The Recession Changes Everything
Created on: February 22nd, 2009
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This is why regulation is a good idea. If you don't check on the people who hold the financial industry hostage (the privately owned banks), they might just f*ck up everything with mismanagement, greed, and unnecessary risks (using our money). This recession proves that we can't trust them to regulate themselves. Maybe we should have federal run banks. Although, I guess we can't always trust the government either. F*cknuts. We just need to keep everyone in check, I guess.
Were you aware that the banking industry was already one of the most regulated industries in America? Do you have any idea as to how many regulations there already are for it? If so, and if you know WHAT those regulations are, then what regulations do you think are missing? Anyone can say 'banking needs more regulations'. What is more difficult is to explain how.
No I don't know all the regulations. I am not a financial expert. But it doesn't take a genius to know that corruption played a hand in the crisis. Fraud was allowed to take place because there were loopholes in financial regulation. Remember that guy who ripped off billions from investors and no one caught wind of it until the collapse? I do have some ideas, actually. How about capping the salaries of executives so more people could keep their jobs? How about limiting the funds a bank can lend out
so they don't get bankrupted by bad investments? Banks should have had a certain amount of liquidity so they don't risk taking down the entire industry if the risks don't pay off, but alas we didn't have that. No one stepped in and controlled the situation. So many banks participated in mortgages with money they didn't have, and once the housing market burst, the banks were left with empty investments.
"But it doesn't take a genius to know that corruption played a hand in the crisis." Really? I wasn't aware that major banks and investment houses had an evil scheme in which they would drive themselves to bankruptcy on purpose :rolls eyes:
"Fraud was allowed to take place because there were loopholes in financial regulation." for example...
"Remember that guy who ripped off billions from investors and no one caught wind of it until the collapse?" Who? Madoff? What's your point? "How about capping the salaries of executives so more people could keep their jobs?" ...So that all the top quality talent will want to go elsewhere, leaving the companies with B grade talent? "How about limiting the funds a bank can lend out" How about getting to congress to stop forcing them to lend to deadbeats in the first place...
...which is what anyone who lends money with half a brain would do. "Banks should have had a certain amount of liquidity so they don't risk taking down the entire industry if the risks don't pay off" They had PLENTY of liquidity. For years. Especially recently. In fact, it has been argued that they had TOO MUCH liquidity, which made it easier to make all kinds of bad loans.
"No one stepped in and controlled the situation" There were actually numerous government controls of all kinds. Do your homework
Get it through your head. Banking is one of the most regulated industries in America. We have and have had laws numbering in the THOUSANDS. Just for banking. Just federal. Not including state laws or municipal laws.
"So many banks participated in mortgages with money they didn't have, and once the housing market burst, the banks were left with empty investments." Because we have an entire economy built on debt. Much like when Beavis and Butthead sold each other chocolates.
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