To big to regulate, to big to bailout, to big to fail...

[Trajan]

so where does that leave us? Dodd-Frank? Nope won't get it done, they broke up Ma Bell, maybe its time to break up the 4 biggest banks?

free article, read on...

JPMorgan’s Follies, for All to See
By GRETCHEN MORGENSON
Published: March 16, 2013

That’s the takeaway for both investors and taxpayers in the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at JPMorgan Chase. The financial system, thanks to dissembling traders and bumbling regulators, is at greater risk than you know.

After bailing out the nation’s banking system in 2008, taxpayers and investors have been assured that such a crisis will not happen again. The Dodd-Frank legislation was supposed to make our system safe from the kinds of reckless banking activities that brought the economy to its knees.

The Senate report disproves this premise with vigor.

Its pages of e-mails, testimony, telephone transcripts and analysis show that traders in the bank’s chief investment office hid money-losing derivatives positions, if only temporarily; that risk limits created by the bank to protect itself were exceeded routinely; that risk models were changed to minimize losses; that bank executives misled investors and the public; and that regulations are only as good as the regulators enforcing them.

please read the rest-
http://www.nytimes.com/2013/03/17/b...e-in-a-senate-report.html?pagewanted=all&_r=0

 

[jwoodie]

...and here I thought Cyprus was a tiny country...

 

[Trajan]

 

[Emir]

One point which needs to be made is that the current situation of "too big to fail" banks is not the norm in recent history. In the early 1990s there were thirty-seven major national banks. 37. In just two decades those thirty-seven banks were merged into the four giants we know today; Citigroup, JP Morgan Chase, Bank of Ameria, and Wells Fargo.

How did this happen? The answer is as convoluted as one might expect when talking about Wallstreet, but the basic theme is the subversion of the Glass-Steagall Act. The Glass-Steagall Act was passed in 1933 during the height of the Great Depression to address the collapse of the banking system. The provisions of the Act worked well enough until about 1970, when various interests colluded to subvert the law, allowing investment and commermicial banks to merge, for healthy banks to merge, for all sorts of merger to occur which violate the spirit of the anti-trust legacy of Theodore Roosevelt and William Taft.

I saw all of that to propose that breaking up the big four won't be enough. Given time they will merge back together and we will be back to square one. What we need to do is reimplement Glass-Steagall in order to protect the financial sector from itself and insulate the American people from Wall Street.

 

[Trajan]

that would be a start, I agree.

( Cicero?)

 

[Emir]

that would be a start, I agree.

( Cicero?)

Added the source. And yeah, I've always admired Cicero, and his sculpture is too awesome to not steal.

 

[PaulS1950]

My bank is not on your list. It is one of the healthiest banks in the USA and the only bank in the USA to have ever loned money to Lloyds of London to bail them out.

They are still under the FDIC rule But I am going to limit my liabilities in the US dollar. I can see what is coming and why the government is making preparations. I would rather be able to ride it out with my savings intact.

 

[waltky]

Granny says is `cause dat do-nothin' Congress ain't doin' nothin' `bout it...

'Too big to fail' remains a problem
3/20/13 - Federal Reserve Chairman Ben Bernanke said Wednesday that he still views "too big to fail" banks as a "major issue" that must be addressed.

Bernanke told reporters that the lingering concern about whether the nation's biggest financial institutions are perceived as enjoying a government lifeline is still a challenge for regulators. He added that while new tools created by the Dodd-Frank financial reform law are aimed at addressing the issue, further action may be needed to put the matter fully to bed. "I don't think 'too big to fail' is solved now. We're doing a number of things which I think will help," he said. "If we don't achieve the goal, I think we'll have to do additional steps ... it's not just something we can forget about."

Bernanke and other regulators have been pressed by lawmakers in both parties about whether big banks still enjoy the implicit backing of the U.S. government since the financial crisis. And while regulators and Dodd-Frank backers insist the law provides the tools to prevent future bailouts, Bernanke acknowledged that the perception has persisted to some degree. "Too big to fail was a major source of the crisis, and we will not have successfully responded to the crisis if we do not address that issue successfully," he said.

He also told reporters that he had discussed his future at the Fed "a bit" with President Obama, but offered no insight into his plans. Bernanke is completing his second term as Fed chairman after Obama re-nominated him for the position in 2010. His term is set to expire at the beginning of 2014. Bernanke is reportedly not interested in serving a third term at the Fed's helm, and emphasized that the Fed is deeply staffed with capable individuals. "I don't think that I'm the only person in the world who can manage the exit," he said. "There's no single person who is essential to that."

Bernanke's remarks came after the Fed announced that it was maintaining its existing, extremely accommodative policy in the face of a slowly improving economy.

Read more: Bernanke: 'Too big to fail' remains a problem - The Hill's On The Money

 

[waltky]

Granny says, "Dat's right - dey oughta just let `em fail...

‘Too big to fail’ fears rise as banks bulk up; lessons from past forgotten?
Tuesday, March 26, 2013 - Nearly three years after Congress passed the most far-reaching new regulations on Wall Street since the Great Depression, worries have resurfaced that the biggest U.S. banks have only grown in size and remain bailout candidates because they are “too big to fail.”

The latest fears cropped up as a result of statements by Attorney General Eric H. Holder Jr., who raised hairs on Capitol Hill last month when he testified that the Justice Department hasn’t indicted any of the major U.S. banks or their top officers in cases of financial crimes in the wake of the 2008 global financial crisis because he has been concerned that doing so might hurt the economy or destabilize financial markets. “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” he told the Senate Judiciary Committee. “That is a function of the fact that some of the institutions have become too large … [which] I think it has an inhibiting influence.”

Though Mr. Holder’s testimony didn’t initially get much publicity, his comments soon provoked outrage across a broad spectrum of legislators, from conservatives such as House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, to liberals such as Sen. Sherrod Brown, Ohio Democrat. Key legislators have since written Mr. Holder to demand an elaboration of his statement, which on its face amounts to an admission that the 2010 Dodd-Frank Wall Street reform law signed by President Obama did not accomplish one of its major goals: ensuring the government would never again have to worry about “too-big-to-fail” banks.

Sen. Bob Corker, Tennessee Republican, and Sen. Mark Warner, Virginia Democrat, questioned whether Mr. Holder was placing the top executives of the world’s biggest banks above the law and pointed out that the Wall Street reform law was supposed to remove the danger that such banks pose for the economy when they massively fail by setting in place procedures for the government to take over and liquidate the banks. “Like many of our colleagues, we believe that criminal behavior at any institution ought to be prosecuted,” they wrote. “If the administration believes that the orderly liquidation process is insufficient in some respect, then the administration and Congress should address any necessary changes right away to ensure that no institution is ‘too big to jail.’”

Fed worries

 

[Trajan]

past is prologue