gonegolfin
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Check out the Financial Times article ...
FT.com / In depth - Wall Street crisis hits stocks
Did you catch the following little nugget?
"The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries."
The Glass-Steagall Act (which was repealed in 1999) has now been completely obliterated. Might this have been the sweetener for Bank Of America to offer such a sweet price for Merrill Lynch Sunday evening (which was set to plunge to single digits Monday morning if they had not been purchased before the markets opened)?
This is serious and has ramifications far beyond that of the Bank of America purchase of Merrill Lynch. This provides license to the banks to use depositor funds to aid its investing banking operations (offset losses). Depositor funds should be kept safe. But the exact opposite is happening all in the name of saving our financial institutions. For all the talk about stiffer regulations on financial institutions (translated - only when it provides more power to the Federal Reserve), this is the disintegration of a very important rule.
What has happened in the last couple of weeks is absolutely stunning and should make people nauseous at the thought of providing more power to the Federal Reserve.
Brian
FT.com / In depth - Wall Street crisis hits stocks
Did you catch the following little nugget?
"The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries."
The Glass-Steagall Act (which was repealed in 1999) has now been completely obliterated. Might this have been the sweetener for Bank Of America to offer such a sweet price for Merrill Lynch Sunday evening (which was set to plunge to single digits Monday morning if they had not been purchased before the markets opened)?
This is serious and has ramifications far beyond that of the Bank of America purchase of Merrill Lynch. This provides license to the banks to use depositor funds to aid its investing banking operations (offset losses). Depositor funds should be kept safe. But the exact opposite is happening all in the name of saving our financial institutions. For all the talk about stiffer regulations on financial institutions (translated - only when it provides more power to the Federal Reserve), this is the disintegration of a very important rule.
What has happened in the last couple of weeks is absolutely stunning and should make people nauseous at the thought of providing more power to the Federal Reserve.
Brian
