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Finances: Local banks prove worth

February 11, 2013

Are some financial institutions “too big to fail” and in need of more accountability? At least Camden R....

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CadeFoster

Feb-14-13 7:59 AM

broken for sure. I know a guy with a credit score of 800+ and income of 140,000 and no bank will give him a loan. Something wrong there.

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Marcia

Feb-12-13 8:56 AM

Probably the worst thing Clinton did (he has admitted this) was signing the end of Glass Steagall. It was stronger than Dodd-Frank and we could use it today.

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DKexpat

Feb-11-13 5:44 PM

Dc - I'd say it's far less our "greedy demand" than the avarice and greed of Wall Street that created the house of cards.

Otherwise, some of those giants would still be standing...

The cheap mortgages now are because of the actions the Federal Reserve took, not from any leadership by the banks.

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Dcronlg

Feb-11-13 3:21 PM

DKexpat: no question the entire banking ecosystem -- commercial and investment -- was*******and insidious. And yet, I dont know about you, but I financially enjoyed the really cheap money created by that ecosystem: 4% mortgages, home equity increasing 5%/yr, 401(k) growth, 0%/60 mos auto loans, 0% credit cards, etc.

Overall, all of our greedy demand fed this house-of-cards supply.

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DKexpat

Feb-11-13 1:20 PM

“The banking industry is broken” – Herbert Allison (ex-pres of Merrill Lynch); Philip Purcell (ex-CEO of Morgan Stanley; Sallie Krawcheck (ex-CFO of Citigroup; David Komansky (ex-CEO of Merrill Lunch); John Reed (ex-CEO of Citigroup.

All have called for tighter regulation or a return to the Glass-Steagall law (which separated commercial banking from investment banking).

It’s gotta make ya shudder to think what those insiders know that we don’t...

Read a couple of books regarding the collapse –All the Devils are Here, The Big Short, Too Big to Fail, etc. They’ll get you riled up all over again.

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DKexpat

Feb-11-13 1:13 PM

Recent Barclays Capital survey: >half of institutional investors do not trust how banks measure the riskiness of their assets. Ranking big banks on a scale of 1 to 5 (with 5 being “trustworthy” and 1 “not trustworthy at all”), 60% of hedge-fund managers answered 1 or 2. (None gave banks a 5.) And this is Wall Street rating its banking peers!

JPMorgan’s recent lost – over $6 billion and countiing – stemmed from its Chief Investment Office, designed to REDUCE the bank’s risk and manage spare cash, investing in low-risk securities. Its degree of confidence was 95% the most it could lose in a day (“value at risk”) was just $67 million. Oops...

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Marcia

Feb-11-13 12:53 PM

Unfortunately, these same banks give too much lobbying money to our "representatives" for this to ever get cleaned up. How sad.

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DKexpat

Feb-11-13 11:55 AM

Actually, it wasn’t Main Street that came crashing down – it was Wall Street that crashed, dragging EVERY street in America along with it.

Noting that the Independent Community Bankers of America is a lobbying group doesn’t change the fact the “big boys” can borrow at 20-60 basis points lower than community banks. It doesn’t change the fact Goldman was selling junk securities – while betting against them at the same time! (Look no further than the Justice Department’s recent action against S&P regarding bogus ratings.) Bear Stearns made billions selling mortgage securities where 80% - 80% - of them immediately defaulted. (JPMorgan Chase has set aside $9 billion to cover litigation just for that.)

Stronger enforcement would help to clean up the banking business. Senior execs should face the same threat of prosecution the same way other leaders do in other areas of the economy.

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Dcronlg

Feb-11-13 10:46 AM

Hate to pop the balloon here, but the banking situation -- the global credit market dynamics -- was and is far, far too complex and to structure it into a simpletonistic "bad guys vs good guys".

Main Street can blame Wall Street all it wants to -- but Main Street enjoyed the abundantly cheap and easy credit for years. Main Street didn't care much about it, it just wanted more, easy and cheap. Main Street was very willing and quite able. Sadly, it came crashing down, it came with a HUGE price especially impacting Main Street.

So, for Main Street to ignore and shirk its own role and responsibility in this morass, and to squarely blame Wall Street, is typical and disingenuous.

Local banks provide a fantastic service to communities, but they were players in the game as well.

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DKexpat

Feb-11-13 9:16 AM

The playing field is tilted in favor of the ‘Too Big To Fail’ behemoths.

In 2011 the four largest US banks (BoA, JPMorgan Chase, Citigroup, Wells Fargo) held 40% of all federally insured deposits. In contrast, the 5,500 community banks held just 12%.

The largest banks in the world colluded on the London Interbank Offered Rate (LIBOR), the theoretical rate at which they’d borrow from each other. Most important is that the LIBOR is used to set interest rates for trillions – trillions – in loans. (If you have a mortgage or car loan, you’re part of this.)

These banks will pay billions – billions – in fines to avoid civil/criminal charges. (Barclays was the first, paying "just" $451 million; UBS paid $1.5 billion two months ago; others, like JPMorgan, BoA and Deutsche Bank, are still under investigation.

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judeye

Feb-11-13 8:11 AM

EXCELLENT!!!

Can not agree more!!

Those CROOKS (using the word Sen Sanders uses to describe them) on Wall St should be in JAIL not getting bonus checks. It has become crystal clear (with the release of even more evidence with the emails) that they KNEW for sure without any doubt that what they were selling...and had the credit raters rate as AAA+++, were TOXIC..ie worthless investments. Yet they sold them with a wink of their eye to all of us suckers out here who had investments, such as in our retirement funds.

Break those banks up..just like we did years ago with ATT. Too big to fail? then Too big to exist.

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