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Time To Cut Big Banks Down To Size?

Sunday, February 10, 2013 - 7:23 PM
Interesting comments on the Too Big To Fail (TBTF) debate:

     they [the TBTF banks] are unhealthy for the financial system even
     when they are healthy. This is because there is a silent subsidy —
     an unfair competitive advantage relative to community banks —
     inherent in being deemed by the government, implicitly but clearly,
     too big to fail.

     Is their debt priced favorably because, being TBTF, they are
     considered especially creditworthy? Brown believes the 20 largest
     banks pay less when borrowing — 50 to 80 basis points less — than
     community banks must pay.

     The 20 largest banks’ assets total 84.5 percent of the nation’s
     gross domestic product.

     banks are not only bigger but also “more opaque than ever.” And
     regulations partake of the opacity: The landmark Glass-Steagall
     Act of 1933, separating commercial banking from investment banking,
     was 37 pages long; the 848 pages of the 2010 Dodd-Frank law may
     eventually be supplemented by 30 times that many pages of rules.
     The “Volcker rule” banning banks from speculating with federally
     insured deposits is 298 pages long.

Read details

Additionally this TBTF group offers some of the least attractive consumer
deposit products in the industry.

So how about a Deposit Accounts straw poll on this one?  I'll start it
off; count me as a yes:  Breakup 1,  No Breakup 0.

Perhaps Ken will edit in one of his cool, first-class pie charts if there's
enough voting interest.
cumuluscumulus359 posts since
Jan 16, 2010
Rep Points: 1,679
1. Sunday, February 10, 2013 - 7:26 PM
Bankbuster Senator Presents A Strong Case

GEORGE WILL: Bankbuster senator presents a strong case » Standard-Times

(Sorry for repeating the post. I saw it with a different title in the above article.)
ShorebreakShorebreak2,686 posts since
Apr 6, 2010
Rep Points: 14,551
2. Monday, February 11, 2013 - 10:34 AM
Thanks cumulus for posting on this and for recommending the poll. Unfortunatley, the forum doesn't have a poll capability. So I did this blog post.
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
3. Monday, February 11, 2013 - 8:35 PM
Thanks Ken for mainstreaming this in the blog with your
five-star overview/summary opening my eyes to issues I was
unmindful of, along with the poll.  The commentary occurring
on the blog article (Wanderer, ytytyt, Shorebreak, lou ...)
is most interesting.
cumuluscumulus359 posts since
Jan 16, 2010
Rep Points: 1,679