Too-Big-to-Ignore Warning: Dodd’s Super-regulator Speeds Train Wreck of Too-Big-to-Fail Banks
Monday, 11/16/2009 - 11:27 am by Lynn Parramore | One Comment
The public didn’t connect the dots on the mortgage crisis until it was too late, partly because the press failed to listen to people like John Ryan of the Conference of State Bank Supervisors. He and his fellow State Regulators saw what was coming. They shouted long and loud to reporters about the coming train wreck. But the story wasn’t sexy enough. Not newsy enough. That is, until the entire economy blew up.
Will we connect the dots this time before it’s too late? As Ryan sees it, Too Big to Fail giants have Washington in their hip pockets. These financial behemoths are getting bigger and more dangerous all the time, and if they aren’t reined in, they will surely cause the next train wreck. Back in November, 2008, in an interview with the Columbia Journalism Review on the mortgage crisis and the collapse, Ryan warned of the Too-Big-to-Fail trap and Washington’s capture: “The decisions being made now in addressing this crisis are going to result in more consolidation, with larger institutions that put us at greater systemic risk,” said Ryan. “In a sense the solution to the problem is rewarding those that caused it. They’ll be bigger and more influential than ever.”
That was a year ago. Now, Ryan and fellow State Bank Regulators are trying to warn the public that Senate Banking Committee Chairman Christopher Dodd’s proposal to create one giant federal bank regulator will create even more risk and favor the very same TBTF banks that ought to be curbed. From a recent piece in the Huffington Post:
“‘The unintended consequences of such a proposal will likely create a too-big-to-fail regulatory agency that reinforces a too-big-to-fail industry,’ Neil Milner, president and C.E.O. of the Conference of State Bank Supervisors, said in a statement.
The federal government policies and actions of the past 18 months have already produced a more consolidated industry — with a handful of ‘haves’ benefiting from explicit and implicit federal backing and with the rest of the banking industry relegated to ‘have not’ status,” the group wrote in a Monday letter to Dodd obtained by the Huffington Post. “Excessive regulatory consolidation will only perpetuate this dichotomy by subjecting the nation’s over 8,000 banks…to a regulatory regime designed to accommodate the needs and business priorities of handful of the nation’s largest and most politically prominent institutions.”
In the Letter to Dodd, the State Bank Regulators warn that giving one agency complete regulatory power will thwart supervision, cripple small banks, and lead to ‘regulatory capture’ — the situation that occurs when the regulator serves the interests of the entity it is meant to regulate rather than, say, the public.
Pass on this link…before it’s too late.
the universe lulls individuals into spoil in order to cleave entire populations as efficiently as possible. the analysis concerning cultural values are more to the point. the culture of greed is self-liquidating, and no regulation can prevent individuals from the lull of the short-cut, which the universe will always present to the individual. the intelligent participants will starve the banks all together.
the talented kids are off building their own economies, leaving a large pool that have never seen an adult work a real job.
the pensions are dependent on the latter, the market is dependent on the pensions, finance is dependent on the markets, government is dependent on finance, and the older generations are dependent on government.
they have the tail wagging the dog. that works right up until the underlying assets, built up over many generations, are liquidated, as they are now across the industrialized world.
the healthcare industry has done the same thing with drugs, creating bubble people that cannot adapt to the environment.
for those bred to seek a short-cut, or bred for dependency on agency, there is no escaping the financial blackhole. the governments that represent a shared vision of productive adaptation will do quite well. the rest will be delegated to History.
just because a government chooses to ignore labor, does not mean that labor is going to fight for representation. real labor always has alternatives readily available in the environment. at the end of the day, someone has to do the work.
pushing paper in make-work jobs and pontificating about discredited economic theory only gets a population so far. the universe ensures increasing Democracy, incrementally to collect maladaptive behavior, and in quantum to eviscerate it.
they locked themselves out of their own computers, which they employed to replace people, they are all dependent on computers as a result, and they have no idea how computers really work.
Posted by kevinearick | November 16th, 2009 at 12:00 pm