......... The value of their assets may have dropped, but they acquired far more assets overall...........
Really can not make heads or tails out of that statement.

But that what your article says, too, so I understand your source. Bank of America, your source says, grew 138% since it acquired Countrywide and Merrill Lynch

OK. So they are bigger. Did they make any money? No. Here are the figures:
http://www.marketwatch.com/investing/stock/BAC/financials


Total Net Income in millions
12/2010 -2,238.00
12/2009 6,276.00
12/2008 4,008.00
12/2007 14,982.00

That most often repeated phrase "government is in the business of picking winners and losers" just doesn't work out. Government is in the business of picking losers. Winners are doing just fine.

The government should not have bailed out the banks, except that if they hadn't then (I am told) we would have touched off a world wide financial crises, much worse than the one we enjoy now.

But are the banks all getting richer? Doesn't look like it.:confused:

Rockntractor
10-06-2011, 09:54 PM
Really can not make heads or tails out of that statement.

But that what your article says, too, so I understand your source. Bank of America, your source says, grew 138% since it acquired Countrywide and Merrill Lynch

OK. So they are bigger. Did they make any money? No. Here are the figures:
http://www.marketwatch.com/investing/stock/BAC/financials


Total Net Income in millions
12/2010 -2,238.00
12/2009 6,276.00
12/2008 4,008.00
12/2007 14,982.00

That most often repeated phrase "government is in the business of picking winners and losers" just doesn't work out. Government is in the business of picking losers. Winners are doing just fine.

The government should not have bailed out the banks, except that if they hadn't then (I am told) we would have touched off a world wide financial crises, much worse than the one we enjoy now.

But are the banks all getting richer? Doesn't look like it.:confused:

The lib play book now says knock banks, protest banks. Wei has no mind of his own, he marches in lock step to the socialist drum.

Elspeth
10-06-2011, 10:15 PM
Bank of America's asset drop had to do with their forced purchase of Countrywide and all those subprime mortgages. Paulson forced them to buy this worthless company and its worthless paper.

Speaking of which, my local B of A has just put up bulletproof glass. I do not live in a dangerous area, but actually a fairly decent area. I haven't seen bullet proof glass on a bank since I left LA years ago. I wonder if they are expecting trouble.

Occupy LA went into the downtown LA B of A and tried to cash a check for the value of the entire 2008 bailout. B of A asked them to leave and most did, but 10 got arrested because they refused to move. Just wonder if B of A expects more of this.