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15 hours ago, Guy Chamberlin said:

After awhile, all those regulations got whittled down, allowing traditional banks, insurance companies, and basically anyone holding huge amounts of other people's money to live the high risk/high reward lifestyle of Goldman Sachs, tying the U.S. and world economy to a doomed ponzi scheme those regulations were designed to avoid. 

 

Good post. But please do not just dump that statement there as some kind of mic drop on the behemoth multinational banks without also pointing out that our own government has made a mockery of fractional reserve banking with what the Fed does with Quantitative Easing and basically-free lending vis-a-vis squashed interest rates. We are enabled to go into debt with this paradigm.

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35 minutes ago, Undone said:

 

Good post. But please do not just dump that statement there as some kind of mic drop on the behemoth multinational banks without also pointing out that our own government has made a mockery of fractional reserve banking with what the Fed does with Quantitative Easing and basically-free lending vis-a-vis squashed interest rates. We are enabled to go into debt with this paradigm.

 

I can assure you that I have never, ever, supported the mocking of fractional reserve banking. 

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On ‎8‎/‎14‎/‎2019 at 3:47 PM, Guy Chamberlin said:

 

Post 1929, the economy was structured to ensure that banks behaved like banks, protecting the deposits of customers, maintaining a guaranteed minimum cash:loan reserve, investing in the community, and avoiding the more high risk investments allowed other financial institutions. After awhile, all those regulations got whittled down, allowing traditional banks, insurance companies, and basically anyone holding huge amounts of other people's money to live the high risk/high reward lifestyle of Goldman Sachs, tying the U.S. and world economy to a doomed ponzi scheme those regulations were designed to avoid. 

This is bass ackwards.   Banks failed all the time before the creation of central banking in the Federal Reserve. And they still make profits as they're supposed to in capitalism.

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7 hours ago, Notre Dame Joe said:

This is bass ackwards.   Banks failed all the time before the creation of central banking in the Federal Reserve. And they still make profits as they're supposed to in capitalism.

Uh, you didn't really dispute what he was saying, and he didn't mention anything about the Fed. So... What's backwards about ensuring that banks aren't engaged in wild speculation with people's life savings?

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7 hours ago, Notre Dame Joe said:

This is bass ackwards.   Banks failed all the time before the creation of central banking in the Federal Reserve. And they still make profits as they're supposed to in capitalism.

What? You don't think the regulations put in place after the Great Depression kept banks for failing until the Great Recession? In particular, Glass-Steagall which was rolled back in 1999. 

 

Also, banks not only failed to make a profit but many would have gone bankrupt had the government not bailed them out just a decade ago.

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10 hours ago, Notre Dame Joe said:

This is bass ackwards.   Banks failed all the time before the creation of central banking in the Federal Reserve. And they still make profits as they're supposed to in capitalism.

 

Seems like you didn't read the post, or had your response crafted regardless. I know it's lonely for you here, but try to do your homework first. 

 

Anyway......this isn't really a partisan debate as much as it is a simple fact. Glass-Steagall is a good place to start. Cause and effect is pretty obvious.

 

https://www.investopedia.com/articles/03/071603.asp

 

 

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10 hours ago, Notre Dame Joe said:

This is bass ackwards.   Banks failed all the time before the creation of central banking in the Federal Reserve. And they still make profits as they're supposed to in capitalism.

 

This is a really interesting subject for me.  I remember somewhere around the end of 2005 or in 2006 sitting with my father and several other people.  Remember, this was when things were really flying high. Economy was booming.  We were discussing what worries us about the economy.  My father, being much younger and was a very smart man....mentioned the bank deregulations.  He thought it was a really bad idea to allow banks to also be involved in insurance and investing.  Fast forward a year or so and the entire system crashed.

 

Deregulating this under the Bush and Clinton administrations was a horrible HORRIBLE idea and lead directly to the great recession and banking crisis.  


Interestingly now....my father is much older and his mind isn't what it used to be...he sits and watches Fox News all day and he somehow thinks deregulation of the banking industry is a great idea and those horrible Socialist Democrats are ruining America by burdening our financial system with so much red tape and regulations.

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2 hours ago, Guy Chamberlin said:

 

Seems like you didn't read the post, or had your response crafted regardless. I know it's lonely for you here, but try to do your homework first. 

 

Anyway......this isn't really a partisan debate as much as it is a simple fact. Glass-Steagall is a good place to start. Cause and effect is pretty obvious.

 

https://www.investopedia.com/articles/03/071603.asp

 

 

I actually did misread the beginning of your post, it was a long day.  Found this on the same site too

 

https://www.investopedia.com/ask/answers/050515/did-repeal-glasssteagall-act-contribute-2008-financial-crisis.asp

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24 minutes ago, Notre Dame Joe said:

I actually did misread the beginning of your post, it was a long day.  Found this on the same site too

 

https://www.investopedia.com/ask/answers/050515/did-repeal-glasssteagall-act-contribute-2008-financial-crisis.asp

Ummm....no.

 

The main cause was deregulation of the financial markets and repealing this was a big part of that.

 

LINK

 

Quote

In 1999, the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act, repealed the Glass-Steagall Act of 1933. The repeal allowed banks to use deposits to invest in derivatives. Bank lobbyists said they needed this change to compete with foreign firms. They promised to only invest in low-risk securities to protect their customers.

 

 

Deregulation allowed for the entire sub prime mortgage industry to escalate.  Behind the scenes of that, were the trading of derivatives.

 

Was the Glass-Steagall Act the main reason?  I would say no.  That was more of other issues with both Clinton and Bush pushing for easier access to mortgages so more people could buy homes.  This also required some deregulation to push Fannie May and Freddie Mac to allow more and more sub prime mortgages.  


The trading of those and the associated derivatives exacerbated the issue to the point that it nobody even knew how to unwind it.

 

People who poo poo the repeal of Glass-Steagall are doing a real disservice in an effort to push an agenda that regulations are bad and we should deregulate more and more industries.

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10 hours ago, Notre Dame Joe said:

Right back at ya

 

That article is from 7/18/2008. That's before the Great Recession officially started in December of 2008.

 

There was a congressional commission that looked into the causes of the GR and here's what they found:

Quote

 

Causes of the Great Recession
According to a 2011 report by the Financial Crisis Inquiry Commission, the Great Recession was avoidable. The appointees, which included six Democrats and four Republicans, cited several key contributing factors that they claimed led to the downturn.

First, the report identified failure on the part of the government to regulate the financial industry. This failure to regulate included the Fed’s inability to curb toxic mortgage lending.

Next, there were too many financial firms taking on too much risk. The shadow banking system, which included investment firms, grew to rival the depository banking system but was not under the same scrutiny or regulation. When the shadow banking system failed, the outcome affected the flow of credit to consumers and businesses.

Other causes identified in the report included excessive borrowing by consumers and corporations and lawmakers who were not able to fully understand the collapsing financial system.

 

 

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