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What would happen if banks were let to go bankrupt?
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I'm sure the answer hasnt changed from any of the other times this has been discussed in other threads.
Nope, the "answer" you gave was defeatist rubbish.
This time, address the restoration of the Glass-Steagall Act, and how it should be used to put the entire banking system in Federal Bankruptcy Reorganisation.
Franklin D. Roosevelt proved that was possible in 1933, and it is just as possible today.
Discuss.....
Article in full here...To Save Wachovia Restore Glass-Steagall
[A] properly regulated banking is an essential aspect of any economy. We must save the state and Federally chartered commercial banks and thrifts. That means two things: First, we must extract the relevant banking functions from banks which have often become virtual casinos of speculative bets, and second, we must restore the modern regulatory regime established by President Franklin Roosevelt, beginning with the restoration of Glass-Steagall.
The Glass-Steagall Act of 1933 was one of the most important banking regulations ever passed, as it prohibited any commercial bank from engaging in investment banking activities. As FDR told the House of Morgan: You can be a commercial bank, or an investment bank, but you can’t be both. This was done to prevent a raft of abuses which occurred in the 1920s and early 1930s, as the bankers saved themselves at the expense of their customers and the public.
Glass-Steagall forced the House of Morgan to split into two separate institutions, an act for which FDR has never been forgiven by the bankers; but FDR was entirely correct, as recent events have demonstrated. The banks began to chip away at Glass-Steagall in the 1980s, and it was finally repealed in 1999, after the illegal merger of Travelers and Citicorp to form Citigroup in 1998.
The repeal of Glass-Steagall opened the floodgates, as the banks expanded their speculative activities, until the distinctions between commercial banking and investment banking have virtually disappeared. As has the solvency of the system.
Retrieving the commercial banking functions out of some of these abominations will require delicate surgery, akin to removing deeply embedded tumors. This is the case with Wachovia Corp., where the commercial bank, Wachovia Bank, N.A., is the largest among hundreds of subsidiaries.
Wachovia Bank, however, is a toxic waste dump, holding, among other nasties, $4.4 trillion in notional value of derivatives, or $6.63 in derivatives for every dollar of assets. That means that saving the entire bank, much less its parent holding company, is not only undesirable but impossible.
What can be saved, first and foremost, however, are the deposits, and the loans and leases related to traditional banking activities; what will be let go, are the derivatives and other speculative activities. The holding company and all its subsidiaries should be seized by Federal banking regulators, and put into receivership. The necessary commercial banking activities would be reorganized into a new institution, while the rest would be frozen and dealt with later.
This approach of stripping out all the speculation and leaving a clean bank, accompanied by strict new banking regulations, would allow households and businesses to have unfettered access to their money and to necessary credit, while removing the burden imposed by the mountain of speculative bets, fictitious capital, and other nonsense."If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
-- Thomas Jefferson0 -
This time, address the restoration of the Glass-Steagall Act
And that will help the U.K. Banking system how ?
U.K. Banks were engaged in Investment Banking activities long before..........
In the U.S. Banking System, yes the changing on those regulations was the main driver behind the huge expansion of Off Balance sheet exposures....and also the Laws relating to cross State banking have also played a huge part, allowing what was once the tiny, National Bank of North Carolina based in Raleigh Durham NC to morph into NationsBank and then via numerous acquisitions grow into what is now Bank of America....
Wachovia, Wells Fargo and numerous others also used this new found ability to do business in States other than your home state, to grow and rates way beyond what should have been possible.
Turning back the clock might look like a desirable option, but it'll never happen.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
And that will help the U.K. Banking system how ?
What's your point?
It is the contents of an Act that matters, not its name, nor its origins.
The Glass-Steagall Act simply separated investment banking from commercial banking.
Up until the 1980s, a US bank could be either a retail bank or an investment bank, but not both..
That separation removed the temptation for coke-fuelled casino-traders to gamble away the savings of the General Public on the derivatives market.
Glass-Steagall worked well for over half a century in the USA, and it would work equally well here, too.
The Act should be commended to the House!"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
-- Thomas Jefferson0 -
What's your point?
It is the contents of an Act that matters, not its name, nor its origins.
The Glass-Steagall Act simply separated investment banking from commercial banking.
My point is that the act relates only to the U.S. Banking system.
What effect would the reinstatement of this Law have on Barclays, UBS, HSBC, Deutsche Bank, Sumitomo Mitsui, BNP Parisbas, Mitsubishi Tokyo, Credit Suisse, HypoVereins Bank, RBS, Lloyds TSB, Rabobank etc etc etc ??'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
My point is that the act relates only to the U.S. Banking system.
What effect would the reinstatement of this Law have on Barclays, UBS, HSBC, Deutsche Bank, Sumitomo Mitsui, BNP Parisbas, Mitsubishi Tokyo, Credit Suisse, HypoVereins Bank, RBS, Lloyds TSB, Rabobank etc etc etc ??
Not hard to see.. For the banks with retail arms, it would spell the end of their derivatives trading...
Gambling addicts like you would be out of business, and hopefully behind bars.
Retail banks would be limited to their chartered functions of deposit-taking and traditional lending.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
-- Thomas Jefferson0 -
it would spell the end of their derivatives trading...
No it wouldn't
Over the course of the last decade and a half most Derivatives have originated from the European market, from the European Banks non of whom would be affected by this......
They will all be glad that a small part of the competition is removed.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
No it wouldn't
Over the course of the last decade and a half most Derivatives have originated from the European market, from the European Banks non of whom would be affected by this......
Then the legislation would be pan-European through a Glass-Steagall Directive.
And before you say it, retail banks licensed in the European Union would be forbidden from engaging in speculative trading anywhere else in the world.
Since you keep throwing up obstacles and excuses, it sounds like you actually approve of casino-like gambling in derivatives.
I see you're quite open in your boasts that it made you enormously rich..
Spare a thought for those left penniless by the City, its coke-fuelled wide boys, and their mindless addiction to gambling.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
-- Thomas Jefferson0
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