Yes, Glass-Steagall should be reinstated but to do so would require an informed, patriotic Congress and a Supreme Court that rejects Citizens United. Woe is us.
Joan, As a pragmatic progressive, I would note that reinstating the Glass Steagall Act, requiring simple majorities in both U.S. chambers, presuming there are 50 Senators receptive to reforming the filibuster to allow the legislation to move to the floor for debate and an up or down majority vote, is not contingent upon rebalancing the 6-3 Supreme Court to repeal Citizens United. As I previously have posted, we get done what we can get done, and then we continue building.
How does a private citizen facilitate filing suit against Fox News for intentionally deceiving (lying) tte public?
Fox News, as evidenced from the recently released internal emails and text messages in the Dominion lawsuit, has continually lied, in an attempt to retain viewership and corporate profits, and Millions of people, including some of family members, believe these lies. These lies have caused hardship in my person relationships, as well as dividing the Nation as a whole.
Something MUST be done!
I, for one, am saying ENOUGH!
Please inform me of the best process to file suit against Fox News for their continued atrocities.
Members of Congress who have a conflict should be barred from voting on a matter when they have personal interests. Every member has to file a financial disclosure statement and trades are monitored.
I don't know this as a fact, but I'd bet that most of the Republicans who oppose stuff like Glass Steagall have conflicts.
Daniel, you are absolutely right, but Republicans aren't the only ones. The Democrats are complicit in all of this, there were enough Dems to gut the laws on the small banks when Trump did that. Also, I was stunned when Pelosi was against a stock law for Congress, she ultimately relented after criticism. Not to mention Diane Feinstein never saw a war she didn't like, he husband cashed in with stocks in the armaments industry. Congress is a bunch of grifters!
All half-smart legislators are in a position to play the markets to their advantage. There is no reasonable way to prevent this that can't be circumvented.
Someone in government has already purchased stock is submarines will ride the high and sell on the down.
That's called insider trading, and it can be made illegal. As you may recall, Martha Stewart went to prison for a relatively small offense, and there's no way families should be trading securities in fields where they have privileged knowledge.
I had to fill out similar financial statements annually during the 29 years I taught school and worked for a County Government. But nothing seemed to happen as a result. Does anyone in the media even bother to read them?
This is a huge problem with the banking industry. Additionally, executive officers are raking in huge profits while the borrower has credit card interest rates above 20%. The banking industry has become your local loan shark.
BUT, it’s not just the banks that are utilizing this concept. Most big businesses are. Whereas the product if the business used to be the value of the business, today the actual product is more of a byproduct to enable the businesses opportunities to increase stock shares and executive officer compensation. That’s where the BIG money is. Meanwhile, quality of the actual product has been reduced because that’s not where the money is.
Something’s gotta give. Soon. Or else, this isn’t going to end well.
The Glass-Steagall Act was the law of the land until 1999. It prohibited banks from making profits off of the deposits entrusted to them...
How does that work? Depositors dump their money in the vault and someone else figures out how to pay the staff and utilities? Without the premise of profitability there would be no banks.
as i mentioned yesterday in your wonderfully educational piece, i absolutely agree with you. glass-steagall must be re-enstated to protect private citizens from thieving bankers.
Girl Scientist, yes, Glass-Steagal and any other regulations that will make banking boring and safe for depositors is essential. Who would have thought it a good idea for banks to work to make profits outside the high interest rates they already charge for loans and mortgages and the extremely low interest rates they pay to use depositors' money? I can see banks needing to invest a small portion of their money to cover borrowers who are notable to pay or bankrupt, but doing that with most of their money makes no sense, and we now see what can happen when banks do that.
In a sense. Obligate private insurance like FDIC for investment banks. The “Invisible Hand” will set rate prices to risk, and drown the attractiveness of speculation.
We need to do more than bring back Dodd-Frank. Yes, that’s the open wound in the banking industry that needs closing.
But we Dems in Congress should take this moment to go after the knife that caused the chaos, and that’s the wiping out of Glass-Steagall. Without it’s separation of commercial and investment banking, professor Reich’s whack-a-mole scenario will never be resolved.
Let’s put pressure on the Senate to pass a bill to reinforce that separation and force Republicans in the House to vote against economic sanity and stability.
Deregulation brings disaster - derailed trains, failing banks. Why do we elect politicians whose sole interest is enriching themselves at the expense of others?
Judy, to people who have no understanding of business and economics, deregulation sounds like "freedom." People want so badly to believe that businesses have their best interests at heart they can't see that it is regulation that helps businesses to keep the people's interests at heart. Without regulation, good regulation, corporations will go after any money they think they can get no matter who is harmed and what damage is done to the economy. Those leading the corporations are so rich, they don't care as much as those deregulators think they should. The 2 banks this weekend hurt a lot of investors, some of those rich corporate leaders, but will not be held accountable for the havoc their irresponsibility and bad actions have caused. They rarely are. Without good regulation, we will just keep repeating this past weekend's bank crisis and maybe in the future we won't be able to bail them out so easily.
Time was, pro-business Republicans opposed poorly-crafted regulations which obstructed creativity. Then, the absolutists wanted no regulation. Except for allowing for moral hazard.
When I was in Mexico many years ago, the common opinion was that anybody who gets into politics and doesn't retire rich must be stupid. Apparently , our politicians were taking notes.
No politician wants to back the middle class because they don’t donate enough during elections to keep the pikers in power. When does either party start talking about The real problems? The class struggle, the wealth disparity, The education system and lack of unionism to take on The billionaires and corporations, just to name a few .It’s almost too late.
You are so right. And that’s why democrats sabotaged him during both of his campaigns. Too many fat cats in politics, and not enough working people involved and it’s worse than ever. Look what Biden did today , gave permission for oil leases on the north slope. Shit, Trump could’ve done that. starting with Billy Clinton democrats became Beholden to the big money greed. Anyone that doesn’t know this has got their heads stuck in a hole in the Sand.
Actually we do donate enough in elections, collectively. That's what's so weird. We have in fact donated enough to help candidates win elections who signed pledges to take nothing from PACS or the fossil fuel industry, and who were opposed by tidal waves of Dark Money. I think there's a critical mass of campaign $$ necessary to get the word out, but beyond that a lot of the $$ now changing hands is pointless. What can overrule self-interest and name recognition though is misinformation spread by corporations: FOX and to a lesser extent the AT&T-funded Herring Networks Inc. that distributes the One America News Network.
Hi --I only know that ATT is or was the primary source of revenue, though DirecTV, of San Diego-Based Herring Networks, and Herring Networks owns and distributes OANN (and one other very shady network, AWE, originally the "Wealth Network"). However it's of interest that Herring Networks was or maybe still is suing AT&T for breach of contract because it spun off DirecTV, from which OANN got 90% of its revenue. https://timesofsandiego.com/business/2022/07/01/san-diegos-oan-hinting-settlement-talks-with-att-deletes-video-in-georgia-deal/
Just one problem, corporate rule! Only HJR48, the We the People Amendment, can and will save us. It will shift the power balance back to We the People, and We will once again REGULATE the banks, (and save our planet)! But our Constitution will not amend itself. We need your help at movetoamend.org.
Lawrence, While a gorgeous agenda, HJR 48 We the People Amendment would require a two-thirds majority in both U.S. chambers plus ratification by three-fourths of the states, a heavy lift to say the least. Hence I propose we focus on passage of H.R.1 For the People which, in 21, passed in the House by a simple majority and could get through the Senate were there 50 Democratic Senators receptive to a modest filibuster rule change that would move the legislation to the floor for debate and an up or down majority vote. H.R.1’s provisions would ensure all eligible votes were cast, counted correctly, and certified without interference and without their being diluted through partisan gerrymandering. Its provisions also would get dark money out of politics. Most important, the legislation likely would pass if we retake the House, seat 50 Senators receptive to a Senate rule change, and hold the Presidency.
