President's assault on banks
To continue observations I made yesterday (https://www.askmehelpdesk.com/curren...-436941-3.html) ; the President basically is attempting to bring back Glass-Steagal, abolished by Clinton in 1999.He wants to get banks out of the private equity business,preventing the banks from playing in riskier markets.
Perhaps that would've worked in a day when it was just American banks they were competing against . But today it is just as likely that directly or indirectly Americans conduct business in an international environment . I for one do some of my banking business with a Swiss bank that would not be under the same restrictions that the President would place on American institutions. Unless the President gets an international deal to have the world banking system simularily reformed then he will place American banks at a tremendous competitive disadvantage .That in fact was the very reason Glass-Steagal was repealed in the 1st place.
It is not likely that the world's banking industry will fall in line. Europe welcomes Obama bank plan, won't imitate it - Yahoo! News
This is a concern that Treasury Sec Tim Geithner is expressing privately behind closed doors.
Quote:
U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources.
The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness.
UPDATE 3-Geithner aired concern on bank limits-sources | Markets | US Markets | Reuters
Hmm one has to wonder if Geithner has just joined the ranks of the zombies walking . I see big bus tire tracks in his future. Not that I will shed any tears over his departure. With him gone;perhaps the President will put someone in Treasury who actually understands monetary policy.
It is unclear how far the President has thought this through. It appears to be more a reaction to the Tues Mass. Vote ;and a desperate attempt at a populist reconnect with the votes. Wall Street has made themselves easy targets this year and the President plans to exploit that for all it's worth heading into the mid term elections. While he continues to call them fat cats ;he still provides their feed. He still thinks some institutions are too big to fail.
Here's a novel concept. The way to prevent 'too big to fail' is to let some of them fail . If that were to happen then risk calculation would change in the institution.His proposal should be ;if you are backed up by taxpayer money then you may not engage in risky investments. If he does that I am sure most of the bailout TARP funds would be returned asap.