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http://baselinescenario.com/2010/05/30/the-consensus-on-big-banks-shifts-but-not-at-treasury/#more-7668
This is a good article related to the thoughts on breaking up the big 6. I think that it could have, and probably should have happened. I think that we could have survived the failure, and that we took a lot of steps back down into a hole when we decided to bail them out. Anyone's thoughts?
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As I've made clear in class, I agree the big banks should be broken up. I like this article because it does a really good job of explaining why the US's culture has prevented us from doing this.
ReplyDelete"In all this, Geithner was betraying the extent to which he shared Wall Street’s mind-set, even if he wasn’t a creature of it."
This is such an important point. I honestly don't believe the regulators are behind the scenes taking bribes from the banks or anything remotely close to that. Instead, they are victims of that culture and probably truly believe that bailouts are the best solution. Yet another reason why Obama needed to pick outsiders instead of wall street veterans for his economic advisory team.
Sorry for the second comment, but I just saw an ad for Citibank that said "We're really a small bank with big opportunities." Looks like they might be getting worried about being broken up.
ReplyDeleteAlso, important to remember that it doesn't have to be the US that decides to break the banks up - they are multinational corporations with assets everywhere.
I definitely agree that the banks should have been broken up. I am glad that the Europeans are leading the way and taking a more strict policy against the size of these corporations and the potential risks that go along with "too big to fail" companies. Hopefully, they will initiate reform and the U.S. will follow.
ReplyDelete"Our top policymakers are simply convinced that what is good for the biggest and most dangerous element on Wall Street is good for the American economy."
ReplyDeleteThis article points out that the culture of our american financial system has in a sense brainwashed our policy makers. This is scary because if these policy makers are not influenced by incentives from wall street and really do trust their concepts about financial reform and market behavior we need some change. Greenspan was stubborn and trapped in his beleifs about the economic outlook during the buildup to the financial crisis, hopefully the mindset of these policy makers can somehow be diverted.
Great article but I have one tangentially related point. I think until Americans stop voting one with our mouths and another with our wallets nothing substantial is going to happen. The reason these banks are so big is because we keep giving them our money (in many cases with a few exceptions.) The fact of the matter is if Americans put there money where their mouths are (literally) these banks would be broken up, not by policy, but by the "all mighty free markets."
ReplyDeleteI'd have to agree with Matt. It really has become a part of our culture and it looks like we need to break out of the old paradigm if we are to move on to new financial structure and policies. It would be nice to see as the current big 6 is a scary idea to many. Nonetheless we rely so heavily on them I don't know if they will be broken up anytime soon. I think there would be a lot of wallets hurting and complaining if the idea of breaking them up becomes solvent.
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