Is the banking system safe?
robertreich.substack.com
Episode details
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Friends,
Welcome back to my Saturday coffee klatch with Heather Lofthouse (executive director of Inequality Media Civic Action, and my former student), where we talk about the lows and the absurdities of the week. So grab a cup and pull up a chair.
Today, we look at:
— What really happened to Silicon Valley and the other small and medium-sized banks that got bailed out.
— Whether this signals the beginning of a period of financial tumult and chaos on Wall Street, in the stock and bond markets, and for global banks.
— Whether the Fed is likely to raise interest rates next Wednesday.
— What all this means for the bankers and for average people.
What do you think?
Is the banking system safe?
my question: why don't we imprison bank CEOs when their bank crashes? we could bail out regular people, but let everyone else (the greedy board of directors, especially) sink into the quagmire of their own avarice. further, this imprison-the-CEOs is the strategy followed by Iceland, and their economy is one of the strongest worldwide after the 2008 meltdown, as the IMF noted here:
https://www.imf.org/en/News/Articles/2015/09/28/04/53/socar031315a
With regard to the poll, the answer is 'all of the above' and ever repeating cycles. And that because, in answer to your obviously rhetorical question in the title, the banking system is anything but safe. Volatility is, frankly, built into what's been gamblified (did I just invent a word?) by the investment banking world. Volatility is great, cycles are great, bet on any- and everything, hedge any which way. This system will definitely not want to change.
Regulation needs to be put back in place. We need, as was the case once upon a time, a clear separation between traditional banking and all forms of investment banking (aka gambling with other people's money). Who will, once in power, have the guts to do that? There's Warren and Sanders among the rare few - but the powers that be will never allow them at the helm. I think it'll take a collapse far worse than 2007/2008 for a system change, for an actual rebuild of the system.