>This is why there is regulation of the finance sector
This is why there are bailouts of the finance sector. A bank loses this kind of money, they get it back for free.
This is why there are bailouts of the finance sector. A bank loses this kind of money, they get it back for free.
But that doesn't stop this old sore being rolled out regularly. Who need the truth when you've got Truthiness on your side, eh?
http://www.politifact.com/new-hampshire/statements/2012/oct/...
Banks supply capital to firms, the government bailed them out (and the automakers) because no one else was willing to supply capital to get the economy rolling.
as already stated, the economic impacts were larger than the money owed, and the abstract impacts are untold and likely substantial.
the 'too big to fail' paradigm was novel, and a clear abuse of their position. Most of us are upset at the fact that corporations literally held the idea of 'global financial well-being' hostage.
"Save us, if not only to save yourselves." is not anything that any corporation should ever or ever be able to say, especially to the government of an entire nation.
Where did he other half go? Not mentioned in the article. Also, that investment was paid back in grossly inflated dollars, thanks to QE.
This sounds very truthy, but there was no market rate on the interest on loans to insolvent banks that was less than infinity%. The reason the government loaned them money was because they were completely uncreditworthy, and at those rates, they could have (and did) just invest the money in treasuries and take the favorable difference in the interest rate as a gift.
Simultaneously, we started a massive program of buying all of their shit debt at par.
In the US, banks are regulated by the Federal Reserve. They have the authority to close and liquidate a bank. They have no authority to bailout a bank. That authority is the responsibility of Congress.
I'm pretty sure it's the same in other countries with a regulated banking sector. The UK parliament decided to bailout their banks, the German senate chose not to.
That's way too simple a statement for the US banking system. Banks in the US are regulated by the Federal Reserve, by the Federal Deposit Insurance Corporation, by the Office of Foreign Assets Control and a few others.
FDIC insured accounts are liabilities on a bank's balance sheet.
(I made the mistake of talking when I shouldn't have, I wasn't trying to mislead)
Is the understanding of the financial crisis really this poor? Paulson literally forced the banks to take TARP. The CEO of BofA and other banks that didn't need it spent a lot of time in the media complaining about it.
He also forced the retail banks to merge with and absorb the losses of the investment banks.
He wasn't able to do this because of direct permission, but because the Fed has so much power that everybody just has to listen to what they say.
That said, the quantitative easing programs are basically bailouts, just not as overt as opening up the public treasury.
The meeting minutes came out in an FOIA request and lawsuit[0]:
> Ben, Sheila, John, Tim and I have asked you here ..
> If a capital fusion is not appealing, you should be aware that your regulator will require it in any circumstance.
[0] http://www.judicialwatch.org/press-room/press-releases/judic...
Yes. One of the great tricks of this disaster (as in most financial crises) is that the powers that be were able to convince to public that there was some single enemy that caused this problem, in this case the "banks", completely ignoring the banks' customers and clients (businesses small and large, mortgage brokers, house-flippers, home-buyers, honest investors, fraudsters, sovereign nations) or the fact that the banks consists of hundreds of thousands of actors working and thinking independently.
This crisis was so much more complicated than "The banks were too greedy". But that's as deep as most people care to get.
I hope you know that the FED is not a independent institution, but owned by the banks themselves?
Another thing to keep in mind, the people who got the bailouts are a subset of the people who claim unfettered capitalism will cure all ills.
Indeed, other exchanges and other Bitcoin businesses don't appear to suffer from the gross incompetence that brought down MtGox.
> Another thing to keep in mind, the people who got the bailouts are a subset of the people who claim unfettered capitalism will cure all ills.
Is that so? In that case they are paying the same kind of lip service to that point as a kleptocratic dictator on his private jet is to socialism.
Iceland did it by stiffing creditors. That's a short-run gain, long-term pain solution.
With regards to Canada, there are specific laws that have inhibited a housing crisis, but we don't know if we have avoided anything yet. Our housing in major centres is as frothy as the peaks of almost anywhere else in the world who suffered a bust. It's too early to say.
Customers lose that kind of money, they get it back for free. Socialising losses is an annoyingly common theme in ‘capitalist’ countries; unfortunately, it is politically infeasible not to bail out failed banks.