As a final point, I would note, that were this progressive legislation to stall in the Senate, the alternative would be to pass the edited down Freedom to Vote Act whose provisions are nearly the same save its far less aggressive stipulations for getting money out of politics. Hardly ideal, but we need to focus on what can get done, and then continue building.
These days I think that nothing short of a French Revolution stands a chance of saving the common man. Greed is universal and deeply entrenched across the congressional aisles.
Good one, Laurie! Of course I was being metaphorical. My point is that nothing will get done until people stand up en masse to the corporate tyranny and greed. Departing Wall Street banks for credit unions may be a good start (I left BofA after quarter of a century, and have never been happier with my financial prospects, not to mention my peace of mind). Support your local or smaller businesses instead of Amazon and alike. Vote out your local representatives who are part of, or profit, from the corporate lobby. And on, and on... In short - hit them where it hurts.
Asta, I like your thinking about mass protests. However, Republicans have that covered too. By keeping the minimum wage low, not supporting paid sick leave, and forcing the energy of people who actually care about the future of this nation focused on issues like maintaining the rights of women to bodily autonomy, protecting child labor laws, moving government and business to take global warming seriously, and so many other important issues, the people are distracted. Focusing on our need to maintain our democracy has left little time and energy for people to stand up to the corporations and banks. If we could address the corporation/bank problems, a lot of the other issues would be less problematic and could be managed. People, alas, have a limited amount of energy and time unless they are the rich corporation and bank owners/operators and other rich folks who delight in the distractions they and the legislators they have purchased are causing. We do need to act, but where first!
Ruth Sheets, I've been told that I'm over reacting & creating conspiracy theories when I suggest that much of the "sudden disasters" we've seen were planned... Not by tfg alone, but more corrupt minds in the background. SO MANY costly issues, caused by deregulation & hidden roadblocks.
The withdrawal from Afganistan, the increase in train derailments, some of the gas prices & deals with Saudi Arabia & Russia?COVID...
Looking back, mistakes were made, but were they part of a plan or incompetence. BOTH!
msbch2u : THEY are crazy like a fox, and calculate and game; use the legal system which is rigged in their favor. You are not crazy. Nor are you a conspiracy theorist.
Saying there's a "group" doing this is misleading imo. There are lots of "groups" doing this, and they don't communicate. But they do have a common goal: More for my group. If that means less for yours, meh.
Daniel Solomon ; King Solomon and the rest of us would agree, I bet! They should do their duty! Too bad they can't be fired! tfg had no problem with that! Why can't Dems get rid of those who work against Democracy! And are criminally inclined! Maybe some legislation that will address some of the harms being done, like banning buy backs and not allowing Congress to own stocks if they are on a committee to police stock trading. Sensible stuff.
Verily so. And, sadly, I do not expect them to, knowing that they are part of the corporate wheel. If anything, the Trump years gave us a good insight as to just what cloth they are cut from.
No, I don’t believe they are, perhaps should be It certainly would help SVB regain some of the money that went into the top execs and purely investment Dollars
I agree wholeheartedly!!!!! I continue to learn so much from you &, so often, find myself thinking “ Well, of course, that’s just common sense.” But greed tramples common sense - even when we should/ could have learned from the past. Banking regulations - what a concept!
Repeal of Glass-Steagall was the most inane of a series of inane acts by Bill Clinton. There followed a quantum leap in Wall Street/corporate wealth and power, an activist SCOTUS, the rejection of Gore, the installation of an avid tax-cutting president, the abominable Citizens United, Lehman Brothers, increased corporate influence in DC via massively increased lobbying, the rape of the medical profession, and now this...SVB crap. It just never goes away.
Adam Smith himself was the first to recognize that capitalism needs to be HEAVILY regulated, and taxes on the wealthy need to be VERY high. This is not difficult.
Clinton made a huge political mistake, the correction for which needs to be political. Obviously this will not come from Trump or Meathead. It seems we need the DNC to be radical for the first time in a century. Sanders is the most popular politician amongst Democrats, and carries 12% of the electorate who would vote for Sanders, but votes Republican if Sanders is not nominated. That's a huge 24% swing, and it's how the Dems lost the Midwest in 2016.
IF BIDEN DOESN'T RUN IN 2024, THE DNC SHOULD GROW A PAIR AND, FINALLY, NOMINATE SANDERS AS PRESIDENTIAL CANDIDATE. I THINK HE WOULD ACCEPT. THEN TRUMP AND MEATHEAD ARE TOAST.
The failure of Corbyn in UK should offer a lesson to those who think Sanders is a credible option for the Democrat future. To win in a two-party system you have to attract the centre ground. However wonderful left-wing policies are (and for the most part they are blindingly obviously correct), they scare voters used to the status quo. Realistically, the idea of reaching a socialist utopia in one giant leap is complete fantasy. As the Right has long understood, the way to make change is one small step at a time. Get voters comfortable with the direction of travel, and then you can drift leftwards inexorably. It’s an uncomfortable reality for those of us impatient to fix things, and to avoid climate disaster, but the alternative is win after win for Republicans.
Corbyn is not the correct analogy. He was deeply unpopular, whereas Sanders is hugely popular. Even amongst Trump's voters. 12% of the total electorate (or about 25% of Trump's voters) would have voted for Sanders were he the Democratic candidate. That's a gigantic swing, and would help explain why, in hypothetical matchups between Trump and Sanders in 2016, Sanders won 70/30. In other words, Trump would have been tost in 2016.
It's a mistake often made in the blue states that Trump's voters are all stupid racist white people who vote routinely against their economic interests. No, many of them are just enraged at the DNC status quo.
As regards socialism, in light of the numbers, it doesn't seem to matter does it? Actually, Sanders is not a socialist at all, he's a Smithian (like Warren) who wants an economy like Denmark. Socialism is quite different - involves government control of key manufacturing industries (shudder).
I don’t call ammunition or manufacturing guns a key industry but I guess it is in this day and time. I’m all for manufacturing coming back to our country. Efff China! Bring our chips and anything else we need to manufacture for our safety and security back home.
I don't believe that Sanders et al progressives think in terms of " one giant leap." Sanders is a pragmatist, a realist, and so are many progressives. But we're caught in a vicious positive reinforcement cycle of economic and cultural inequality. We'd better act fast to get it on the right path. It seems that "drifting left" gradually is an uneasy solution.
I don't know, though. He's pretty radical and it's difficult to believe he thinks it's possible to drift left. Incidentally, he's only radical in the US, in Europe he would be considered mainstream - firmly in the center.
You are using the same old tired arguments that the corporatist establishment that runs the Democratic has used to prevent any of the desperately needed changes to our government (acting on climate chaos, wealth disparity, economic injustice, providing universal healthcare, etc.), using "conventional wisdom" long past the time that conventional wisdom is valid, being that 75% of the American electorate has become anti-establishment, anti-corporatist.
Bernie Sanders had +7 favorability while Hillary Clinton was below -20 favorability, & doing much better head to head against Trump than Hillary. Bernie was first choice of a lot of people sick of the corporatist establishment, who went for Trump or sat it out when Hillary became the Democratic nominee. Young people & Independents need to be inspired to vote for Democrats. Bernie inspired them & Hillary didn't.
Another false theme that the DNC propagated was that it was time & the American people were ready for a woman as President. When Hillary failed, suddenly the message reversed, & it was said in 2020 that a woman couldn't win because the American people were NOT ready for a woman as President, which was conveniently used against Elizabeth Warren, an enlightened progressive like Bernie. No, it was the uninspiring message & campaign of Hillary & her association with corporate America that turned people off, not that she's a woman (not to say misogyny doesn't exist, but it exists mainly in people who won't vote for Democrats or progressives, anyway, so it hardly affects the vote).
