I do care if they lose that (as do most people, who use banks to store money rather than to invest money), and I think the best way to ensure that we never need to bail them out again is to make sure that they can't freely add risk to those non-invested accounts without insuring against their own bank's failure.
And the instrument used to insure against their failure can't be some phoney baloney CDS that has no collateral backing it.
Exactly! There you go. I knew you could do it.
CDOs are AAA-rated financial instruments. ING didn't need to use leverage to buy them because they ALREADY HAD money and needed to invest it. And to further reduce their risk, they purchased CDSs. See? No law forced them to be dumbasses, and they weren't being dumbasses being on the BUY side.
The dumbasses were on the SELL side, and no laws forced them to be dumbasses either. They were just being greedy. Nobody forced investment banks to use leverage to buy assets and create CDOs. Nobody forced investment banks to sell these CDOs to investors, which included the retail banking side of their own company. Nobody forced insurance companies to sell CDSs to back these CDOs without having any collateral.
@evildictaitor: I respect you for taking the time in finding a solution, but I don't think it solves the fundamental problem. It just fights another one of the symptoms.
The core problem is one of trust. We no longer trust our banks. And they no longer trust each other. Instead of letting banks being corrected by the market, the FED/ECB has started loaning out massive amounts of money. Instead of learning the lesson of trust, they got high on cheap credit.
The problem isn't that we no longer trust banks. The problem is that they're no longer TRUSTWORTHY. The problem is that we continue to trust them despite their lack of trustworthiness. Break them up. Reinstate Glass-Steagall. If they still take on too much risk, buh-bye. Nobody's going to bail you out anymore.The true way out, is for the bank to take it's customers seriously. Because now the customer has no power, he has no voice, so he doesn't have to be taken seriously. Get the government out and the customer back in. Take away the safety net for both banker and customer, so that they have to dance on the cord together. This is the capitalist way, if you are a true capitalist.
Here you go again, making broad statements without connecting any dots. How do get from point A (eliminating government involvement) to point B (banks are magically trustworthy and no longer too big to fail)?
Why would private institutions help out drug addicts? It's the free market, baby. There are better ways to make money than helping drug addicts.
Actually yes, poor banks,.. Forced to be choose between two doom scenario's and being blamed for them,..
What doom scenario? They created their own doom scenario. They weren't forced into it.
They could have issued their loans and sold them outright like they've been doing for 40 years. They didn't need to get into the CDO game.
I would go out with a bang as well.
In other words, slash and burn. Destroy the entire world economy because you think the system isn't fair to you, when all you have to do is control your own greed. Nice.
Those are the normal reserve requirements. You have to have insurance against the money you put into the savings account. The US government states it must be domestic. Since the domestic market was saturated, ING direct bought up the only mortgages that where available on the market.
You dodged the question. What law forced ING to issue CDOs themselves instead of just issuing mortgages and servicing them or simply selling them outright to the GSEs?
I do not "hate government", I just think we have too much of it and that we can attribute a lot of our problems to them.
No, you do hate government. Quit lying to yourself. The first step is to admit you have an irrational hatred of government, and then maybe you'll be taken seriously.
They're covered by government only because they're so big they hold the economy hostage.
So, break them up into little pieces. Reinstate Glass-Steagall. If they get too big break them up again and again and again and again. That's what we do with monopolies. And if any happen to fail from that point on, you let them fail. No bail outs.
Here's Maddus' nonsensical position:
Banks have absolutely no will power and restraint in risk management, so he wants all government regulations removed because then and only then will banks have the will power to avoid another credit crisis like 2007.
That's enough to make one's head explode.
You're suffering from delusions and "bend over for the bank" syndrome. I hope you own a lot of lubricant.
So you have no problem if the government provides welfare and free healthcare to the homeless, jobless drug addict. It's not his fault, right?
So I blame the FED for creating profit hungry banks, who got high on their cheap money.
They would have no CDO's to sell, if they did not have the cheap money to back it up.
Oh, those poor banks! They can't help themselves. They're so addicted to money, that have to grab every dollar they can get their hands on in order to buy mortgages and turn them into exotic and risky financial instruments called CDOs. How dare the Fed for lowering the interest rate!
Yes they do. ING Direct was forced to by these products because law dictates they should reinvest a percentage of the amount of savings they collect back into US mortgages.
Citation please. Lets see the law that states that ING Direct was forced to use leverage in order to issue millions of mortgages in order to create CDOs to sell to other investors. Lets see.*snip*
Good job they are doing!
I wouldn't trust them to fix my car, let alone fix the economy.
I wouldn't trust you to read a children's book and actually understand it, so your distrust of the government is meaningless. Your brain is stuck on "hate government" mode, and nothing is going to convince you that banks are the ones to blame for their own troubles that they created.
I want a government without politicians that are owned by the corporation and voted in by corporate-sycophants like you who don't know enough that these politicians aren't looking after the best interests of the voters.