HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » WARREN TO BERNANKE: "...
Introducing Discussionist: A new forum by the creators of DU

Wed Feb 27, 2013, 09:36 AM

WARREN TO BERNANKE: "So when are we gonna get rid of 'too big to fail?'"

Sen. Warren continues to strike fear among the biggest of the oligarchs - enjoy watching!
&feature=player_embedded


"We've now understood this problem for nearly five years," she said. "So when are we gonna get rid of 'too big to fail?'"


Though Bernanke questioned the accuracy of the $83 billion figure, he admitted that big banks get some subsidy. But he said the market was wrong to give banks any subsidy at all (in the form of lower borrowing costs), insisting that the government will in fact let banks fail. The 2010 Dodd-Frank financial reform law has given policymakers the tools to safely shut down big, failing banks, he claimed.

But when repeatedly pressed by Warren, Bernanke's confidence seemed to waver.

"The subsidy is coming because of market expectations that the government would bail out these firms if they failed," Bernanke said. "Those expectations are incorrect. We have an orderly liquidation authority. Even in the crisis, we -- uh, uh -- in the cases of AIG, for example, we wiped out the shareholders..."



http://www.huffingtonpost.com/2013/02/26/elizabeth-warren-ben-bernanke_n_2766368.html?utm_hp_ref=tw

15 replies, 1310 views

Reply to this thread

Back to top Alert abuse

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 15 replies Author Time Post
Reply WARREN TO BERNANKE: "So when are we gonna get rid of 'too big to fail?'" (Original post)
kpete Feb 2013 OP
BeyondGeography Feb 2013 #1
KurtNYC Feb 2013 #2
TheCowsCameHome Feb 2013 #3
tavalon Feb 2013 #6
dkf Feb 2013 #4
ProSense Feb 2013 #5
dkf Feb 2013 #7
ProSense Feb 2013 #8
dkf Feb 2013 #9
ProSense Feb 2013 #10
dkf Feb 2013 #11
ProSense Feb 2013 #12
bvar22 Feb 2013 #13
woo me with science Feb 2013 #14
lonestarnot Mar 2013 #15

Response to kpete (Original post)

Wed Feb 27, 2013, 09:48 AM

1. An interesting, civil exchange, certain to be repeated for years to come

Sen. Warren will have him grabbing for the Deer Park by then.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Wed Feb 27, 2013, 09:55 AM

2. When? A: when the US Post Office needs a (hoax-induced) bailout.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Wed Feb 27, 2013, 10:26 AM

3. Is she beautiful, or what?

I'm so glad to have had the opportunity to vote for her.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to TheCowsCameHome (Reply #3)

Wed Feb 27, 2013, 10:50 AM

6. She's turning out to be everything I thought the Senate would kill in her

I can't believe I didn't trust that such a talented and strong woman would be cowed by the "gentleman's" club.

She's magnificent.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Wed Feb 27, 2013, 10:27 AM

4. The $83 billion subsidy is based on the market discounting the governments assertions

 

That is how the market is pricing the risk.

This is such a stupid argument.

Maybe people would believe the Fed would let big banks fail if they started reining in QE eternity. But they are so determined to build this possibly false confidence that it permeates to the idea that the government still won't let a large bank fail.

This is a government failure to persuade the public/investors their word is good on the subject, not the banks fault.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #4)

Wed Feb 27, 2013, 10:45 AM

5. Wait

"This is such a stupid argument."

...if it's such a "stupid argument," why is Bernanke agreeing with it?

I like what Senator Warren is doing, which is highlighting the problems that have plagued the implementation and enforcement of Dodd-Frank. See the exchange beginning at 3:25 mins.

Previously, she went after regulators for not doing their jobs, which has huge implications for Dodd-Frank.

The $83 billion dollars runs counter to the notion that the banks are too big to fail. Invoking Dodd-Frank is fine, but where does enforcement begin?

Public Citizen, a public interest nonprofit organization representing more than 250,000 members and supporters nationwide, hereby petitions the Board of Governors of the Federal Reserve System (the “Board”) and the Financial Stability Oversight Council (the “Council”) to recognize that the Bank of America Corporation (“Bank of America” or “the bank”) poses a “grave threat” to the stability of the United States financial system and to mitigate that threat, as provided by section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or the “Act”). 1 Pursuant to the authority in the Act, the Board and the Council should reform Bank of America into one or more institutions that are smaller, less interconnected, less complex, more manageable and, as a result, less systemically dangerous.

Under section 121 of the Dodd-Frank Act, if the Board determines that a financial institution poses a “grave threat” to U.S. financial stability, then the Board, with approval from the Council, “shall” mitigate that threat.2 The Act offers regulators the flexibility to take a range of actions, including limiting the institution’s mergers and acquisitions, restricting or imposing conditions on its products or activities, or ordering it to divest assets or off-balance sheet items.