The way to change people's minds is to hammer progressive issues over & over like Bernie & Warren have done. Republicans have understood this for decades, consistently taking extreme positions over & over until voters become used to hearing about it & more willing to accept them, while at the same time Democrats started with compromised positions, assuming that Republicans wouldn't accept what Democrats (& the American people) really wanted, & they still couldn't pass their proposals, or if they did, they would be greatly weakened so as to be useless. In this way the country moved far to the right. Democratic conventional wisdom has repeatedly failed & had the opposite effect as proponents have asserted.
Agreed. But I don't think we even have to "hammer" the issues -- voters naturally respond to the right thing. What we have to do is hammer the corporate media until it relents and starts giving us equal time, not only in puny mention at the end of articles and op-eds, but equal time in conversations with their talking heads. AND some damn respect. It's sad, but I wonder how much voters actually read now. And that's where the richness is.
James, Republicans have been working really hard to repeal anything that will help working-class or poor folks in this country since the 1930s. They want a slave class they can bully to get them to produce to make the rich richer and the rich wannabees even more angry, resentful, and willing to blame everyone else for their problems and for their not being at the very top. That really is a long game. The sad thing for me is that so many of us have been willing to go along with the nonsense while allowing ourselves to be blamed for all the problems. We could make change if people could stop voting for a letter "R" (or any other letter) and look at the people who are running or want to run, then decide who is actually worthy of the trust a vote brings with it. No wonder so many folks are angry, resentful, et al. They voted for "R" thinking those "r's" cared a wit about them. They don't and show it over and over, but those "leaders" point the finger everywhere but at themselves, generally the cause of the problem or a major contributor to it. How much evidence would it take to show the people of McCarthy's district, for example, that he is a jerk and only wants power, and cares nothing for them. That is all true, but getting people living in Fantasyland to even notice what is going on is exceedingly difficult, by design.
I think bluestatedemocrats tend to think of the "basket of deplorables" as a bunch of incorrigible morons who continue to vote against their economic interests for unfathomable reasons other than race. While this may be true for some, I think there is a sizeable group which feels betrayed by the Democrats. So their economic position doesn't change, whether they vote R or D, so why not vote R because it drives the Dems crazy.
I learned recently that Sanders remains the most popular politician of either party, which implies that a lot of R-voting 99 percenters approve of him. Even more startling, 12% of Trump's vote would have gone instead to Sanders if he had been running. Think about that for a moment, it means a 24% swing. Now, say Trump got 46% of voters in 2016 and Hillary got 54%. Had Bernie run against Trump, all else being equal, 12% of the total vote would have swung from Trump to Sanders, which means that Sanders would have ended up 66% and Trump 34%, roughly the 2:1 advantage for Sanders that many polls in 2016 predicted.
Clinton had the opportunity of vetoing it. Veto was one of his powers, remember? It was only after a visit by Time Magazine's "Three Wise Men" (don't laugh, Rubin, Summers and Greenspan) that Clinton chose not to veto.
Thank you for sharing this. I thought one pen to paper seemed a rather ridiculous cause of the collapse of the entire banking system. This makes a LOT more sense.
The Capital Police should have marched into his office, or where ever he slept and arrested his ass on Jan 6th put him he jail pending trial. No bail, charged with treason for fomenting an insurrection JMHO.
President Biden said he would ask Congress and banking regulators “to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.” Observers of Silicon Valley Bank’s failure note that the 2018 loosening of banking regulations that had been imposed after the 2008 crash paved the way for SVB’s troubles. One of the lobbyists for this loosening was Greg Becker, who until Friday was the person in charge of SVB.
Meanwhile, David McIntosh, president of the right-wing Club for Growth, retorted, “Changing the rules after the crash to prop-up liberal investors at the expense of taxpayers is pure crony capitalism,” a sentence that seems to mix a bunch of different concepts together. Florida governor Ron DeSantis and Trump-adjacent figures took a different tack, falling back on the culture-war lens they use for everything, blaming the failure not on the company’s poor business decisions but on “wokeness.”
In an opinion piece in the Wall Street Journal, Andy Kessler, who writes on technology and markets, echoed the culture warriors, writing that “in its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have ‘1 Black,’ ‘1 LGBTQ+’ and ‘2 Veterans.’ I’m not saying 12 white men would have avoided this mess,” Kessler wrote, “but the company may have been distracted by diversity demands.”
In other news, House Republicans have ended the congressional investigation into former president Trump’s financial records. Representative Jamie Raskin (D-MD), the top Democrat on the Oversight and Accountability Committee, on Sunday accused committee chair James Comer (R-KY) of coordinating with Trump’s lawyers to end the probe into Trump’s finances. On January 19, 2023, Trump’s lawyer Patrick Strawbridge wrote to the lawyer for Trump’s accounting firm, whose records the committee had subpoenaed in 2019, saying “my understanding is that the Committee has no interest in forcing Mazars to complete it and is willing to release it from further obligations under the settlement agreement.”
Instead of pursuing the investigation into Trump, Comer says he plans to look into “money the Bidens received from China.” Trump accused Biden of taking a $1.5 billion payoff from China without any evidence. Now Comer claims to have “documents to prove” that the Biden family has taken illicit money from China, but there is no evidence that this allegation is true. Raskin revealed Sunday that Comer has quietly subpoenaed 14 years of business records from Bank of America for three of Hunter Biden’s business associates.
Keith, wow, Republicans are deeper in the slime than I had thought. They don't even mind pumping out their racism and misogyny for all to see. DeSantis has proven that at least in the former Confederacy and confederate wannabee states, this is a working strategy. Then there are the insurrectionists in Congress who continue to work to undermine our democracy. I don't understand why We the People are allowing it except that Republicans have weaseled their way into so many important positions it is hard to keep up with it all (sorry weasels - the animal for using you to describe the appalling behavior of a bunch of disgusting human beings). It is unacceptable that so many regulations on businesses and banks have been dropped and that the tax loopholes have permitted so much bad behavior on the part of corporate America. I do have to blame our Department of Justice for some of this, not indicting the leaders of the January 6th insurrection. We would be part-way through the trials of at least some of them by now if indictments had been issued last summer when it was very clear much of who was involved, what they did, and how it is continuing. Those insurrectionists and their buddies were willing to bring down our whole government for their own purposes and are delighted at the thought of bringing down our economy. They think that would bring them closer to their goal, whatever it is. They know that their pensions and everything else they suck from the government every day will still be there for them no matter what they do. Gag!
How exactly would Glass-Steagall have prevented SVB from imploding? Bank investments in Treasury securities was an allowed activity under Glass-Steagall. Let’s not blame lack of basic risk management structures on Glass-Steagall. Who buys a long-term treasury investment portfolio using anything but core deposits, without actively managing interest rate and maturity risk. And why wasn’t at least part of that portfolio “held for sale” and marked to market which would have forced management to face up to it earlier than they did? This was good old-fashioned stupidity in asset-liability management that would have been flagged by the bank examiners in the 80’s or earlier. The difference is that bank management paid more attention to exam findings back then. Now, anyone but the Fed examiners are pretty toothless, at least the Fed has some enforcement tools which the bigger banks need to pay attention to.
According to Elizabeth Warren, Jerome Powell went hog-wild loosening requirements for banks like SVB, some say even beyond what the 2018 law allowed. So, he used his enforcement tools to not enforce. That is why she vehemently opposed his renomination as Fed chair. So, Jerome Powell contributed to the failure of SVB in two ways: rapidly raising interest rates, for which SVB was not prepared, and failure to require that the bank have in place mechanisms to handle changing conditions.
