1) Do you care to explain or provide a link that explains how money market (i assume accounts) were leveraged? How exactly does that work, i would assume it has something to do with accounting standards which i was talking about in another post. IF that is the case, then the only way to prevent it is to change the accounting standards, otherwise couldn't this happen again even with GS in place? 2) I agree with transparency, depositors should know what their money could potentially be used for, but again that depends on them. There is nothing stopping them from asking right now. 3) The 4.42T that you refer to in insured accounts.. is that the sum of all accounts and not just the portions which are covered by insurance? and does that also include securities accounts, or just deposits? Anyway obviously the FDIC is another joke, as they couldn't even cover a single one of those banks going down. That is bad policy and we should do away with it instead of pretending that we can increase it when the funds aren't there.
1) if you google "money mkt fund reform", you'll find some info. Basically, due to old laws money mkt funds are (still) allowed to not mark to market. So they "guarantee" that their NAV never drops below $1. However, in reality the whole thing is a scam, since they have absolutely no way of guaranteeing the value of the paper they hold, especially when/if they have to liquidate into a distressed mkt (for instance, when there's a wave of redemptions). So yes, it's a matter of accounting standards, like you say, and not directly related to G-S. Reform is kinda on its way, but the industry is fighting it tooth and nail. My point about the MMF stuff was just that it was another way for the banking system to get more leverage, once they could put it to use. 3) Yeah, $4.42trn is all FDIC-insured deposits and it's just deposits, not securities. The thing about the FDIC is that it is very capable of dealing with commercial bank failures. Such failures are part of capitalism and they are adequately covered by the FDIC insurance levies that the banks pay. Just during the recent crisis FDIC dealt with 414 bank failures (incl a lot of smaller banks in the Midwest that got killed by commercial RE loans). Problem is that the FDIC simply cannot deal with a failure of a megabank like Citi or BofA. If such a failure happens and the FDIC has to act, it will draw on taxpayer funds (full faith and credit of the US Treasury stands behind the FDIC). So you have two choices: either break up the TBTF banks, like the Brown-Vitter bill sorta calls for (won't happen, sadly), or, at the very least, ring-fence (and, if necessary, break up) the insured deposits. Both of these things are anathema to the banking lobby, so I am very pessimistic about the prospects,
Prop traders are moving to Hedge Funds: http://www.elitetrader.com/vb/showt...erpage=6&highlight=glass stegall&pagenumber=1 Hedge Fund advertising rule about to become law: http://www.elitetrader.com/vb/showthread.php?s=&threadid=276431 Europe strikes deal to push cost of bank failure on investors http://www.elitetrader.com/vb/showthread.php?s=&threadid=276023 Glass Stegall reinstated? Seems like a logical consequence of the first two above. The argument for the repeal of GS (not Goldman Sachs, although it is an interesting pun) the argument was that Europe did not have a similar law [they move in the opposite direction, see link 3 above], and US banks could not compete and it was actually sold as a national security issue (I don't remember where I read that). If you put the pieces together posted in this and the Economics forum over the years, the logic of causation is pretty straightforward, and I expect it to pass forcefully.
Eliminating TBTF Banks and stopping them from using gov't insured accounts seems to have a general approval by Libs, Conserves, and Indpends as far as I can see (in this thread too). However, whenever you see it discussed, the reporter will always ask the person interviewed - "What are the chances of it passing?" or some such derivation. The answer is almost universally "Slim to none." Now, I'm not sure if that is true because of how bought-and-paid for the slime in DC is, or if there are enough plants in the media to get people watching to just become discouraged and give up on their support for it - sort of a preemptive attempt at derailing it - at least in public perception. Could be both. BUT - it needs to be VERY prominently posted everywhere who and how many politicians will be voting against it. The usual argument is "It's not a silver bullet - so let's do nothing."
To be honest wasn't Hillary an expert cattle futures trader? I know she made a bundle trading cattle.