Too big to fail banks = Fight them back!

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The Silver Bear Cafe

What do you think? Will it work ?


Take your money out of these big banks and open account with the honest ones.


Bring Goldman Sachs and the likes to their knees.

[Strem2]

Absolutely. This is one of the best ideas and has gotten a lot of internet and radio attention. Have you moved your money yet?

[DaveM]

Continually bailing out banking companies is just part of how the modern economy is set up. None banking companies rely on them working and lending to exist. You often see atleast one bailout each decade. People should accept that its a reality of life.

Im not saying that we shouldn't try to regulate to reduce the odds of it happening. People need to realize this and stop fainting outrage whenever it happens. Sayings its not the capitalist way, but it is the way the economy is designed.

Lots of companies are huge and they need to work with big banks to secure large enough loans for them. The economy wouldn't work without large banks able to do this.

[Gabo]

I don't do any business with the big banks. I have one debit card from my hometown credit union, and use that credit union exclusively. When I ask people why they use large banks, most people have no answer! They just do!

The only "drawback" most people cite about using a local bank or credit union is that they don't have many locations or ATMs. What most people don't know is that almost every credit union is part of the Credit Union Co-op network along with NYCE, STAR, Cirrus, Pulse and/or Plus, alliances that allow members to use 800,000 public and local ATMs nationwide with zero transaction fees.

Credit Unions tend to offer shorter lines, friendlier service, and better rates and benefits. My credit union privately insures all deposits an extra $100,000 on top of the FDIC's "guaranteed" insurance, meaning I don't have to worry about my money's safety due to bad lending practices.

I highly recommend anyone using one of the big banks to switch over to a local bank or credit union. You will be surprised at the benefits!

[ThoughtAddict]

I shy away from the big banks for a reason not related to the TARP funds. Big banks offer, in my experience, shoddy customer service. I remember sitting in Suntrust with a friend of mine. This guy, with his wife, had kept $200k in Suntrust for years. The rep inside didn't know his name, didn't treat him with any real care, and generally used assembly-line service on him.

Contrast with my small local bank. I have a relatively small account there. When I walk in, I stop and chat with the account rep who opened my account. They chat with me, often asking how friends I've referred are doing. The tellers are quick and efficient, but look for every way possible to make life easier. AND they offer ATM reimbursements and a higher interest rate. Odd how cutting corporate overhead makes better service possible....

[Curtis2011]

I once read that on average, only 1 out of 1000 banks actually fails as a business.

Banking is probably one of the most profitable businesses that exists.

[Strem2]

Originally Posted by DaveM

Continually bailing out banking companies is just part of how the modern economy is set up. None banking companies rely on them working and lending to exist. You often see atleast one bailout each decade. ...

Please, Dave, let's look at them, and who bailed them out or who allowed them to fail.

The first major bank to fail in the US since the FDIC was established was United States National Savings Bank, worth $1.5 billion. Shortly thereafter, on October 8, 1974, the Franklin National Bank in New York also failed. -- This was not a bailout. Caused by mismanagement and fraud, it was at the time the largest bank failure in the history of the U.S. Out of the debacle came disgrace and jail sentences for several bankers, a suicide in Italy, huge losses for the bank's stockholders -- but not its depositors -- and a black eye for the federal bank regulatory system. A couple of months after Franklin was declared insolvent on Oct. 8, 1974, most of its assets were taken over by European-American (now known as EAB).

The United States Congress granted all thrifts in 1980, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts. This was the beginning of bank deregulation. Those regulations had kept us from another great depression.

In the 1980's there were increasing bailouts. In early May, 1984 Continental Illinois National Bank and Trust was seized by the US government as "too big to fail". Lytle later pleaded guilty to a count of defrauding Continental of $2.25 million and receiving $585,000 in kickbacks for approving risky loan applications. Lytle was sentenced to three and a half years in a federal prison. The US government remained in control until 10 years later when it was acquired by what is now Bank of America.

Lincoln Savings and Loan

The Lincoln Savings led to the Keating five political scandal, in which five US senators were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln Savings and made $300,000 as political contributions to them in the 1980s. Three of those senators—Alan Cranston (D-CA), Don Riegle (D-MI), and Dennis DeConcini (D-AZ)—found their political careers cut short as a result. Two others—John Glenn (D-OH) and John McCain (R-AZ)—were rebuked by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.[12]
[edit] Silverado Savings and Loan

Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was Director of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing.[13]

The US Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement, the Washington Post reported.[14]

As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.[citation needed]

Neil Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion.

If you are interested in the numbers rather than in some of the details, this site, has the numbers from 1930 to now.

You will see the big increase during the 1980's and again in 2008 and 2009.

Note that the "Too big to fail" expression was only coined by the Reagan government. Before that FDIC protected depositors, but not investors or officers. In the 1980's the process of protecting officers and investors began.

This was not the intention of the original bank regulations. Of course this would lead investors to want to invest in banks that are "too big to fail." -- This was the beginning of our present troubles and can be reversed....

Unless we all decide, as you apparently have, to accept it...

Oh, please note also that when the US government managed Continental Illinois National Bank and Trust, no one was screaming about Socialism. It was smarter than to leave the crooks in charge as Bush and Obama did this time.

And, BTW, Neil Bush, brother of George W Bush, was the first banker convicted of fraud who didn't go to jail. -- Prior to that, when fraud was uncovered, Bankers paid for their costs to the US Taxpayer....

[Strem2]

Originally Posted by Curtis2011

I once read that on average, only 1 out of 1000 banks actually fails as a business.

Banking is probably one of the most profitable businesses that exists.

When they are run as a business, they seldom fail. When they are run to make some people massively wealthy is when they fail.....

The question is, will we continue to allow this?

[DaveM]

Don't get me wrong, Im all for tough regulations.

Its just society needs big working banks. An argument for it is moral hazard, if you allow them to fail it will deter future banks from doing it again in the future. The big problem with that is the CEOs of these companies that take ridiculous risk don't care about the companies, they just want big bonuses.

If you let the companies fail from their perspective most of the time big risk makes them tons for money for many years. Worst case they make big short term bonuses than get a golden parachute and retire. From their perspective its still a great move.

Letting them fail doesn't hurt the CEOs that caused this mess, they already made tens if not hundreds of millions. Its the average worker in those companies that are powerless to stop the CEOs and the public at large that gets screwed.

In the case of Merryl Lynch, Stanley Oneil was told that the trades he was making were terrible, not a huge risk, but definitly will lose a ton of money for the company. He didn't care, he greatly increased how much he was doing for short-term bonuses.

In addition to making regulation for the companies changing companies to making longer-term bonuses instead of just short-term is important. Leihman brothers had this, Dick Fuld had 1.7% of the companies stock, he would have lost close to a Billion from the stocks high point. So just changing how bonuses are structure isn't enough.

[Strem2]

I am not interested in how the companies structure their bonus'. When there are banking laws in place, and consequences for disregarding those laws, there are fewer failures.

I was young in the 50's, 60's and 70's. The banks managed to take care of their money and to support businesses and individual borrowing needs as well. I believe that there were more US businesses who actually produced things in those years.

Since the laws were "relaxed" during the last 30 years of corporatist lawmaking, the US big industries now move money around but don't actually make anything -- oh, except weapons and drugs. Those industries are doing just fine.

Now, tell me again why we need "big working banks" ....

Perhaps GM or Ford needed big banks to fund the equipment and materials needed when producing the new cars for the new year....

I say, fire the cheats like Stanley Oneil and let him live on Unemployment. Thom Hartmann theorizes that the huge exec salaries these days are because its so hard to find a good psychopath!

[ar81]

YouTube - $1.4 billion in CEO bonuses handed out

[Double]

Hmm if individuals are fundamentally unable to run a healthy buisness, why should anyone be able to regulate them so as they can? Regulation wont help anything then make you feel better. But it does not solve the problems that was created. Usually in most cases, where there is need for heavy reguluation or other kind of government interference.. government interference created the whole problem to begin with. Its excactly the same with centralised banking.

[ar81]

Well, in Costa Rica, nationalized banking never created a problem, and bailouts were never necessary.

[pjhaggerty]

I'm sure that moving money to local credit unions will help those people who are angry at the big banks move on with their lives.

