From LaVern F. Isely
Monroe
Since President Obama and Congress passed the Financial Regulatory Oversight Bill, will it be enough to get us out of the financial ditch, because of the lack of federal regulations on derivatives or should it have been stronger like Senator (Russ) Feingold wanted?
Here's a quote from the book, "13 Bankers" written by Simon Johnson and James Kwak from page 133: "Greenspan Triumphant - An emerging market oligarchy uses its political power and connections to make money through such means as buying national assets at below-market prices, getting cheap loans from state-controlled banks, or selling products to the government at inflated prices. In the United States, the banking oligarchy (and its allies in the real estate industry) used its political power to protect its golden goose from interference and to clear away any remaining obstacles to its growth. The banks' objectives included both the elimination or nonenforcement of existing regulations and the prevention of new regulations that might stifle profitable innovations. Their sweeping success enabled them to take on more and more risk, increasing their profits but also increasing the potential cost of an eventual crash. At the top of the major commercial banks' wish list was the repeal of the Glass-Steagall Act, which was finally achieved in 1999. By that point, the separation of commercial and investment banking had been severely weakened by a series of Federal Reserve actions that allowed commercial banks, through their subsidiaries, to underwrite many types of securities; in addition, the new business of derivatives fell outside Glass-Steagall altogether, and commercial banks such as bankers Trust and J.P. Morgan were among the pioneers in that market. In 1996, the Fed struck a major blow for deregulation, allowing bank subsidiaries to earn up to 25 percent of their revenues from securities operations, up from 10 percent. That same year, the Fed overhauled its regulations to make it easier for banks to gain approval to expand into new activities. Congress also changed the rules for banks seeking to expand into new businesses, relieving banks of the need to obtain approval from the Federal Reserve and putting the onus on the Fed to actively disapprove of any new activities. As long as Glass-Steagall remained on the books, however, the 25 percent revenue limit posed a barrier, and there was still the risk that Congress or the courts might overrule a friendly decision by the Fed."
Repeal of Glass-Steagal was a bad decision.
Monroe
Since President Obama and Congress passed the Financial Regulatory Oversight Bill, will it be enough to get us out of the financial ditch, because of the lack of federal regulations on derivatives or should it have been stronger like Senator (Russ) Feingold wanted?
Here's a quote from the book, "13 Bankers" written by Simon Johnson and James Kwak from page 133: "Greenspan Triumphant - An emerging market oligarchy uses its political power and connections to make money through such means as buying national assets at below-market prices, getting cheap loans from state-controlled banks, or selling products to the government at inflated prices. In the United States, the banking oligarchy (and its allies in the real estate industry) used its political power to protect its golden goose from interference and to clear away any remaining obstacles to its growth. The banks' objectives included both the elimination or nonenforcement of existing regulations and the prevention of new regulations that might stifle profitable innovations. Their sweeping success enabled them to take on more and more risk, increasing their profits but also increasing the potential cost of an eventual crash. At the top of the major commercial banks' wish list was the repeal of the Glass-Steagall Act, which was finally achieved in 1999. By that point, the separation of commercial and investment banking had been severely weakened by a series of Federal Reserve actions that allowed commercial banks, through their subsidiaries, to underwrite many types of securities; in addition, the new business of derivatives fell outside Glass-Steagall altogether, and commercial banks such as bankers Trust and J.P. Morgan were among the pioneers in that market. In 1996, the Fed struck a major blow for deregulation, allowing bank subsidiaries to earn up to 25 percent of their revenues from securities operations, up from 10 percent. That same year, the Fed overhauled its regulations to make it easier for banks to gain approval to expand into new activities. Congress also changed the rules for banks seeking to expand into new businesses, relieving banks of the need to obtain approval from the Federal Reserve and putting the onus on the Fed to actively disapprove of any new activities. As long as Glass-Steagall remained on the books, however, the 25 percent revenue limit posed a barrier, and there was still the risk that Congress or the courts might overrule a friendly decision by the Fed."
Repeal of Glass-Steagal was a bad decision.
