EMAIL SIGN UP!
Most Popular This Week
- 'The Gilded Age' Statistics Corporations Don't Want Workers, or Anyone, to See
- As Death Toll Rises Beyond 500, Garment Factory Disaster 'Worst in World History'
- Wisconsin Bill Would Treat Organic Milk, Sharp Cheddar, Brown Eggs as "Junk Food"
- Report: Toxic Chemicals Found in Thousands of Children's Products
- Climate Change's 'Evil Twin': Ocean Acidification
- Report: Toxic Chemicals Found in Thousands of Children's Products
- Move Over, Koch Brothers: A Bigger, Darker Rightwing Funder Is Out to Destroy Public Education
- 'The Gilded Age' Statistics Corporations Don't Want Workers, or Anyone, to See
- Time for Big Green to Go Fossil Free
- Wisconsin Bill Would Treat Organic Milk, Sharp Cheddar, Brown Eggs as "Junk Food"
Popular content
Today's Top News
Still No End to 'Too Big to Fail'
When Congress passed the Dodd-Frank financial reform bill in the summer of 2010, the Obama administration made happy talk about putting an end to “too big to fail” banks. Hold the champagne. The Federal Reserve Board has just created the fifth-largest bank in the country, despite a flood of warnings from community advocates and smaller banks.
Skeptics in financial markets are entitled to their skepticism. Capital One has been rapidly assembling this new behemoth, acquiring local deposits and credit card operations in a series of mergers. Federal Reserve governors reviewed the complaints and rejected them. In banking regulation, the “new normal” so far looks a lot like the “old normal.”
Of course, it is impossible to say this marks an end to reform. But it’s a real downer for the reform advocates. They have pleaded for a different perspective from the Fed regulators—weighing the “public benefits” of bank consolidations against the “adverse effects,” as Dodd-Frank requires. But the Fed made this calculation on very narrow grounds.The governors concluded that one more very large bank will not by itself bring down the system. True enough. But each decision the Fed makes now on applying the new rules sets a precedent for its future decisions. How big is too big? The Capital One decision seems to say size is not an issue.
Reform groups like the National Community Reinvestment Coalition argued that the new, enlarged Capital One is a bad bet on its own terms because its business model is grounded in credit card debt, with a heavy portion of so-called “subprime” credit card holders—borrowers much like the “subprime” mortgage holders now lined up for foreclosure and bankruptcy. When the credit card bubble bursts, these critics say, the government will stick with the same bad choice—bailing out the creditors when the debtors fail.
Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.
The Fed and other regulators were given the impossible job of changing the behavior of these megabanks without messing with their awesome size and financial power.
Good luck to the Fed. The new regulatory rules are still being written, and the banking industry has flooded Washington with comments, questions and fine-print objections. Some say the bank lobbyists are in a purposeful stall, hoping to delay the final regulations until they get a more banker-friendly president. I suspect the stalling tactics are designed to outwait the public anger.
Comments
Note: Disqus 2012 is best viewed on an up to date browser. Click here for information. Instructions for how to sign up to comment can be viewed here. Our Comment Policy can be viewed here. Please follow the guidelines. Note to Readers: Spam Filter May Capture Legitimate Comments...
23 Comments so far
Show All"The Fed and other regulators were given the impossible job of changing the behavior of these megabanks without messing with their awesome size and financial power."
For christ sakes the BANKS own the fed reserve - theres no true regulation that protects We the People coming from the Fed.
Thats like asking tony soprano to prosecute mafia crimes.......
More BS from the Nation fishwrap.
Thank you, you are right the Fed is composed of private banks. For example: Jamie Dimon sits on the board of the NY Fed AND is the CEO of JPMorgan Chase, one of the world's biggest too bigs. Conflicts of interest? Oversight? Regulators?
Please
The almalgamation of state/corporate/financial powers is called neo-fascism. No one wants to look behind the curtain at the ugly creature. Easier to remain in denial.
When Kansas City Fed Chief Thomas Honig retired in October 2011 (mandatory age 65 retirement) the Fed lost its only uncorrupted member who actually questioned and voted against the Fed's serial regressive actions. The Fed is now 100% corrupt and 100% populated with groupthinkers.
Although Ron Paul is a regressive candidate, his commitment to dumping the Fed is more progressive than most Democrats or any other GOP candidate.
I agree 100% Ray. Just mentioning Ron Paul makes most so-called progressives uncomfortable. He won't win any "election", but at least some of his discourse sneaks through the cracks.
Ron Paul will run as a third party candidate if he doesn't win the republican nomination. This will hurt Obama much more than Romney (or Santorum, or somebody else like Sarah Palin).
I don't beleive that Ron Paul will run as a 3rd party candidate - he is the equilevent of Dennis kucinich - offering a hint of the possibility of change from within that goes exactly nowhere.
In fact RP has said to various state organizations that are getting 3 party access to the ballot that he wouldn't run under another party banner.
Ben Bernanke, for a famous (or infamous rather) example, did not see the crisis coming. No one could have seen this coming?
(Dr. Michael Hudson, Dr. Dean Baker and Dr. Steve Keen did see this coming, one of them should be Fed Chair, not that idiot Bernanke)
Folks like Greenspan, Bernanke and the vast majority of Fed officials should be fired immediately and tarred and feathered (and that is being way too kind) for their negligence, lies and corrupt behavior.
