snappy, the banks are seeing this as limiting their ability to take risks (which many would say is a good thing, others bad). Since risk taking is what makes many insitutitions stronger in the long run. If, IF they know what they’re doing.
It also unbundles several of the mergers of retail and investment banks that kept the latter alive 18 months ago. Then, the strong deposit bases of retail banks like BofA, Wells Fargo etc were needed by the investment banks such as Merrill as it was just about the only source of capital to which they had access.
Under this new regime Merrill would probably have gone to the wall, or it would have needed to find a foreign buyer.
Also, the bad assets have to reside somewhere, and having them housed in smaller institutions either increases default risk or means that even more of them will have to be transferred to the govt.
Denton, you mean GS was short selling the securities as an investment move yet still selling the securities to their clients and saying that those securities were a good buy?
Woulda been MUCH better just to roll back leverage requirements to where they were… dibs, didn’t they go from 14 to 24 or something? (Yes, under Clinton, lol)
The Critics argument is not untested theory, however– it was the same argument that was made in teh 80s and 90s, and they were right in that allowing the diversity of services led to unprecedented growth. But it also removed essential safeguards which protected everyone, and by everyone, i mean people like you and me, who don’t play around in the markets and don’t have much to gain unless you believe in trickle-down economics or unless you rode the housing bubble
Etson, let me see if I am understanding this correctly. He wants to split the banks so that if the investment side of Citi effs up too bad, the regular Citi’s I see on the corner won’t fold. Is that right? But then if that happens, we would be dealing with many small/weak banks without access to capital from their former investment side? Your last sentence left me totally confuzzed. Can you re-phrase that?
“But it also removed essential safeguards which protected everyone, and by everyone, i mean people like you and me,”
Blowfish, which safeguards are you speaking of?
thanks etson,
snappy, the banks are seeing this as limiting their ability to take risks (which many would say is a good thing, others bad). Since risk taking is what makes many insitutitions stronger in the long run. If, IF they know what they’re doing.
snappy, you’re reading it right @ 2.33.
It also unbundles several of the mergers of retail and investment banks that kept the latter alive 18 months ago. Then, the strong deposit bases of retail banks like BofA, Wells Fargo etc were needed by the investment banks such as Merrill as it was just about the only source of capital to which they had access.
Under this new regime Merrill would probably have gone to the wall, or it would have needed to find a foreign buyer.
Also, the bad assets have to reside somewhere, and having them housed in smaller institutions either increases default risk or means that even more of them will have to be transferred to the govt.
Denton, you mean GS was short selling the securities as an investment move yet still selling the securities to their clients and saying that those securities were a good buy?
DIBS, from the NYT article, it sounds to me like Summers and Geithner are on board with this.
http://www.nytimes.com/2010/01/22/business/22banks.html?hp
Woulda been MUCH better just to roll back leverage requirements to where they were… dibs, didn’t they go from 14 to 24 or something? (Yes, under Clinton, lol)
The Critics argument is not untested theory, however– it was the same argument that was made in teh 80s and 90s, and they were right in that allowing the diversity of services led to unprecedented growth. But it also removed essential safeguards which protected everyone, and by everyone, i mean people like you and me, who don’t play around in the markets and don’t have much to gain unless you believe in trickle-down economics or unless you rode the housing bubble
Etson, let me see if I am understanding this correctly. He wants to split the banks so that if the investment side of Citi effs up too bad, the regular Citi’s I see on the corner won’t fold. Is that right? But then if that happens, we would be dealing with many small/weak banks without access to capital from their former investment side? Your last sentence left me totally confuzzed. Can you re-phrase that?