[ThoughtAddict]

Originally Posted by Double

Hmm if individuals are fundamentally unable to run a healthy buisness, why should anyone be able to regulate them so as they can? Regulation wont help anything then make you feel better. But it does not solve the problems that was created. Usually in most cases, where there is need for heavy reguluation or other kind of government interference.. government interference created the whole problem to begin with. Its excactly the same with centralised banking.

The question is "why?" Why are they unable to run them as a healthy business.

In banking, the answer is pretty simple: greed. There's an incredible incentive, at a very base level, to simply run off with other people's money. At a more sophisticated level, there's more incentive to take very aggressive positions unsuited for the individual investors who are trusting you, or to make new, creative instruments which can generate large amounts of short-term income.

If the answer was that man's virtues are insufficient, we would only hope to collectively come to a better answer after centuries of trial and error. But when man's vice is the reason for failure, we can disincentivise the vice...

[ar81]

The inventory of a bank is money, and money can't add value to itself, so the only source of profit is to create toxic assets, or to force people to empty their pockets and pay the bank.

With nationalized banking, where bank is a govt agency (not government having stocks, which is bailing out a private bank by buying stocks), interests paid on loans become some sort of tax that would help to reduce govt deficit.

[Andrew Gubb]

Hmm, I while ago when I was thinking about how to save the world (I do that a lot) I came to the conclusion that we needed local banks. I didn't quite link it up to the here-and-now real world though. Cause I didn't know about any local banks. Hah.

Yeah, I'm going to look into this a bit more, the info is a bit much for me to digest at once, but maybe if I can I'll move my money.

When I was walking through the streets of Barcelona I'd sometimes notice how there were much more banks than supermarkets. There has to be something wrong there. When there are so many banks, then they are making too much profit for such a simple service.

The "darkworker" influence is too strong in the banking world... we need people to wake up and demand better treatment... and we need some conscious, love-aligned banks to take these people, deservingly.

I've never tried to create a bank so I don't know, but I bet the legislation has been screwed up to try and make it difficult. The "Matrix" doesn't like independent entrepeneurs in general, come to that.

More status quo please! No challenges for us! We like to enjoy our stupor while we wait for our unsustainable resources to run out

[ar81]

Local banks does not get rid of the systemic problem of toxic asset production by private banks or the gradual liquidity loss banks cause to economy.

[pjhaggerty]

Large banks have historically filled a societal demand. If there was not this demand, there would be no large banks. I don't think that demand has gone away with the financial crisis, nor do I think consumers shifting their money to small local banks will really make a huge dent in that demand.

[ar81]

53% of Swiss bank UBS shareholders will held executives accountable.
It was bailed out, so they will held previous administration accountable in a historical move.

Unfortunately this link is in spanish
Sin perdón para los banqueros de UBS · ELPAÍS.com

It seems that people in Switzerland do not get rich with banks, only bankers...

[Brutha]

Large banks have historically filled a societal demand. If there was not this demand, there would be no large banks. I don't think that demand has gone away with the financial crisis, nor do I think consumers shifting their money to small local banks will really make a huge dent in that demand.

That's like saying that rapists filled historically a societal demand and would go away when there wouldn't be a demand for them.

In Germany we have a lot of local owned banks (Berlin for example owned a bank).

Through the Washington consensus our financial system in Germany changes to the Anglo-American model of having a financial system that bubbles.
We learn't something after our inflation and still don't stand up for our German financial system but give it up.

[ar81]

Demand of money... money is a social construct.
So demand of money is demand of a social contruct.
Isn't it silly?

[KaleidoskopicVision]

Originally Posted by ar81

Demand of money... money is a social construct.
So demand of money is demand of a social contruct.
Isn't it silly?

Well, people DO like stability, ar81. That's what constructs give societies. What are you getting at?

[ar81]

Originally Posted by KaleidoskopicVision

Well, people DO like stability, ar81. That's what constructs give societies. What are you getting at?

What is weird is that if you treat money as a commodity you should have to assign this money a price using the same currency, which is somehow weird.

[ar81]

Congress is debating an overhaul to financial regulation that would leave the Federal Reserve with unprecedented power, despite its mistakes in the run-up to the financial crisis.

Fed's new chief regulator raises hopes, and doubts | Reuters