- more -

http://www.citizen.org/documents/Public-Citizen-Bank-of-America-Petition.pdf


Orderly Liquidation Fund

To the extent that the Act expanded the scope of financial firms that may be liquidated by the federal government, beyond the existing authorities of the FDIC and SIPC, there needed to be an additional source of funds, independent of the FDIC's Deposit Insurance Fund, to be used in case of a non-bank or non-security financial company's liquidation. The Orderly Liquidation Fund is to be an FDIC-managed fund, to be used by the FDIC in the event of a covered financial company's liquidation that is not covered by FDIC or SIPC.

Initially, the Fund is to be capitalized over a period no shorter than five years, but no longer than ten; however, in the event the FDIC must make use of the Fund before it is fully capitalized, the Secretary of the Treasury and the FDIC are permitted to extend the period as determined necessary. The method of capitalization is by collecting risk-based assessment fees on any "eligible financial company" – which is defined as " any bank holding company with total consolidated assets equal to or greater than $50 billion and any nonbank financial company supervised by the Board of Governors." The severity of the assessment fees can be adjusted on an as-needed basis (depending on economic conditions and other similar factors) and the relative size and value of a firm is to play a role in determining the fees to be assessed. The eligibility of a financial company to be subject to the fees is periodically reevaluated; or, in other words, a company that does not qualify for fees in the present, will be subject to the fees in the future if they cross the 50 billion line, or become subject to Federal Reserve scrutiny.

To the extent that a covered financial company has a negative net worth and its liquidation creates an obligation to the FDIC as its liquidator, the FDIC shall charge one or more risk-based assessment such that the obligation will be paid off within 60 months (5 years) of the issuance of the obligation. The assessments will be charged to any bank holding company with consolidated assets greater than $50 billion and any nonbank financial company supervised by the Federal Reserve. Under certain conditions, the assessment may be extended to regulated banks and other financial institutions. Assessments are imposed on a graduated basis, with financial companies having greater assets and risk being assessed at a higher rate.

http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Title_II_.E2.80.93_Orderly_Liquidation_Authority


Senator Warren: Why Isn’t Wall Street Paying Back Taxpayers For Being ‘Too Big To Fail’?
http://www.democraticunderground.com/10022430875

Reply to this post

Back to top Alert abuse Link here Permalink


Response to ProSense (Reply #5)

Wed Feb 27, 2013, 10:58 AM

7. Bah they wanted BofA to take Countrywide.

 

And Merrill. Now they want to take them apart after making BofA take the hit.

It sure is fun to skewer BofA and stick them with all the sins of Countrywide.

That was a mistake anyway. BofA would have been better off throwing that mess into the governments lap in the first place.

Then we could have crashed the FDIC fund and put it all on the taxpayers and left all the robosigning and bad loans as a burden on the collective.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #7)

Wed Feb 27, 2013, 11:03 AM

8. Yeah,

"BofA would have been better off throwing that mess into the governments lap in the first place. "

...fuck taxpayers. Saving Bank of America is all that matters, right?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to ProSense (Reply #8)

Wed Feb 27, 2013, 11:09 AM

9. Do you get that now they want to take apart BofA for being too big?

 

Mighty convenient for us, making BofA take all the pain then break them up anyway.

Same thing with JP Morgan doing us the favor of taking on Bear Stearns and then getting hit for what Bear did.

The moral of the story is let the banks fail and be a burden to the taxpayer because helping the government out will only bite you.

The lesson is learned.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #9)

Wed Feb 27, 2013, 11:18 AM

10. Yay! n/t

Reply to this post

Back to top Alert abuse Link here Permalink


Response to ProSense (Reply #10)

Wed Feb 27, 2013, 11:36 AM

11. I don't know why you even use banks.

 

You should stay away from the financial system period and go on a cash basis.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to dkf (Reply #11)

Wed Feb 27, 2013, 11:42 AM

12. I don't know why you keep

"The moral of the story is let the banks fail and be a burden to the taxpayer because helping the government out will only bite you. "

...posting nonsense. I mean, I'm sure you think the banks did us taxpayers a favor by causing the financial crisis.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Wed Feb 27, 2013, 12:20 PM

13. Kudos to Senator Warren!

We need MORE of THIS:



and LESS of THIS:

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Wed Feb 27, 2013, 02:35 PM

14. K&R

Reply to this post

Back to top Alert abuse Link here Permalink


Response to kpete (Original post)

Fri Mar 1, 2013, 10:00 AM

15. K & R!

Reply to this post

Back to top Alert abuse Link here Permalink

Reply to this thread