That may be letting management off the hook too much. There were signs rates were going up and the bank had time to restructure its investments to mitigate the effect. My completely uninformed view is that they did not want to recognize any of the losses in the portfolio, even as part of an interest rate and maturity risk mitigation effort, so held off until Moodys made noises about downgrading, and ran out of time. Even a casual observers such as I am, who remember the late 70’s and early 80’s where we saw interest rates of 21%, were making comments a year ago that we hoped Powell would not pull a Volcker. He hasn’t thus far, but basic asset liability management principles still apply. Taking extremely volatile short term money and lending/investing it in long term assets is can be a fools game if you don’t manage it closely.
True, and those unscrupulous executives who absconded with millions in bonuses just before SVB's collapse should be held to account. However, system-wide, as a country, we clearly can't rely on greedy private leadership to forego hefty short-term profits in favor of long-term institutional health and the common good. That is the government's responsibility. Government regulators should be more closely monitoring these banks to ensure they don't pile on the risks, so that they are able to weather unforeseen problems, and it is only the government that can hold SVB's leadership to account.
In the 2008 financial crisis, the too-big-to-fail banks received taxpayer-funded bailouts and their greedy and incompetent executives got off scot-free, so they have no incentive to behave responsibly. Eric Holder, Obama's attorney general, had represented some of those big banks as a private attorney just before his time as attorney general, so I wondered how he could turn around and prosecute his former clients. He couldn't and we all pay the price.
Also, one point -- in the 2005's I had a meeting with the UK Regulator in London, and strongly warned them about the lowering of credit risk standards ins securitisation (of mortgages and other loans). They did not want to hear of it --those were the days when there was "loose touch" regulation, to encourage more financial services activity in the City of London!
Ah yes, loose touch. I had forgotten that phrase. During that time 20 years ago when regulators competed to attract financial firms.
Competed in the US because of the tangled alphabet soup of regulators trying to preserve their relevancy post Glass-Steagall. (Size and influence and regulatory quiescence is the sin of dismantling of Glass-Steagall. Putting that genie back in the bottle would be hard, but not as hard as trying 100 tears later to again disentangle financial services in the face of the Universal Bank concept elsewhere.) The alphabet soup still exists, as does the political sniping and the turf battles between the agencies. I despair of using a 1930’s regulatory regime to address today’s issues.
Competed in the UK to ensure continued primacy of London as a European financial center. Well that didn’t go too well either. At least the UK has not been afraid to re-examine its regulatory structure (for better or worse).
In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.
This is, of course, nonsense. As my colleague Michael Mechanic explained in a newsletter last week, American conservatives (and some Democrats) have been loath to accept any whiff of progressivism in our financial institutions. That's why the Senate blocked a Labor Department rule that would have allowed retirement fund managers to let clients invest in ESG funds—those that consider environmental and social factors. And it's also why they choose to focus not on Silicon Valley greed or lax government regulations, but on the bank's stated support of LGBTQ causes.
Do you think Bear Stearns was "distracted by diversity demands"? Lehman Brothers? Bailey Building and Loan from It's a Wonderful Life? Give me a break.
Regulators are not asleep at the wheel. Regulators' managers are captive. These are captive agencies. I worked in three captive agencies in my career - two federal, one state. It is so easy for the regulatees to capture the regulators.
The press has reported on short sellers publicly drawing attention to SVB's capital position for some time... so surely the situation couldn't have escaped their attention entirely, yeah? (They certainly can't be expected to hedge the bank's risk - but there was something that *could* have been done, even in the case of the bank not being subject to the $250B threshold for stress tests!)
"Despite your assurances to Congress that SVB was sufficiently protected from risk because of your various efforts, it is now clear that SVB was wholly unequipped to independently assess its business’s risk. SVB failed – while its Chief Risk Officer position sat vacant for eight months as its financial standing deteriorated – because it failed to address two key risks: concentration in your client base, and rising interest rates. This is a failure of “Banking 101” – what one analyst called “sheer incompetence.”"
She is 100% correct (and goes on to make the point that stringent standards would have precluded the bank from being in a weak position)... but *even then*, the regulators must have had *something* they could do (as the casual suggestion of complete regulatory capture just seems too convenient); indeed, if standards aren't made more stringent there would have to be some means of accounting for the people who are harmed by the zeroing of the banks' equity & defaulting on its debts, no?
Yes to Glass-Steagall in the US, but assuming JB can progress this, I'm thinking it would be helpful if this is a subject that can be addressed in financial summits led by JB across the developed world, reason being that no one country, not even one of the size and financial strength of the US, can isolate itself from international bank failure. And there's a lot of pretty weak bank regulation still out there, with continuing emphasis from some quarters to reduce what there is. For example, in the UK, where the Government is now seeking to roll back the ring fence legislation (Dodd-Frank equivalent) put in place after the banking crises alongside the UK Treasury also looking to reduce bank stress test levels.
My own view is that this is a subject that needs very serious consideration and action across the developed world, without which I feel at some point the whole pack of cards could collapse.
I agree. I'm sure Janet Yellen is aware and works with other nations to protect the international banking system. For now, we have Powell at the Fed. Doesn't it feel like we have toddlers at the helms of banks, corporations? They want "mine and more right now!" rather than a reasoned look at the big picture and how to proceed in the best interest for all.
Yes, Glass-Steagall should be reinstated but to do so would require an informed, patriotic Congress and a Supreme Court that rejects Citizens United. Woe is us.
Joan, As a pragmatic progressive, I would note that reinstating the Glass Steagall Act, requiring simple majorities in both U.S. chambers, presuming there are 50 Senators receptive to reforming the filibuster to allow the legislation to move to the floor for debate and an up or down majority vote, is not contingent upon rebalancing the 6-3 Supreme Court to repeal Citizens United. As I previously have posted, we get done what we can get done, and then we continue building.
Professor Reich,
How does a private citizen facilitate filing suit against Fox News for intentionally deceiving (lying) tte public?
Fox News, as evidenced from the recently released internal emails and text messages in the Dominion lawsuit, has continually lied, in an attempt to retain viewership and corporate profits, and Millions of people, including some of family members, believe these lies. These lies have caused hardship in my person relationships, as well as dividing the Nation as a whole.
Something MUST be done!
I, for one, am saying ENOUGH!
Please inform me of the best process to file suit against Fox News for their continued atrocities.
Thank you,
Todd
You might want to show this to your family members. https://www.businessinsider.com/fox-news-karen-mcdougal-case-tucker-carlson-2020-9. Good luck to you in suing these snakes!
Good for you
Good luck, hoping for the best outcome for you and your family!!!
"Inch by inch it is a cinch," is a motto we had at work for getting things accomplished that upper management agreed in principle but not in funding.
Members of Congress who have a conflict should be barred from voting on a matter when they have personal interests. Every member has to file a financial disclosure statement and trades are monitored.
I don't know this as a fact, but I'd bet that most of the Republicans who oppose stuff like Glass Steagall have conflicts.
Daniel, you are absolutely right, but Republicans aren't the only ones. The Democrats are complicit in all of this, there were enough Dems to gut the laws on the small banks when Trump did that. Also, I was stunned when Pelosi was against a stock law for Congress, she ultimately relented after criticism. Not to mention Diane Feinstein never saw a war she didn't like, he husband cashed in with stocks in the armaments industry. Congress is a bunch of grifters!
The repeal of Glass was done by a Democrat-WJ Clinton.
SO WHAT!
That’s a fact.
All half-smart legislators are in a position to play the markets to their advantage. There is no reasonable way to prevent this that can't be circumvented.
Someone in government has already purchased stock is submarines will ride the high and sell on the down.
