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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWARREN TO BERNANKE: "So when are we gonna get rid of 'too big to fail?'"
Sen. Warren continues to strike fear among the biggest of the oligarchs - enjoy watching!
"We've now understood this problem for nearly five years," she said. "So when are we gonna get rid of 'too big to fail?'"
[...]
Though Bernanke questioned the accuracy of the $83 billion figure, he admitted that big banks get some subsidy. But he said the market was wrong to give banks any subsidy at all (in the form of lower borrowing costs), insisting that the government will in fact let banks fail. The 2010 Dodd-Frank financial reform law has given policymakers the tools to safely shut down big, failing banks, he claimed.
But when repeatedly pressed by Warren, Bernanke's confidence seemed to waver.
"The subsidy is coming because of market expectations that the government would bail out these firms if they failed," Bernanke said. "Those expectations are incorrect. We have an orderly liquidation authority. Even in the crisis, we -- uh, uh -- in the cases of AIG, for example, we wiped out the shareholders..."
http://www.huffingtonpost.com/2013/02/26/elizabeth-warren-ben-bernanke_n_2766368.html?utm_hp_ref=tw
BeyondGeography
(39,374 posts)Sen. Warren will have him grabbing for the Deer Park by then.
KurtNYC
(14,549 posts)TheCowsCameHome
(40,168 posts)tavalon
(27,985 posts)I can't believe I didn't trust that such a talented and strong woman would be cowed by the "gentleman's" club.
She's magnificent.
dkf
(37,305 posts)That is how the market is pricing the risk.
This is such a stupid argument.
Maybe people would believe the Fed would let big banks fail if they started reining in QE eternity. But they are so determined to build this possibly false confidence that it permeates to the idea that the government still won't let a large bank fail.
This is a government failure to persuade the public/investors their word is good on the subject, not the banks fault.
"This is such a stupid argument."
...if it's such a "stupid argument," why is Bernanke agreeing with it?
I like what Senator Warren is doing, which is highlighting the problems that have plagued the implementation and enforcement of Dodd-Frank. See the exchange beginning at 3:25 mins.
Previously, she went after regulators for not doing their jobs, which has huge implications for Dodd-Frank.
The $83 billion dollars runs counter to the notion that the banks are too big to fail. Invoking Dodd-Frank is fine, but where does enforcement begin?
Under section 121 of the Dodd-Frank Act, if the Board determines that a financial institution poses a grave threat to U.S. financial stability, then the Board, with approval from the Council, shall mitigate that threat.2 The Act offers regulators the flexibility to take a range of actions, including limiting the institutions mergers and acquisitions, restricting or imposing conditions on its products or activities, or ordering it to divest assets or off-balance sheet items.
- more -
http://www.citizen.org/documents/Public-Citizen-Bank-of-America-Petition.pdf
To the extent that the Act expanded the scope of financial firms that may be liquidated by the federal government, beyond the existing authorities of the FDIC and SIPC, there needed to be an additional source of funds, independent of the FDIC's Deposit Insurance Fund, to be used in case of a non-bank or non-security financial company's liquidation. The Orderly Liquidation Fund is to be an FDIC-managed fund, to be used by the FDIC in the event of a covered financial company's liquidation[75] that is not covered by FDIC or SIPC.[76]
Initially, the Fund is to be capitalized over a period no shorter than five years, but no longer than ten; however, in the event the FDIC must make use of the Fund before it is fully capitalized, the Secretary of the Treasury and the FDIC are permitted to extend the period as determined necessary.[36] The method of capitalization is by collecting risk-based assessment fees on any "eligible financial company" which is defined as "[ ] any bank holding company with total consolidated assets equal to or greater than $50 billion and any nonbank financial company supervised by the Board of Governors." The severity of the assessment fees can be adjusted on an as-needed basis (depending on economic conditions and other similar factors) and the relative size and value of a firm is to play a role in determining the fees to be assessed.[36] The eligibility of a financial company to be subject to the fees is periodically reevaluated; or, in other words, a company that does not qualify for fees in the present, will be subject to the fees in the future if they cross the 50 billion line, or become subject to Federal Reserve scrutiny.[36]
To the extent that a covered financial company has a negative net worth and its liquidation creates an obligation to the FDIC as its liquidator, the FDIC shall charge one or more risk-based assessment such that the obligation will be paid off within 60 months (5 years) of the issuance of the obligation.[77] The assessments will be charged to any bank holding company with consolidated assets greater than $50 billion and any nonbank financial company supervised by the Federal Reserve. Under certain conditions, the assessment may be extended to regulated banks and other financial institutions.[78] Assessments are imposed on a graduated basis, with financial companies having greater assets and risk being assessed at a higher rate.[79]
http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Title_II_.E2.80.93_Orderly_Liquidation_Authority
Senator Warren: Why Isnt Wall Street Paying Back Taxpayers For Being Too Big To Fail?
http://www.democraticunderground.com/10022430875
dkf
(37,305 posts)And Merrill. Now they want to take them apart after making BofA take the hit.
It sure is fun to skewer BofA and stick them with all the sins of Countrywide.
That was a mistake anyway. BofA would have been better off throwing that mess into the governments lap in the first place.
Then we could have crashed the FDIC fund and put it all on the taxpayers and left all the robosigning and bad loans as a burden on the collective.
"BofA would have been better off throwing that mess into the governments lap in the first place. "
...fuck taxpayers. Saving Bank of America is all that matters, right?
dkf
(37,305 posts)Mighty convenient for us, making BofA take all the pain then break them up anyway.
Same thing with JP Morgan doing us the favor of taking on Bear Stearns and then getting hit for what Bear did.
The moral of the story is let the banks fail and be a burden to the taxpayer because helping the government out will only bite you.
The lesson is learned.
dkf
(37,305 posts)You should stay away from the financial system period and go on a cash basis.
ProSense
(116,464 posts)"The moral of the story is let the banks fail and be a burden to the taxpayer because helping the government out will only bite you. "
...posting nonsense. I mean, I'm sure you think the banks did us taxpayers a favor by causing the financial crisis.
bvar22
(39,909 posts)We need MORE of THIS:
and LESS of THIS: