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Warren Stephens: How Big Banks Threaten Our Economy
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Warren Stephens, head of Stephens Inc, in Little Rock, Arkansas, says repeal of the Glass-Steagall Act was a mistake. U.S. banks should have a 5% cap on holdings of total deposits in the U.S., and no "grandfathering" of banks over the 5% limit. Five institutions controlling 50% of the deposits in the U.S. creates too much systemic risk in another financial crisis. Banks should be expected to be one or the other, commercial banks or investment banks, not both. These recommendations are not new. Bank of England Governor, Mervyn King, called for breaking up the largest banks or shrinking the size of the largest banks during the global financial crisis in 2008. This position for banks that are smaller in size is supported by veteran bankers Paul Volcker, Thomas Hoenig and other experts.
Bank of England governor Mervyn King sees the need to breakup the biggest banks.
01/28/2008
Volcker in the USA and Mervyn King in England both agree that speculative and utility banking should be separated, and too big to fail banks broken up. Regulation to prevent a future banking crisis they agree is something of an illusion.
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Liquidity Facility Was Lifeline for Wall Street
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Jon Huntsman on "too-big-to-fail" banks and the need for a tax on banks that exceed a certain percentage of GDP
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'Too Big to Fail' Is Simply Too Big
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How Huge Banks Threaten the Economy
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Not just "too big to fail" but too big to run.
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Bank of America is 10 times the size of Exxon. It has $2.3 trillion in assets.
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Irreversible Damage: Why Little Action on Banking Can Do Great Harm.
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Soul searching about the lack of changes to make the financial system safer after the 2008 global financial crisis
01/15/2010
Soul searching at the IMF, Britain's Financial Services Authority and among experts about the lack of serious changes or reforms in the financial system after the global financial crisis of 2008. Bondholders did not take a haircut in Ireland, and large banks are still "too big to fail." A sense that this could happen again.
Grouped Articles
Wall Street's Giants Try 'Flow Monster' Formula
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GE Capital, AIG to Get More Government Oversight
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Obama Presses Regulators to Finish Financial Rules
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Weâre All Still Hostages to the Big Banks
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Volcker Rule to Curb Bank Trading Proves Hard to Write
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After a Financial Flood, Pipes Are Still Broken
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Simon Johnson and other experts on the capital shortfall and banking crisis in the U.S.
04/15/2010
Johnson points to irreversible damage from the lack of aggressive action with the large banks from the Obama administration. Johnson pointed to the problems with too big to fail banks. now he and Peter Boone give a lucid explanation on the big picture facing America in relation to the task of aggressive action to resolve the banking problem.
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New Life for 'the Volcker Rule'
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Jamie Dimon: Americaâs Least-Hated Banker
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After the reforms: Safer, but not yet safe enough
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Thomas Hoenig and other experts on the "too big to fail" banking crisis that hovers over the U.S. economy
09/23/2010
Former Fed Governor of the Kansas City Federal Reserve Bank for 20 years, Thomas Hoenig, has followed Fed policy over a long period. He has maintained throughout that government backing takes away an essential element in the safe and conservative practices of financial institutions by encouraging the taking of excessive risks. The only way to ensure their safety is for creditors to know they bear serious risks and for the systemically important financial insitutions to know that not following safe financial practices can put these institutions and management out of business.
Grouped Articles
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Banks Ordered to Add Capital to Limit Risks
New York Times 04/08/2014
Different approaches to banking crises- South Korea and the U.S.
04/01/2009
The U.S. leaned on S. Korea to make radical changes in its banking system in 1997, with takeover of banks by the government, closing of loss ridden banks, and creation of a new banking sector. The moves were compressed into a short time because of U.S. pressure. The large influence of bank lobbying in the US, in Republican and Democratic administrations, has led to a situation in which the U.S. banking sector is similiar to what it was before the 2008 crisis, with the same too-big-to fail banks- only larger now- and with unresolved bad housing loans.
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Book portrays dysfunction in Obama White House - The Washington Post
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Plan to Help Banks Clear Their Books Is Halted
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South Korea Makes a Quick Economic Recovery
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'Too Big to Fail' Is Simply Too Big
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How the U.S. Federal Reserve and Treasury define "Systematically Important" or "Too Big to Fail"
02/09/2011
The Fed defines the term as required by the Dodd-Frank financial regulation law.
Grouped Articles
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Fed’s Tarullo Reiterates Support for Raising “Systemically Important” Threshold
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Fed Moves to Label 'Systemically Important' Nonbank Firms
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The Fed's A-Team Hunts for Signs of Risk
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Larry Kotlikoff and other economists who support strong action to strip banks of risk-taking activities.
02/04/2010
Among those who support such moves are Simon Johnson at MIT, Robert Lucas at the University of Chicago, Jeffrey Sachs at Columbia. Most recently Mervyn King, governor of the Bank of England. Glenn Hubbard of Columbia and an advisor to President George W. Bush compares the action needed to breakup "too-big-to-fail" banks to the action taken by Theodore Roosevelt, see the link to Hubbard.
Grouped Articles
Weâre All Still Hostages to the Big Banks
New York Times 08/25/2013
How Larry Kotlikoff Would Fix the Financial System
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New York Times 04/30/2010
New Life for 'the Volcker Rule'
Wall Street Journal 05/01/2010
BusinessWeek 04/15/2010
Ireland Crisis Might Give China Break It Seeks
Unknown 11/19/2010
Liquidity Trap in Japan and the U.S.
03/17/2008
With the demand curve for money horizontal further increases in the money supply do little to lower interest rates, or as in the current situation where the interest rates in the US are virtually at zero so that further increases in the money supply do little to stimulate the economy. As unemployment is growing and the financial sector weak, Bernanke and the Fed see other ways in which quantitative easing helps a recovery. Here Chritopher Woods compares today's situation in America to that of postbubble Japan. He says America is already in a liquidity trap. And the regulatory forbearance to cleanup the banking mess is similiar to that in postbubble Japan when it took the government years to get up the will and strength to straighten out the mess including breaking up the banks that are too big to fail.
Grouped Articles
Is the U.S. Economy Turning Japanese?
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Fed’s Bullard Raises Policy Concerns
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Opinions Are Split on Fed Policy Move
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Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
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The bailout and the Federal Reserve's infusion of cheap money are having unintended effects.
01/20/2009
One impact is that a few securties firms are making large profits even as the smaller banks are failing, banks like Citigroup and Bank of America are suffering losses, and the banks that were "too big to fail" are actually becoming larger. The Fed's infusion of money is not helping small and medium sized businesses with credit, as the smaller banks that lend to these businesses -as Ms. Lee points out- are not getting credit and are laying off people. This is setting off a vicious cycle of shrinking employment and shriking consumer demand.
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How the Fed Can Avoid the Next Bubble
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Steven Pearlstein - Don't Reinflate the Old Bubbles
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Financial-Services Regulation Fuels Tiff
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That Promised Financial Reform
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The lack of action in the "too big to fail" and systemically important financial institutions area one year into the Obama administration.
04/21/2009
Regulatory reform proposals and other actions taken in the first 6 months still leave many banking and financial nstitutions that are too big to fail. Consolidations of banks have actually increasd their size. The dangers in additional bailout assistance if banks suffer huge losses.
Grouped Articles
GE Capital, AIG to Get More Government Oversight
Wall Street Journal 07/09/2013
Weâre All Still Hostages to the Big Banks
New York Times 08/25/2013
Wall Street Journal 05/01/2013
Economists Seek Breakup of Big Banks
Wall Street Journal 04/21/2009
Banks Need Fewer Carrots and More Sticks
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What Does the Market Focus on After the Stress Tests?
Wall Street Journal 05/07/2009
Sanford Weill of Citigroup, former U.S. Fed chairman Volcker, and other voices calling for breakup of the biggest banks
04/29/2012
Weill pushed hard to repeal the Glass Steagall Act. He now says the housing bubble and the financial crisis have proved that this was a mistake. He called for a breakup of the biggest banks on July 23, 2012, in comments to CNBC.
Linked Articles
Big-Bank Pioneer Now Seeks Breakup
Wall Street Journal 07/25/2012
Warren Stephens: How Big Banks Threaten Our Economy
Wall Street Journal 04/29/2012
The risks to the U.S. financial system posed by concentrating 50% of deposits in just 5 banks
10/21/2009
The failure to make changes during the financial crisis of 2008 and the risks this poses in the future.
Linked Articles
Warren Stephens: How Big Banks Threaten Our Economy
Wall Street Journal 04/29/2012
BOE's King: Big Banks Should Get Broken Up
Wall Street Journal 10/21/2009
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