I worked for the government. Lived in a fishbowl. If DOJ finds, out they can prosecute.
That's called insider trading, and it can be made illegal. As you may recall, Martha Stewart went to prison for a relatively small offense, and there's no way families should be trading securities in fields where they have privileged knowledge.
I agree. Daniel, but didn't dumdum McCarthy dispense with the Ethics Committee or defund it in the House of Representatives?
Even if he did, the financial statements are public record.
https://disclosures-clerk.house.gov/PublicDisclosure/FinancialDisclosure
I had to fill out similar financial statements annually during the 29 years I taught school and worked for a County Government. But nothing seemed to happen as a result. Does anyone in the media even bother to read them?
Runaway Capitalism…
This is a huge problem with the banking industry. Additionally, executive officers are raking in huge profits while the borrower has credit card interest rates above 20%. The banking industry has become your local loan shark.
BUT, it’s not just the banks that are utilizing this concept. Most big businesses are. Whereas the product if the business used to be the value of the business, today the actual product is more of a byproduct to enable the businesses opportunities to increase stock shares and executive officer compensation. That’s where the BIG money is. Meanwhile, quality of the actual product has been reduced because that’s not where the money is.
Something’s gotta give. Soon. Or else, this isn’t going to end well.
Expand SCOTUS to 13 justices ⚖️ to accurately reflect the 13 federal appellate districts
Yes, bring back Glass-Steagall! As Elizabeth Warren said, make banking boring again.
The Glass-Steagall Act was the law of the land until 1999. It prohibited banks from making profits off of the deposits entrusted to them...
How does that work? Depositors dump their money in the vault and someone else figures out how to pay the staff and utilities? Without the premise of profitability there would be no banks.
Borrow at 3. Lend at 6. Go home by 3.
as i mentioned yesterday in your wonderfully educational piece, i absolutely agree with you. glass-steagall must be re-enstated to protect private citizens from thieving bankers.
Girl Scientist, yes, Glass-Steagal and any other regulations that will make banking boring and safe for depositors is essential. Who would have thought it a good idea for banks to work to make profits outside the high interest rates they already charge for loans and mortgages and the extremely low interest rates they pay to use depositors' money? I can see banks needing to invest a small portion of their money to cover borrowers who are notable to pay or bankrupt, but doing that with most of their money makes no sense, and we now see what can happen when banks do that.
In a sense. Obligate private insurance like FDIC for investment banks. The “Invisible Hand” will set rate prices to risk, and drown the attractiveness of speculation.
"drown the attractiveness of speculation"
and this is bad ... how??
Not sure how to answer.
We need to do more than bring back Dodd-Frank. Yes, that’s the open wound in the banking industry that needs closing.
But we Dems in Congress should take this moment to go after the knife that caused the chaos, and that’s the wiping out of Glass-Steagall. Without it’s separation of commercial and investment banking, professor Reich’s whack-a-mole scenario will never be resolved.
Let’s put pressure on the Senate to pass a bill to reinforce that separation and force Republicans in the House to vote against economic sanity and stability.
It all goes back to dark money and citizen united. Until that changes, nothing will...unfortunately.
Todd Telford ; Isn't it economic INsanity and INstability that Republicans should be forced to vote against?
BINGO!
Deregulation brings disaster - derailed trains, failing banks. Why do we elect politicians whose sole interest is enriching themselves at the expense of others?
Judy, to people who have no understanding of business and economics, deregulation sounds like "freedom." People want so badly to believe that businesses have their best interests at heart they can't see that it is regulation that helps businesses to keep the people's interests at heart. Without regulation, good regulation, corporations will go after any money they think they can get no matter who is harmed and what damage is done to the economy. Those leading the corporations are so rich, they don't care as much as those deregulators think they should. The 2 banks this weekend hurt a lot of investors, some of those rich corporate leaders, but will not be held accountable for the havoc their irresponsibility and bad actions have caused. They rarely are. Without good regulation, we will just keep repeating this past weekend's bank crisis and maybe in the future we won't be able to bail them out so easily.
Two words that don’t go together: “deregulators think.” They don’t think much at all, they are performing monkeys for the highest bidders.
Time was, pro-business Republicans opposed poorly-crafted regulations which obstructed creativity. Then, the absolutists wanted no regulation. Except for allowing for moral hazard.
When I was in Mexico many years ago, the common opinion was that anybody who gets into politics and doesn't retire rich must be stupid. Apparently , our politicians were taking notes.
No politician wants to back the middle class because they don’t donate enough during elections to keep the pikers in power. When does either party start talking about The real problems? The class struggle, the wealth disparity, The education system and lack of unionism to take on The billionaires and corporations, just to name a few .It’s almost too late.
Bernie Sanders and other progressives are attending to the real issues.
You are so right. And that’s why democrats sabotaged him during both of his campaigns. Too many fat cats in politics, and not enough working people involved and it’s worse than ever. Look what Biden did today , gave permission for oil leases on the north slope. Shit, Trump could’ve done that. starting with Billy Clinton democrats became Beholden to the big money greed. Anyone that doesn’t know this has got their heads stuck in a hole in the Sand.
Actually we do donate enough in elections, collectively. That's what's so weird. We have in fact donated enough to help candidates win elections who signed pledges to take nothing from PACS or the fossil fuel industry, and who were opposed by tidal waves of Dark Money. I think there's a critical mass of campaign $$ necessary to get the word out, but beyond that a lot of the $$ now changing hands is pointless. What can overrule self-interest and name recognition though is misinformation spread by corporations: FOX and to a lesser extent the AT&T-funded Herring Networks Inc. that distributes the One America News Network.
Are you saying AT&T backed distribution of ONN?
P.S. I only want to read the article you read for research.
Hi --I only know that ATT is or was the primary source of revenue, though DirecTV, of San Diego-Based Herring Networks, and Herring Networks owns and distributes OANN (and one other very shady network, AWE, originally the "Wealth Network"). However it's of interest that Herring Networks was or maybe still is suing AT&T for breach of contract because it spun off DirecTV, from which OANN got 90% of its revenue. https://timesofsandiego.com/business/2022/07/01/san-diegos-oan-hinting-settlement-talks-with-att-deletes-video-in-georgia-deal/
Oh, that's not their SOLE interest. They're also happy to enrich the execs who enrich them.
Just one problem, corporate rule! Only HJR48, the We the People Amendment, can and will save us. It will shift the power balance back to We the People, and We will once again REGULATE the banks, (and save our planet)! But our Constitution will not amend itself. We need your help at movetoamend.org.
Lawrence, While a gorgeous agenda, HJR 48 We the People Amendment would require a two-thirds majority in both U.S. chambers plus ratification by three-fourths of the states, a heavy lift to say the least. Hence I propose we focus on passage of H.R.1 For the People which, in 21, passed in the House by a simple majority and could get through the Senate were there 50 Democratic Senators receptive to a modest filibuster rule change that would move the legislation to the floor for debate and an up or down majority vote. H.R.1’s provisions would ensure all eligible votes were cast, counted correctly, and certified without interference and without their being diluted through partisan gerrymandering. Its provisions also would get dark money out of politics. Most important, the legislation likely would pass if we retake the House, seat 50 Senators receptive to a Senate rule change, and hold the Presidency.
As a final point, I would note, that were this progressive legislation to stall in the Senate, the alternative would be to pass the edited down Freedom to Vote Act whose provisions are nearly the same save its far less aggressive stipulations for getting money out of politics. Hardly ideal, but we need to focus on what can get done, and then continue building.
Excellent analysis 👏 👍
@danquick65, My thanks for your affirming reply.
Keep up the good work 👏
These days I think that nothing short of a French Revolution stands a chance of saving the common man. Greed is universal and deeply entrenched across the congressional aisles.
