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The Fed’s Lame Defense of Too Big To Fail
Washington’s Blog
Tuesday, Nov 10th, 2009
Federal Reserve Governor Daniel Tarullo argues that we should not break up the too big to fails or reimpose Glass-Steagall because:
Financial institutions that experienced so many problems — such as Bear Stearns and Lehman Brothers, which did not have commercial banking operations — would still have posed a “too big to fail” threat had commercial banks been prohibited from owning investment banks prior to the crisis.
He also said that commercial banks without investment-banking issues have, in the past, had serious difficulties as well. “Some very large institutions have in the past encountered serious difficulties through risky lending alone.”
That’s like arguing that nuclear power plants shouldn’t be regulated as to how close they are to earthquake faults because some plants failed because their concrete containment dome wasn’t thick enough.
Giant banks become dangerous to the entire economy if one or more of the following occur:
(1) They are too big;
(2) They speculate too much, especially if they are speculating with deposits gained through normal depository banking functions (the whole dynamic Glass-Steagall was enacted to stop); or
(3) They focus too much of their investments in credit default swaps or other instruments which allow massive looting.
Nuclear plants must be sited away from earthquake faults and their containment domes have to be thick enough. Similarly, all 3 of the giant banks problems must be addressed. The TBTFs should be broken up (see this and this). Glass-Steagall should be reimposed. And risky investments which encourage looting and which generally destabilize the system should be reined in.
Note: Sure, higher capital and liquidity requirements – as suggested by Tarullo – would be helpful. But unless the real core risks are addressed, they won’t be nearly enough.
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17 Responses to “The Fed’s Lame Defense of Too Big To Fail”
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November 10th, 2009 at 5:52 am
a film about nwo veri-chip and the coming forced chip implantand cop media you got to watch this and pass it on – resist the mark of the beast http://www.youtube.com/watch?v=CmvCFd866R8
Bray Reply:
November 10th, 2009 at 6:07 am
http://www.KeepTheTruthAlive.com
Colonel X Reply:
November 10th, 2009 at 10:15 am
THERE IS NO SUCH THING AS TOO BIG TO FAIL.
I run my business every day and risk my capital and my family’s capital to own a business and provide jobs. Do you think if I f**Ked up bad enough anyone would bail me out? Hell no! That is the Risk vs. Reward concept and is integral to the Capitalsit system.
Rotten firms should be allowed to fail.
Colonel X Reply:
November 10th, 2009 at 12:03 pm
The Fed is just lame anyway. It’s a criminal enterprise that needs to be eliminated from the face of the earth. Just a bunch of gangster bankers, starting with Bernanke, Paulson, Geithner, anyone named Rothschild, Rockefeller. All of them.
November 10th, 2009 at 9:07 am
Shit just got real.
November 10th, 2009 at 9:20 am
When your ruled by trash and scum and disgusting thieves what do you expect? The FED
is full of thieves we all know this. They don’t fool people.
November 10th, 2009 at 9:21 am
This crap happened in 1987 with Solomon Brothers. Fraud is fraud.
November 10th, 2009 at 9:28 am
THE USA is not 20 in World Corruption list for being NOT corrupt. It is what it is here. as long
as the TOP 1% has all the money everybody happy. It’s third and getting more third world.
Nobody can even do simple math anymore.
November 10th, 2009 at 10:37 am
So Mr Tarullo, would be one of the head criminals then. According to his own statement.
Knowingly commiting fraud and major grand theft ,in the form of derivatives and carbon credits, “Packaging securities into bombs”. Standard oil and ATT was broken up because they were monopolies if anybody remembers, they lost in court.But now its ok.
The legal system is a bought and paid for cartel of thieves in concert with the Banking cartel.
If you have enough money you can twist anything to create a perception of truth ,that is false and untrue, in TRUE reality.
They know it and they are laughing at all of us ,while they slober all over themselves looking at your children.
November 10th, 2009 at 12:27 pm
My understanding of this “too big to fail” concept is that one company going under can start a chain reaction that causes others to go under which cause all of them to go under.
So why is this a problem? Sounds fine to me.
November 10th, 2009 at 1:56 pm
the bottom line is, they consider the US too big to fail. So, they have to keep throwing money at the financial mess, to keep things rolling. they are avoiding the main issue…the nation is broke, and going further in debt. the money they print up is keeping the system running only as a delay tactic. there must be an end to this madness.
November 10th, 2009 at 3:05 pm
It is simple math pointed out by a simple Christian Church article on Rense. The Interest is never created. You can not pay off the debt. You have to create more debt to pay for old debt. A debt free currency is the only way to go. A Silver dollar is totally different then a Paper debt dollar. The INTEREST IS NEVER CREATED.
November 10th, 2009 at 3:11 pm
Plus we are NOW geting into what Thomas Jefferson said could happen and that is Generational Debt Problems. Were one generation enslaves another through debt.
The Founding Fathers for all their faults were not stupid. Plus I really don’t think they threw
off the Rothschild influence until the War of 1812. So the USA after the American Revolution was still being controlled by the Rothschild Bank. Thus the 20 year Charter of the First American Bank.
November 10th, 2009 at 3:18 pm
Has anything really changed. Even this bank was probably cleaner yet Jefferson say its
Flaws. Forth Mchenry was not taken Move the NEW American Bank there…….
http://en.wikipedia.org/wiki/F.....ted_States
November 10th, 2009 at 3:26 pm
It really is easy to see the 100 year plans. 1812 American Bank vs. Rothschild Bank and the War of 1812
1913 The Federal Reserve and then WW1.
And what NOW…. WW3 and some World Bank gig? who knows…..
November 10th, 2009 at 3:30 pm
Tarullo says anything to cover his boss, Obama, who performed the shotgun weddings himself.
November 11th, 2009 at 2:38 am
Over many years we have all been lied to by our Governments, but not just our Governments but many religous leaders. Many things we have been taught are not even in Scripture and millions have swallowed so many lies by these false prophets. If you are a truth seeker please visit the following web site and take the time to read some of the articles, you will be shocked.
http://www.2besaved.com
Blessings
Ben