They hold a huge responsibility for causing the financial crash. Interest rates were held way too low during a textbook bubble. All they do is pour gasoline on the fire and shovel ZIRP and QE for the benefit of their cronies.
Why do progressives think the Fed is acting in our interests? Progressives need to learn how these crooks operate
If you want to criticize so-called capitalism (kleptocracy) KNOW YOUR ENEMY!
None of the pros who claimed to not being able to "see it coming" have been reprimanded, let alone fired. Obama and Congressional Democrats zealously promoted Bernanke's 2010 reconfirmation.
Obama and Congress have continued to enable all of the too-big-to-fail banks to continue to grow and become more politically powerful each and every day since the 2008 meltdown.
I agree that lot should be pilloried, then forced to break big stones into little stones forever. However Bernanke saw the "crisis" coming. It was not a crisis, that's why; it was a deliberate strategy to move the wealth upward into the hands of the corporate hegemons. People keep talking about the "crisis" but it is not a crisis -it is a money grab ("stimulus" - blackmail) and power consolidation that's totally deliberate and calculated. The laws limiting the grab had been cancelled, replaced with legal permissions by the politicos and legislators in the banksters' pockets. These vultures have been blackmailing us for decades - it's just all come to fruition as they are handed the ransom - and the victims will be killed anyway, SOSO. There were a few canaries who warned those willing to hear, but they were slammed down fairly quickly. Again, there is no crisis - all is working perfectly as intended. The citizen is now reduced to the status of a battery hen, to be exploited as a conduit of the wealth (his meager earnings) upward to the insurance companies, banks, Wall St. etc., and to produce for ever lower compensation and security, and then to be disposed of, reviled as undeserving. This is the only explanation of why the responses of stimulus and austerity keep being applied despite how they rip up societies everywhere. It also explains why the US health insurance and the 401K pension substitution are structured as they are and why the crooks who caused the "crisis" are Obama's closest advisors. As you say, kleptocracy.
And let's not forget that Congress exempts itself from insider trading laws.
This is refered to as lubricating the system.
Capitalism in deep decay.
The stone crazy O'Bomber snorts another line.
"F-ck it" Ben, says the cold killer. He lights his cigarette with a hundred dollar bill and orders another bombing or two.
"The economy? Give that zombie another shot a juice Ben. That'll do it. We can bleed it dry again after the election.
"Some say the bank lobbyists are in a purposeful stall, hoping to delay the final regulations until they get a more banker-friendly president."
__________________
A MORE bankster-- er, banker-friendly-- president? The one who turned the Executive Branch into a Goldman-Sachs annex isn't satisfactory to the bank lobbyists?
Are there secret plans to launch a Dimon-Summers ticket?
Senator Dick Durbin told us that "the banks own the place (DC)" so their stalling technique assures that their license to steal has no expiration date.
Yes! and Lloyd Blankfein for Treasury Sec.
But seriously, I recall reading a rumor that Geithner will step down after Obama "wins" the next election and Jamie Dimon would be nominated for the next Treasury Sec. Just a rumor, but I would not be surprised.
Geithner definitely will step down. A Jamie Dimon appointment sounds like Obama. Will Obama let him keep his seat on the board of the NY fed and the chair of JPMorgan?
Reports have dimon going to the Treasury and Larry Summers being named by obama as the head of the world bank.
Yet obamabots will still trot out the 'at least he's not romney" canard.
William Grieder who wrote "Secrets of the Temple: How the Federal Reserve Runs the Country", is now writing articles implying that the Federal Reserve, which is made up of a Board of Governors of MEMBER BANKS, will act in the citizens interests over the banks???
AND, he thinks the banks and lobbyists are waiting for a "more bank friendly president"??? He needs to look at the campaign contributions from the financial sector to President Obama and ask himself why NONE of the primary players in the finacial crisis have gone to prison.
What ever happened to William Greider? At one time he could be depended upon to provide rational analysis, regardless of political party in power. This is just sad to read from him.
I think it is time to invest in Armagedon Banking.
Someday the Chinese and Russians might liberate us from out self-imposed masters. Until then, abandon all hope....
This is just one more proof that our government is controlled by big money. The Republicans are incredibly stupid and greedy. The Democrats are only very slightly better. Obama is right with the program.
Anyone who makes less than, say, a quarter to half a million a year and votes Republican is ignorant or crazy. This demonstrates, again how badly we need an intelligent electorate.
Jim Shea
"The Democrats are only very slightly better."
I don't believe that. I think they're worse, especially Obama. People on the left who would normally push back against the wars, foreclosure fraud deals, and bogus mandated health insurance are silent because Obama sponsored those things. No, I think slowly bleeding to death is worse than having a steamroller headed right at you.
We've got to get rid of all of them. Don't vote for anyone from either party, no matter how liberal they claim to be. All of them have got to go.
We have to understand! ONE OWNER! Repubs, demos, it doesn't matter. FT times today came out with an article that thru the Hamp laws the tax payers of this country ,due to a loop hole will now be on the hook to help pay off the banks mistakes of up to $40 billion. this is for their crimes against the people....
Like most of the decisions made by this adminstration, this one has strong political component (self serving). Wall Street financed Obama's last campaign and he's counting on them to fund this election. This sort of ham fisted and obvious form of patronage is destroying us.
Waiting for a more banker-friendly president?
How much more friendly can a president get when no one has been prosecuted for the massive fraud that has taken place?