Asta ; What would a French Revolution look like in present day America? Guillotines are not allowed today, are they?
Good one, Laurie! Of course I was being metaphorical. My point is that nothing will get done until people stand up en masse to the corporate tyranny and greed. Departing Wall Street banks for credit unions may be a good start (I left BofA after quarter of a century, and have never been happier with my financial prospects, not to mention my peace of mind). Support your local or smaller businesses instead of Amazon and alike. Vote out your local representatives who are part of, or profit, from the corporate lobby. And on, and on... In short - hit them where it hurts.
Asta ; I have thought credit unions might be a better option than guillotines, and try to support local businesses too.
Asta, I like your thinking about mass protests. However, Republicans have that covered too. By keeping the minimum wage low, not supporting paid sick leave, and forcing the energy of people who actually care about the future of this nation focused on issues like maintaining the rights of women to bodily autonomy, protecting child labor laws, moving government and business to take global warming seriously, and so many other important issues, the people are distracted. Focusing on our need to maintain our democracy has left little time and energy for people to stand up to the corporations and banks. If we could address the corporation/bank problems, a lot of the other issues would be less problematic and could be managed. People, alas, have a limited amount of energy and time unless they are the rich corporation and bank owners/operators and other rich folks who delight in the distractions they and the legislators they have purchased are causing. We do need to act, but where first!
Ruth Sheets ; Good question! If we could get some guardrails and restore some regulations, it would help.
Agree! I am absolutely a fan of credit unions versus giving anything more to those huge banks. I literally cringe when I hear the word, "bank."
Ruth Sheets, I've been told that I'm over reacting & creating conspiracy theories when I suggest that much of the "sudden disasters" we've seen were planned... Not by tfg alone, but more corrupt minds in the background. SO MANY costly issues, caused by deregulation & hidden roadblocks.
The withdrawal from Afganistan, the increase in train derailments, some of the gas prices & deals with Saudi Arabia & Russia?COVID...
Looking back, mistakes were made, but were they part of a plan or incompetence. BOTH!
It was both.
(I do sound a bit crazy. But I'm ok with that.)
msbch2u : THEY are crazy like a fox, and calculate and game; use the legal system which is rigged in their favor. You are not crazy. Nor are you a conspiracy theorist.
msbch2u: Thank you. I have been saying this for months: that a group is causing these sudden disasters and not the Law of Cause and Effect.
Saying there's a "group" doing this is misleading imo. There are lots of "groups" doing this, and they don't communicate. But they do have a common goal: More for my group. If that means less for yours, meh.
Through the neck or through the wallet so they don’t leave it to their kids. Murdock comes to mind!
The Justice Department could but so far hasn't sent the traitors to the metaphorical guillotine...but has the capacity.
Daniel Solomon ; King Solomon and the rest of us would agree, I bet! They should do their duty! Too bad they can't be fired! tfg had no problem with that! Why can't Dems get rid of those who work against Democracy! And are criminally inclined! Maybe some legislation that will address some of the harms being done, like banning buy backs and not allowing Congress to own stocks if they are on a committee to police stock trading. Sensible stuff.
Verily so. And, sadly, I do not expect them to, knowing that they are part of the corporate wheel. If anything, the Trump years gave us a good insight as to just what cloth they are cut from.
They are carbon-neutral, unlike burning at the stake.
No, I don’t believe they are, perhaps should be It certainly would help SVB regain some of the money that went into the top execs and purely investment Dollars
I agree wholeheartedly!!!!! I continue to learn so much from you &, so often, find myself thinking “ Well, of course, that’s just common sense.” But greed tramples common sense - even when we should/ could have learned from the past. Banking regulations - what a concept!
Repeal of Glass-Steagall was the most inane of a series of inane acts by Bill Clinton. There followed a quantum leap in Wall Street/corporate wealth and power, an activist SCOTUS, the rejection of Gore, the installation of an avid tax-cutting president, the abominable Citizens United, Lehman Brothers, increased corporate influence in DC via massively increased lobbying, the rape of the medical profession, and now this...SVB crap. It just never goes away.
Adam Smith himself was the first to recognize that capitalism needs to be HEAVILY regulated, and taxes on the wealthy need to be VERY high. This is not difficult.
Clinton made a huge political mistake, the correction for which needs to be political. Obviously this will not come from Trump or Meathead. It seems we need the DNC to be radical for the first time in a century. Sanders is the most popular politician amongst Democrats, and carries 12% of the electorate who would vote for Sanders, but votes Republican if Sanders is not nominated. That's a huge 24% swing, and it's how the Dems lost the Midwest in 2016.
IF BIDEN DOESN'T RUN IN 2024, THE DNC SHOULD GROW A PAIR AND, FINALLY, NOMINATE SANDERS AS PRESIDENTIAL CANDIDATE. I THINK HE WOULD ACCEPT. THEN TRUMP AND MEATHEAD ARE TOAST.
As Trump would say "Whattya gotta lose?"
The failure of Corbyn in UK should offer a lesson to those who think Sanders is a credible option for the Democrat future. To win in a two-party system you have to attract the centre ground. However wonderful left-wing policies are (and for the most part they are blindingly obviously correct), they scare voters used to the status quo. Realistically, the idea of reaching a socialist utopia in one giant leap is complete fantasy. As the Right has long understood, the way to make change is one small step at a time. Get voters comfortable with the direction of travel, and then you can drift leftwards inexorably. It’s an uncomfortable reality for those of us impatient to fix things, and to avoid climate disaster, but the alternative is win after win for Republicans.
Corbyn is not the correct analogy. He was deeply unpopular, whereas Sanders is hugely popular. Even amongst Trump's voters. 12% of the total electorate (or about 25% of Trump's voters) would have voted for Sanders were he the Democratic candidate. That's a gigantic swing, and would help explain why, in hypothetical matchups between Trump and Sanders in 2016, Sanders won 70/30. In other words, Trump would have been tost in 2016.
It's a mistake often made in the blue states that Trump's voters are all stupid racist white people who vote routinely against their economic interests. No, many of them are just enraged at the DNC status quo.
As regards socialism, in light of the numbers, it doesn't seem to matter does it? Actually, Sanders is not a socialist at all, he's a Smithian (like Warren) who wants an economy like Denmark. Socialism is quite different - involves government control of key manufacturing industries (shudder).
I don’t call ammunition or manufacturing guns a key industry but I guess it is in this day and time. I’m all for manufacturing coming back to our country. Efff China! Bring our chips and anything else we need to manufacture for our safety and security back home.
I don't believe that Sanders et al progressives think in terms of " one giant leap." Sanders is a pragmatist, a realist, and so are many progressives. But we're caught in a vicious positive reinforcement cycle of economic and cultural inequality. We'd better act fast to get it on the right path. It seems that "drifting left" gradually is an uneasy solution.
I don't know, though. He's pretty radical and it's difficult to believe he thinks it's possible to drift left. Incidentally, he's only radical in the US, in Europe he would be considered mainstream - firmly in the center.
You are using the same old tired arguments that the corporatist establishment that runs the Democratic has used to prevent any of the desperately needed changes to our government (acting on climate chaos, wealth disparity, economic injustice, providing universal healthcare, etc.), using "conventional wisdom" long past the time that conventional wisdom is valid, being that 75% of the American electorate has become anti-establishment, anti-corporatist.
Bernie Sanders had +7 favorability while Hillary Clinton was below -20 favorability, & doing much better head to head against Trump than Hillary. Bernie was first choice of a lot of people sick of the corporatist establishment, who went for Trump or sat it out when Hillary became the Democratic nominee. Young people & Independents need to be inspired to vote for Democrats. Bernie inspired them & Hillary didn't.
