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KC Fed Reserve Pres says we need to break up the big Wall Street firms/banks

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
I've got to agree with this guy. Many of these big investment banks were actually created with our own Federal Reserve system's blessing and compliance. Its said they are "too big to fail" but if that is true then we should bust them up into smaller entities so that insurance is separated from banking which is separated from investments, etc etc.

Here is what Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, said:
Today, I am convinced that the existence of too big to fail financial institutions poses the greatest risk to the U.S. economy.

The incentives for risk-taking have not changed post-crisis and the regulatory factors that helped create the crisis remain in place. We must make the largest institutions more manageable, more competitive, and more accountable.

We must break up the largest banks, and could do so by expanding the Volcker Rule and significantly narrowing the scope of institutions that are now more powerful and more of a threat to our capitalistic system than prior to the crisis.
http://www.nationalreview.com/corner/260539/republicans-should-take-too-big-fail-lou-dolinar
 

jimbo

Bronze Member
GOLD Site Supporter
I agree that if an entity is too big to fail, then smaller entities should the norm. However, doesn't this apply to all to big to fail entities?

Unions have reached monopolistic size. Time to eliminate or at least reduce them to manageable size. Unions by law must be recognized. Corporations cannot by law become monopolies and/or conspire to set prices or quality with their competitors.
Then there is government. All the founders warned about a large centralized government being a threat to the survival of the nation. They were right.

Leaving control of government as close to your wallet as possible is the best bet. Large federal government can be bought, either with cash or the promise of votes. If the power was with the localities, then the states, and last, but least, to the federal government, wouldn't we be better able to control it? Smaller government leaders can also be bought, but at least I know where to find them.

A very few things can be done on a federal level better than local. These would be interstate commerce and travel across state lines and protecting the citizens from outside invaders, including border security. Not much else.

The thing is, nobody is too big to fail. Our government is failing, unions are destroying the market system, and big businesses should be allowed to go under when they can no longer compete. Smaller, more efficient, companies will take their place.

Their are 18 large auto companies competing in the US. Only the 2 weakest were bailed out. At least 10,000 financial instututions, only a few were bailed out. The weakest ones. Both bailouts came at the expense of the better companies.

Time to give every politician a copy of a good economics book and a copy of the Constitution, and then test them on the contents.
 
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