Originally Posted By DAR <a href="http://news.yahoo.com/s/ap/20100422/ap_on_bi_ge/us_obama" target="_blank">http://news.yahoo.com/s/ap/201...us_obama</a> The President spoke with some financial representatives on Wall St. And it sounded great but like any concerned citizen I have some questions. So if one part of this legislation will make sure that the taxpayers do not have to bail out these institutions, a move I endorse, are the banks then out of luck and they just fail? Or is there still a way to keep them active without screwing over the taxpayers? Also what's to prevent the banks from finding a loophole to jack up fees to their customers? I'd like to think these are rather legimate questions but with this group who knows.
Originally Posted By queenbee My understanding is that large banks will pay a fee/tax to maintain a bank funded (as opposed to tax payer funded) bailout fund. This bank funded bailout fund would allow these institutions to fail in an orderly fashion ie not taking the entire financial system with them. As for banks jacking up their fees, banks will charge what the market will bear. They will, of course, try to pass on the fees. They may or may not be able to depending on their specific market.
Originally Posted By Dabob2 Those are legitimate questions. And if you're really interested, you can actually google up some info on the Dodd bill (the middle of the road one most likely to pass) as well as some of the improvements suggested by Sherrod Brown. Start with Dodd's own site: <a href="http://banking.senate.gov/public/_files/FinancialReformSummary231510FINAL.pdf" target="_blank">http://banking.senate.gov/publ...INAL.pdf</a> Now, critics on both the left and right have taken issue with some of Dodd's claims, and you can seek them out too. Here's something on Brown's proposals: <a href="http://www.dailykos.com/story/2010/4/22/75322/7347" target="_blank">http://www.dailykos.com/story/...322/7347</a> If you don't like dailykos, seek out other sites. But Brown addresses your central question.
Originally Posted By DAR If Dodd is leaving office, should he really be proposing legislation or maybe he should what does he have to lose.
Originally Posted By DAR And you're right about the Daily Kos, I trust that site as much as Free Republic which is to say I don't.
Originally Posted By Dabob2 I repeat: if you don't like Daily Kos, seek out other sites. That is, if you're actually interested in finding out about the bills. And Dodd is still a senator till January, and has been working on this for a while.
Originally Posted By dshyates I believe those not seeking reelection are MORE likely to do something that is actually good for the American people than those that are seeking campaign funds from financial and corporate entities.
Originally Posted By Mr X ***So if one part of this legislation will make sure that the taxpayers do not have to bail out these institutions, a move I endorse, are the banks then out of luck and they just fail? Or is there still a way to keep them active without screwing over the taxpayers? Also what's to prevent the banks from finding a loophole to jack up fees to their customers? I'd like to think these are rather legimate questions but with this group who knows.*** Those ARE legitimate questions. But why you feel the need to conclude by pre-insulting the folks you're talking with, I don't get. Anyway, as far as I'm concerned the way to eliminate "too big to fail" is to eliminate the possibility for any one institution to become too big. Frankly, it's an easy thing to do. BUT, there will be flak from the lobbyists about unfair treatment and all that crap, to be sure. As far as that meaning a failed institution is "out of luck" and should there be a way to keep them going, I say no way. Why should that be? Any other company that screws the pooch and goes bankrupt goes away, don't they? And don't forget, prior to the big boys getting in trouble, there were literally hundreds of banks and institutions that failed, went bankrupt, got absorbed or taken over, etc...there's nothing wrong with that, in fact it's the very nature of competition in a capitalist society. Some win, some lose. What is NOT a capitalist thing is to take a company that has failed (totally their own fault, by the way), and bail them out because if you don't the world economy will collapse. What that means is you've got corporations that have become lumbering behemoths, capable of financially ruining everything in their path. How is that good for ANYONE?
Originally Posted By Mr X As far as banks jacking up fees, I agree with qb. They'll try to jack up their rates as much as they can. And at some point, people will simply stop using them. They'll find competitors that offer better rates, or perhaps a different sort of institution (credit union, online pay systems perhaps), or simply keep their money under the mattress until the banks either fail from stupidity or come to their senses.
Originally Posted By DAR I was never for the bailouts and I was always a part of the philosophy let the market correct itself. As for me questioning the group, well I seem to be questioned about everything I post so I just wanted to make sure that was okay.
Originally Posted By Mr X Uh huh. Dude, letting the market correct itself. But you're not understanding what "too big to fail" means. It doesn't mean it will hurt the market (that's fine), it's the idea that those companies going down means they'd take the U.S. (and probably the world) economy down with them. It's a whole lot more dire than just "the market correcting itself". You understand that part, right?
Originally Posted By queenbee Well, DAR, some of these companies are so large that if they go bankrupt in what economist call a "disorderly" fashion it threatens the entire US economy and probably the world economy too. Their sheer size in the marketplace as well as their interconnectedness with other companies contribute to the risk of being "too big to fail". What is being proposed is to allow the "market to correct itself" but in an "orderly" way so as not to collapse the economy. Instead of the taxpayer having to pay if things go bad (or risk economic collaspe) the banks will pay for their own funeral. The "too big to fail" institutions will pay into a bailout fund so regulators could close up shop in a planned way thus eliminating a great deal of the economic collaspe risk.
Originally Posted By Mr X ^---what she said. It was never a matter of protecting "the markets" or "particular companies" per se DAR. It was an emergency measure necessary to prevent total disaster for EVERYONE, and you can see from the fact that a Republican President proposed it and enough Republicans reluctantly went along with it that it was a necessary evil (or at least they claimed it to be so).
Originally Posted By ecdc I think it was mawnck (who I hope returns to posting soon!) who said the way some people talk is like a 1950s classroom filmstrip on Capitalism. In that line of reasoning, the market always fixes itself, there's no such thing as too big too fail, and competition thrives, resulting in better products and better innovation, which benefits all of us. Oh, and any worker can someday be the CEO or own his own company. It just takes hard work, gumption, and American know-how. This is so far from reality today, however. The system has been gamed to nickel and dime consumers to death, to ensure that the rich only get richer, and that competition is strangled. One quick example: If I decided to open a mom-and-pop gas station, and decided to hold a big grand opening promotion with .99 cent gas, I couldn't do it. It's illegal; all the big companies have lobbied state and federal officials insisting that undercutting gas prices would "destabilize" the market. But is there anything less Capitalist than that? Yet this is the system we have.