Another false theme that the DNC propagated was that it was time & the American people were ready for a woman as President. When Hillary failed, suddenly the message reversed, & it was said in 2020 that a woman couldn't win because the American people were NOT ready for a woman as President, which was conveniently used against Elizabeth Warren, an enlightened progressive like Bernie. No, it was the uninspiring message & campaign of Hillary & her association with corporate America that turned people off, not that she's a woman (not to say misogyny doesn't exist, but it exists mainly in people who won't vote for Democrats or progressives, anyway, so it hardly affects the vote).
The way to change people's minds is to hammer progressive issues over & over like Bernie & Warren have done. Republicans have understood this for decades, consistently taking extreme positions over & over until voters become used to hearing about it & more willing to accept them, while at the same time Democrats started with compromised positions, assuming that Republicans wouldn't accept what Democrats (& the American people) really wanted, & they still couldn't pass their proposals, or if they did, they would be greatly weakened so as to be useless. In this way the country moved far to the right. Democratic conventional wisdom has repeatedly failed & had the opposite effect as proponents have asserted.
Agreed. But I don't think we even have to "hammer" the issues -- voters naturally respond to the right thing. What we have to do is hammer the corporate media until it relents and starts giving us equal time, not only in puny mention at the end of articles and op-eds, but equal time in conversations with their talking heads. AND some damn respect. It's sad, but I wonder how much voters actually read now. And that's where the richness is.
Michael Hutchinson ; Who is meathead?
Yes, my question as well: there are so many Repubbie candidates for that appellation!
Try this article.
https://www.theatlantic.com/ideas/archive/2023/03/supreme-court-decisions-conservative-justices-dobbs/673347/
Money / court / control / country = Your country but in a very antebellum way.
The founding fathers knew that the courts control the country. It was debated among
themselves pre - revolution.
Yes, but only one who looks the part.
Michael Hutchinson ; You insult Rob Reiner!
Oh, DeSantis. I thought everyone called him Meathead.
I figured it out. Works for me
MeatBALL. Don’t you follow Trump on Twaddle?
Sorry, Meatball. Though I think Meathead is better.
Noo, haven’t touched Twitter in two years
Michael Hutchinson ; It IS fitting for DeSantis!
Glass-Steagall was hollowed out before the Republican Congress repealed it and Clinton signed the bill.
https://www.politifact.com/factchecks/2015/aug/19/bill-clinton/bill-clinton-glass-steagall-had-nothing-do-financi/
James, Republicans have been working really hard to repeal anything that will help working-class or poor folks in this country since the 1930s. They want a slave class they can bully to get them to produce to make the rich richer and the rich wannabees even more angry, resentful, and willing to blame everyone else for their problems and for their not being at the very top. That really is a long game. The sad thing for me is that so many of us have been willing to go along with the nonsense while allowing ourselves to be blamed for all the problems. We could make change if people could stop voting for a letter "R" (or any other letter) and look at the people who are running or want to run, then decide who is actually worthy of the trust a vote brings with it. No wonder so many folks are angry, resentful, et al. They voted for "R" thinking those "r's" cared a wit about them. They don't and show it over and over, but those "leaders" point the finger everywhere but at themselves, generally the cause of the problem or a major contributor to it. How much evidence would it take to show the people of McCarthy's district, for example, that he is a jerk and only wants power, and cares nothing for them. That is all true, but getting people living in Fantasyland to even notice what is going on is exceedingly difficult, by design.
I think bluestatedemocrats tend to think of the "basket of deplorables" as a bunch of incorrigible morons who continue to vote against their economic interests for unfathomable reasons other than race. While this may be true for some, I think there is a sizeable group which feels betrayed by the Democrats. So their economic position doesn't change, whether they vote R or D, so why not vote R because it drives the Dems crazy.
I learned recently that Sanders remains the most popular politician of either party, which implies that a lot of R-voting 99 percenters approve of him. Even more startling, 12% of Trump's vote would have gone instead to Sanders if he had been running. Think about that for a moment, it means a 24% swing. Now, say Trump got 46% of voters in 2016 and Hillary got 54%. Had Bernie run against Trump, all else being equal, 12% of the total vote would have swung from Trump to Sanders, which means that Sanders would have ended up 66% and Trump 34%, roughly the 2:1 advantage for Sanders that many polls in 2016 predicted.
Why is the DNC so incompetent?
It's as if the corporatist DNC would rather lose to a Republican than win with a progressive candidate not beholden to corporate donors like they are.
Clinton had the opportunity of vetoing it. Veto was one of his powers, remember? It was only after a visit by Time Magazine's "Three Wise Men" (don't laugh, Rubin, Summers and Greenspan) that Clinton chose not to veto.
Alan Greenspan later admitted he made a mistake...
Too little too late.
Sadly, Clinton chose to listen to those 3 not so wise men rather than his own much wiser Secretary of Labor, the honorable Dr. Reich.
Thank you for sharing this. I thought one pen to paper seemed a rather ridiculous cause of the collapse of the entire banking system. This makes a LOT more sense.
See above reply to James Dicker.
The Capital Police should have marched into his office, or where ever he slept and arrested his ass on Jan 6th put him he jail pending trial. No bail, charged with treason for fomenting an insurrection JMHO.
English Grammar?
Right you are, Robert. Bring back Glass-Steagall.
From Heather Cox Richardson
President Biden said he would ask Congress and banking regulators “to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.” Observers of Silicon Valley Bank’s failure note that the 2018 loosening of banking regulations that had been imposed after the 2008 crash paved the way for SVB’s troubles. One of the lobbyists for this loosening was Greg Becker, who until Friday was the person in charge of SVB.
Meanwhile, David McIntosh, president of the right-wing Club for Growth, retorted, “Changing the rules after the crash to prop-up liberal investors at the expense of taxpayers is pure crony capitalism,” a sentence that seems to mix a bunch of different concepts together. Florida governor Ron DeSantis and Trump-adjacent figures took a different tack, falling back on the culture-war lens they use for everything, blaming the failure not on the company’s poor business decisions but on “wokeness.”
In an opinion piece in the Wall Street Journal, Andy Kessler, who writes on technology and markets, echoed the culture warriors, writing that “in its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have ‘1 Black,’ ‘1 LGBTQ+’ and ‘2 Veterans.’ I’m not saying 12 white men would have avoided this mess,” Kessler wrote, “but the company may have been distracted by diversity demands.”
In other news, House Republicans have ended the congressional investigation into former president Trump’s financial records. Representative Jamie Raskin (D-MD), the top Democrat on the Oversight and Accountability Committee, on Sunday accused committee chair James Comer (R-KY) of coordinating with Trump’s lawyers to end the probe into Trump’s finances. On January 19, 2023, Trump’s lawyer Patrick Strawbridge wrote to the lawyer for Trump’s accounting firm, whose records the committee had subpoenaed in 2019, saying “my understanding is that the Committee has no interest in forcing Mazars to complete it and is willing to release it from further obligations under the settlement agreement.”
Instead of pursuing the investigation into Trump, Comer says he plans to look into “money the Bidens received from China.” Trump accused Biden of taking a $1.5 billion payoff from China without any evidence. Now Comer claims to have “documents to prove” that the Biden family has taken illicit money from China, but there is no evidence that this allegation is true. Raskin revealed Sunday that Comer has quietly subpoenaed 14 years of business records from Bank of America for three of Hunter Biden’s business associates.
Typical obfuscation by the Right Wing Republicans in Congress.
Keith Olson ; Weaponizing the courts again, as if the courts have not already been weaponized.
