Posted on 06/15/2012 4:14:29 AM PDT by SeekAndFind
I'm still not seeing who's getting the 2.9 trillion as of last week. Can you please provide a link showing which banks/entities are getting this money?
Because banks aren't borrowing that much as of last week. Currently they're borrowing $4 million.
MILLION with an "m".
http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1
It’s inconceivable to think that a bank JPMorgan’s size could fail without the FDIC
Glass-Stegall would've prevented Investment banks from acquiring and merging with Retail banks in the first place, preventing taxpayers from being exposed to the risk and liability that was created, that's how.
It was the Investment Banking arms of JPM Chase, BoA, Wells Fargo, etc.. that bought up risky mortgages, securitized them, and sold them as risk weighted assets with AAA+ ratings. Eliminating Glass-Stegal enabled banks like JPM Chase to combine Investment banks with Retail Banks, which therefore put you and I on the hook to bail them out because they were "too big to fail."
The problem with the "too big to fail" banks is that they've gotten even BIGGER since the meltdown! Prior to 2007, the top five banks in this country held about 40% of all retail banking accounts in the United States.
Guess what? They now hold 57% of all retail banking accounts. Why? Because stupid consumers believe their money is somehow better protected in a "too big to fail" bank than in a local community bank. That's simply not true. In fact, by having one's checking, savings, cd's in JPM Chase, BoA, Citi, Wells Fargo etc.. the banks are actually screwing you multiple ways. First they have your money in the bank, second they know they can take risks without repercussion with it and third because your taxpayer dollars will be used to bail them out in the event another meltdown happens.
Too Big To Fail really means it's high time to re-instate Glass-Stegall *and* break up the banks to minimize risk to the economy. We simply cannot have a Banking "Cartel" with this much power controlling the economy, our political system and our way of life. It's time to break them up.
I will not say who I work for, but we didn't need or WANT to take TARP money. We were forced to. To hear our CEO and Board Chairman say it, the Fed's came in the door, put a gun to our heads, and said "sign here, take the money." No was not an option, and it was a major PITA to "repay" the money later, with 10% interest back to the Fed of course.
Most people don't realize it, but they charged INTEREST on the TARP funds, which also had to be paid back. And you paid that interest whether or not you wanted TARP funds in the first place.
Ahhh probably just a coincidence.
“No, since it was paid back with imaginary money from the fed, the payback inflated the money supply even more than the bailout did.”
I hear a recent audit revealed somewhere in the area of 16 trillion in secret loans to the large banks.
The losses were mortgage based. GS wouldn't have stopped mortgages from being written.
It was the Investment Banking arms of JPM Chase, BoA, Wells Fargo, etc.. that bought up risky mortgages, securitized them, and sold them as risk weighted assets with AAA+ ratings.
Mortgages were securitized under GS.
The problem with the "too big to fail" banks is that they've gotten even BIGGER since the meltdown!
The failure of 10 $100 billion banks is just as bad as the failure of one $1 trillion bank.
Secret? The Fed spread sheet is released every week.
Prior to Glass-Stegall being repealed, the bank itself would have to realize the loss of the bad loan and take the write down/write off on their books. That means if Bank of America the Retail Bank wrote the loan and it went bad, Bank of America the Retail Bank realized the loss directly.
Repealing Glass-Stegall enabled those Retail banks which had acquired, or been acquired by Investment banks to package and sell those loans (some of them knowingly bad) to their own Investment banking divisions, or other Investment banks.
Because of the way the loans were packaged and not being able to separate loans in the package to perform risk calculations (called Risk Weighting) there was really no accurate way to estimate the level of risk within that package, telling any investor, investment bank, etc.. the true risk of loss of purchasing those loans (or: Risk Weighted Assets.)
Now to your mis-statement that Glass-Stegall wouldn't have stopped mortgages from being written, that's correct. It is INCORRECT to think that Glass-Stegall wouldn't have stopped BAD MORTGAGES from being packaged, securitized, and sold as Investment Vehicles to other Banks, thereby causing the collapse.
Prior to Glass-Stegall being repealed, it was IMPOSSIBLE for you or I to be on the hook to bail out Goldman Sachs, JP Morgan Chase, BoA, etc ... because Investment Banks were not federally guaranteed.
