Hold on, I didn't say anything about the crisis and all the other issues you're raising here... My question is very simple. Do you think, during normal, non-crisis times, the American taxpayer should be lowering the funding costs of the large "supermarket" banks by allowing these banks to use FDIC-insured deposits to fund investment banking activities? This is on top of the implicit govt backstop that the mkt independently prices in for the TBTF banks. And yes, I realise that these large financial institutions only have everyone's best interests at heart and that, without them, society as we know it will surely unravel.
Yes. As much as they should be lowering the funding costs for banks to offer commercial bank lines to corporations, home buyers, and credit card users.
JPMorgan Chase Fires Back At Warren-McCain Plan To Reinstate Glass-Steagall http://www.huffingtonpost.com/2013/07/12/jpmorgan-chase-glass-steagall_n_3587062.html?serious
Indirectly, Jaimie Dimon has something to say about that. http://www.bloomberg.com/video/dimon-throws-down-at-investor-conference-G6o~Ac75SkeeFo5JCpjXBQ.html
I forgot this has already been voted on twice in Dodd-Frank and shot down. Almost zero chance of it passing, at least in this administration.
LOL I said in P&R on the topic of G-S that the media would come out with the same old line, and here it is... http://finance.yahoo.com/blogs/breakout/glass-steagall-ii-not-fixed-break-121308053.html The argument is: It has to be a SINGLE, SILVER BULLET piece of legislation that will GUARANTEE that we can NEVER HAVE another BANKING CRISES for ALL TIME!! OR - the only alternative is - we should do nothing.... He so smart.
Bail-in is the new rule, going forward. Bank failures/deposit confiscations >100K, like Cyprus, will occur in the United States, when the next crisis hits. Glass-Steagall 2.0 mitigates the damage. It won't pass because DC is owned by the banking establishment. Good luck.
It's partly down to that too big to fail argument isn't it. Perhaps it would help if investment companies and banks branch off financially independent companies as they grow. Then if they are mismanaged it won't bring the whole system down.