Keith, wow, Republicans are deeper in the slime than I had thought. They don't even mind pumping out their racism and misogyny for all to see. DeSantis has proven that at least in the former Confederacy and confederate wannabee states, this is a working strategy. Then there are the insurrectionists in Congress who continue to work to undermine our democracy. I don't understand why We the People are allowing it except that Republicans have weaseled their way into so many important positions it is hard to keep up with it all (sorry weasels - the animal for using you to describe the appalling behavior of a bunch of disgusting human beings). It is unacceptable that so many regulations on businesses and banks have been dropped and that the tax loopholes have permitted so much bad behavior on the part of corporate America. I do have to blame our Department of Justice for some of this, not indicting the leaders of the January 6th insurrection. We would be part-way through the trials of at least some of them by now if indictments had been issued last summer when it was very clear much of who was involved, what they did, and how it is continuing. Those insurrectionists and their buddies were willing to bring down our whole government for their own purposes and are delighted at the thought of bringing down our economy. They think that would bring them closer to their goal, whatever it is. They know that their pensions and everything else they suck from the government every day will still be there for them no matter what they do. Gag!
Pretty SAD state our country is in!
Weaponizing Congressional Committees I see!
How exactly would Glass-Steagall have prevented SVB from imploding? Bank investments in Treasury securities was an allowed activity under Glass-Steagall. Let’s not blame lack of basic risk management structures on Glass-Steagall. Who buys a long-term treasury investment portfolio using anything but core deposits, without actively managing interest rate and maturity risk. And why wasn’t at least part of that portfolio “held for sale” and marked to market which would have forced management to face up to it earlier than they did? This was good old-fashioned stupidity in asset-liability management that would have been flagged by the bank examiners in the 80’s or earlier. The difference is that bank management paid more attention to exam findings back then. Now, anyone but the Fed examiners are pretty toothless, at least the Fed has some enforcement tools which the bigger banks need to pay attention to.
According to Elizabeth Warren, Jerome Powell went hog-wild loosening requirements for banks like SVB, some say even beyond what the 2018 law allowed. So, he used his enforcement tools to not enforce. That is why she vehemently opposed his renomination as Fed chair. So, Jerome Powell contributed to the failure of SVB in two ways: rapidly raising interest rates, for which SVB was not prepared, and failure to require that the bank have in place mechanisms to handle changing conditions.
That may be letting management off the hook too much. There were signs rates were going up and the bank had time to restructure its investments to mitigate the effect. My completely uninformed view is that they did not want to recognize any of the losses in the portfolio, even as part of an interest rate and maturity risk mitigation effort, so held off until Moodys made noises about downgrading, and ran out of time. Even a casual observers such as I am, who remember the late 70’s and early 80’s where we saw interest rates of 21%, were making comments a year ago that we hoped Powell would not pull a Volcker. He hasn’t thus far, but basic asset liability management principles still apply. Taking extremely volatile short term money and lending/investing it in long term assets is can be a fools game if you don’t manage it closely.
True, and those unscrupulous executives who absconded with millions in bonuses just before SVB's collapse should be held to account. However, system-wide, as a country, we clearly can't rely on greedy private leadership to forego hefty short-term profits in favor of long-term institutional health and the common good. That is the government's responsibility. Government regulators should be more closely monitoring these banks to ensure they don't pile on the risks, so that they are able to weather unforeseen problems, and it is only the government that can hold SVB's leadership to account.
In the 2008 financial crisis, the too-big-to-fail banks received taxpayer-funded bailouts and their greedy and incompetent executives got off scot-free, so they have no incentive to behave responsibly. Eric Holder, Obama's attorney general, had represented some of those big banks as a private attorney just before his time as attorney general, so I wondered how he could turn around and prosecute his former clients. He couldn't and we all pay the price.
Also, one point -- in the 2005's I had a meeting with the UK Regulator in London, and strongly warned them about the lowering of credit risk standards ins securitisation (of mortgages and other loans). They did not want to hear of it --those were the days when there was "loose touch" regulation, to encourage more financial services activity in the City of London!
Ah yes, loose touch. I had forgotten that phrase. During that time 20 years ago when regulators competed to attract financial firms.
Competed in the US because of the tangled alphabet soup of regulators trying to preserve their relevancy post Glass-Steagall. (Size and influence and regulatory quiescence is the sin of dismantling of Glass-Steagall. Putting that genie back in the bottle would be hard, but not as hard as trying 100 tears later to again disentangle financial services in the face of the Universal Bank concept elsewhere.) The alphabet soup still exists, as does the political sniping and the turf battles between the agencies. I despair of using a 1930’s regulatory regime to address today’s issues.
Competed in the UK to ensure continued primacy of London as a European financial center. Well that didn’t go too well either. At least the UK has not been afraid to re-examine its regulatory structure (for better or worse).
Correct! See my longer explanation below. Some misinformed talk has been circulating here.
Diversity is the reason! Say what?
In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.
This is, of course, nonsense. As my colleague Michael Mechanic explained in a newsletter last week, American conservatives (and some Democrats) have been loath to accept any whiff of progressivism in our financial institutions. That's why the Senate blocked a Labor Department rule that would have allowed retirement fund managers to let clients invest in ESG funds—those that consider environmental and social factors. And it's also why they choose to focus not on Silicon Valley greed or lax government regulations, but on the bank's stated support of LGBTQ causes.
Do you think Bear Stearns was "distracted by diversity demands"? Lehman Brothers? Bailey Building and Loan from It's a Wonderful Life? Give me a break.
—Abigail Weinberg
Glass-Steagall should be reinstated, for it is said that banks that live in Glass-Steagall should never throw deposits.
Regulators are not asleep at the wheel. Regulators' managers are captive. These are captive agencies. I worked in three captive agencies in my career - two federal, one state. It is so easy for the regulatees to capture the regulators.
The press has reported on short sellers publicly drawing attention to SVB's capital position for some time... so surely the situation couldn't have escaped their attention entirely, yeah? (They certainly can't be expected to hedge the bank's risk - but there was something that *could* have been done, even in the case of the bank not being subject to the $250B threshold for stress tests!)
https://www.bostonglobe.com/2023/03/14/metro/elizabeth-warren-letter-to-svb-ceo/?s_campaign=breakingnews:newsletter
"Despite your assurances to Congress that SVB was sufficiently protected from risk because of your various efforts, it is now clear that SVB was wholly unequipped to independently assess its business’s risk. SVB failed – while its Chief Risk Officer position sat vacant for eight months as its financial standing deteriorated – because it failed to address two key risks: concentration in your client base, and rising interest rates. This is a failure of “Banking 101” – what one analyst called “sheer incompetence.”"
She is 100% correct (and goes on to make the point that stringent standards would have precluded the bank from being in a weak position)... but *even then*, the regulators must have had *something* they could do (as the casual suggestion of complete regulatory capture just seems too convenient); indeed, if standards aren't made more stringent there would have to be some means of accounting for the people who are harmed by the zeroing of the banks' equity & defaulting on its debts, no?
Yes to Glass-Steagall in the US, but assuming JB can progress this, I'm thinking it would be helpful if this is a subject that can be addressed in financial summits led by JB across the developed world, reason being that no one country, not even one of the size and financial strength of the US, can isolate itself from international bank failure. And there's a lot of pretty weak bank regulation still out there, with continuing emphasis from some quarters to reduce what there is. For example, in the UK, where the Government is now seeking to roll back the ring fence legislation (Dodd-Frank equivalent) put in place after the banking crises alongside the UK Treasury also looking to reduce bank stress test levels.
My own view is that this is a subject that needs very serious consideration and action across the developed world, without which I feel at some point the whole pack of cards could collapse.
I agree. I'm sure Janet Yellen is aware and works with other nations to protect the international banking system. For now, we have Powell at the Fed. Doesn't it feel like we have toddlers at the helms of banks, corporations? They want "mine and more right now!" rather than a reasoned look at the big picture and how to proceed in the best interest for all.