Once it was repealed, we saw acquisitions and mergers of Retail (read that: consumer banking) with Investment Banking (read that: Traditional brokerages, investment companies, etc..) which blurred the line between what was "insured" by the Fed's vs. what was not.
In fact, during the banking sector meltdown, several Investment Banks (AMEX being one) specifically went out and acquired small local and regional banks so that they WOULD be covered under TARP to cover their losses. American Express (AMEX) was one that SPECIFICALLY purchased a small regional bank with 20 or so branches to qualify for TARP Bailout which they used to shore up their credit card business which was recording a high level of insolvent/delinquent accounts due to the economic downturn.
Again, had Glass-Stegall been in place, AMEX would NEVER have "qualified" for the several BILLION dollars of bailout money they received because Investment Banks did not have federal guarantees of investments.
It absolutely is the point.
Prior to Glass-Stegall being repealed, the bank itself would have to realize the loss of the bad loan and take the write down/write off on their books.
See, you get it too. Banks still lose hundreds of billions on mortgages under Glass Steagall.
Repealing Glass-Stegall enabled those Retail banks which had acquired, or been acquired by Investment banks to package and sell those loans (some of them knowingly bad) to their own Investment banking divisions, or other Investment banks.
Banks couldn't sell mortgages during Glass Steagall? Mortgages weren't securitized during Glass Steagall? Are you sure?
It is INCORRECT to think that Glass-Stegall wouldn't have stopped BAD MORTGAGES from being packaged, securitized, and sold as Investment Vehicles to other Banks, thereby causing the collapse.
What is the difference between a bank writing a bad mortgage and the same bank buying a bad mortgage?
Prior to Glass-Stegall being repealed, it was IMPOSSIBLE for you or I to be on the hook to bail out Goldman Sachs, JP Morgan Chase, BoA, etc ... because Investment Banks were not federally guaranteed.
TARP was used for banks that owned investment banks as well as banks that didn't. What's the big difference?
In fact, during the banking sector meltdown, several Investment Banks (AMEX being one) specifically went out and acquired small local and regional banks so that they WOULD be covered under TARP to cover their losses.
Cover their losses? What does that mean? They got loans, they paid the loans back. They still ate their own losses, you didn't.
Again, had Glass-Stegall been in place, AMEX would NEVER have "qualified" for the several BILLION dollars of bailout money they received because Investment Banks did not have federal guarantees of investments.
Amex had a bank in 2000.
Clearly you're not understanding the difference, I'll try this for the last time: Prior to Glass-Stegall being repealed, Investment Banks WOULD NEVER HAVE been bailed out, period. Do you understand the difference between a Retail Bank and an Investment Bank? If not, that's likely the source of your confusion.
Once Glass-Stegall was repealed in Nov. 1999 under the Clinton Administration, packaging up mortgages as Securitized Assets became a practice, and the sale of bad mortgages as Securitized Assets were the "trigger" that caused the meltdown.
It's not the writing of those mortgages that caused the problem, it's what was done WITH those mortgages afterwards and how they were MIS-REPRESENTED as Securitized Assets that caused the problem.
You seem to want to argue that writing mortgages in the first place is the root of the problem, decades of banking dating back to 1933 and the implementation of Glass-Stegall until it's repeal in 1999 demonstrate otherwise.
” because this is a derivative trade, the total extent of the lose is still to be determined.”
There in lies the problem. How does any prudent investor take a risk with an unlimited downside? If the debacle in 2008 taught anything it surely taught that. Didn’t it?.....
Uhh, apparently not.
Let me try again. So what? The big losses were in MORTGAGES. Besides, allowing banks to buy the failing investment banks reduced the financial disruption.
packaging up mortgages as Securitized Assets became a practice
Mortgages were securitized under Glass Steagall for decades.
You seem to want to argue that writing mortgages in the first place is the root of the problem
You seem to think that hundreds of billions of MBS losses are different, and worse, than hundreds of billions of mortgage losses.
The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..
Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,
000) Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
...
View the 266-page GAO audit of the Federal Reserve(July 21st, 2011):
http://www.scribd.com/doc/60553686/GAO-Fed-Investigation
Source: http://www.gao.gov/products/GAO-11-696
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