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I misread that to be \"Glass Seagull\" and I wondered, why would anyone want to kill a glass seagull?
I misread that to be \"Glass Seagull\" and I wondered, why would anyone want to kill a glass seagull?
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Love the Shattered Glass reference.
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Nice Buffy reference!
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Oops - sweeping changes to regulation (more or less) has unintented consequences. Shocking! I hope that more people would carefully consider the long-term consequences on policy changes prior to acting. Maybe it's the lobbyists who're espousing the brunt of the myopic views.
Sad, because there really is so much work to be done.
@Coelacanth: actually this is less sweeping changes, and more how deregulation is a BAD THING and when your society isnt a \"free market\" in the first place, deregulation only leads to bad things happening.
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@Falcon5768: I wouldn't go that far. I think that you can counter balance regulation and deregulation. For example, you can up reserve requirements and require reserves for every account, policy, swap, stock, etc. a financial institution has and allow them to operate as they have.
You can let them operate how they are, but state that you can't be bigger than X in size, so that if they fail, they don't drag the economy with them. The only issue there is that if all the banks take the same risks, you could have multiple small failures.
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@ARP: It is hard if not politically impossible to set some arbitrary maximum size. And what if a company right at the edge has a highly successful year and grows 10%? Should we then tell them to fire all the people they hired on?
It seems smarter to charge banks FDIC rates that incorporate their actual risk. Big banks == big risk, which translates to substantially higher FDIC rates. This means higher costs for big institutions, which means banks cannot grow indefinitely since they would no longer be able to afford the insurance. We also need to take off the arbitrary cap on how much capital FDIC can have, currently set at 1.5% but they are supposed to try to keep their capital low at 1.25%.
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@statgrad:
Banks grow by purchasing competitors. A law eliminating bonus payments for the CEO the buying institution or the purchased institution would put a stop to the creation of \"too big\" to fail institutions.
@cowboyesfan: Eliminating bonus payments for CEOs is not a free market solution and also can be worked around (e.g. options). Setting FDIC insurance rates to charge big banks directly for their systematic risk is a free market solution and will reduce the size of the largest banks.
This is known as the Robert McNamara Syndrome, although fewer people died.
I worked for Citicorp when Reed became chairman. His background is actually in engineering and he was the guy who got Citi's ATMs up and running. The first bank to do that. For that he got promoted because people could get their dough 24 hours a day, and people flocked to the bank. But he also presided over their first meltdown back in the 80s when he had to get some sheik from Dubai to buy $454,000,000 worth of non voting, preferred stock to prop up the bank. So, he's used to screwing up.
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+5