4/13 NY Times Top Story: 5 Banks Are Still Too Big to Fail...threaten financial stability of U.S.

[amborin]

Regulators Warn 5 Top Banks They Are Still Too Big to Fail

By NATHANIEL POPPER and PETER EAVISAPRIL 13, 2016

A JPMorgan Chase bank branch in Manhattan. Credit Karsten Moran for The New York Times

The nation’s top bank regulators have added an unexpected voice to the growing chorus of critics worried that the biggest American banks, nearly eight years after the financial crisis, are still too big to fail.

The Federal Reserve and the Federal Deposit Insurance Corporation said on Wednesday that five of the nation’s eight largest banks — including JPMorgan Chase and Bank of America — did not have “credible” plans for how they would wind themselves down in a crisis without sowing panic.

That suggests that if there were another crisis today, the government would need to prop up the largest banks if it wanted to avoid financial chaos.

The announcement coincides with a presidential campaign that at times has been dominated by a debate over what danger the big banks still pose to the nation’s economic security. Senator Bernie Sanders of Vermont has called for the biggest banks to be broken up, a stand that his opponent, the front-runner for the Democratic presidential nomination, Hillary Clinton, has criticized.

But Mr. Sanders’ position has drawn sympathy from some on the other side of the political spectrum, including the new president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, who was a Treasury official during the financial crisis.

In long letters sent to the banks this week, the two regulatory agencies pointed to the dangers created by the global reach and complexity of the largest banks, which are bigger now than they were before the 2008 crisis.

The current arrangement could “pose serious adverse effects to the financial stability of the United States,” the regulators said in their letter to JPMorgan.

snip

http://www.nytimes.com/2016/04/14/business/dealbook/living-wills-of-5-banks-fail-to-pass-muster.html?ref=todayspaper&_r=0

[BernieforPres2016]

1. Bernie whiffed on one question in the NY Daily News interview and nobody noticed

Bernie was asked about job losses from breaking up the large banks, because after all a lot of people work for those banks. Bernie said that there would be more people working for credit unions and local community banks. While that might be true, it missed the bigger point.

What Bernie didn't say, but should have, is that most of these handful of dominant banks, particularly Bank of America, Citigroup and Wells Fargo, became that way via merger after merger over 2-3 decades. After every one of those mergers, employees were laid off (you don't need 2 sets of management, 2 IT departments, 2 HR departments, etc.), and "redundant" branches and ATMs were closed. In addition to eliminating jobs, it reduced competition and consumer choice. If the process was put into reverse by breaking up the too big to fail financial institutions, it would have the opposite effect. It would add jobs, bank branches, ATM machines and consumer choice.

[amborin]

2. Excellent points!

would make a good article

[BernieforPres2016]

3. The megabank mergers also removed autonomy from local branches

There used to be a decision maker in local bank branches 30 years ago, somebody who could decide to make a small business loan based on his or her experience and judgment. Today, the decision making is centralized in the mega banks and the people in the branches are glorified clerks. Decisions are made on the basis of formulas, FICO scores and other inflexible metrics handed down from headquarters.

[me b zola]

4. This underscores just how important Bernie's campaign is

...and how badly we need leaders like Bernie to fight the good fight.

Rock on Bernie!

[amborin]

7. yes, exactly; it is what Bernie has been saying;

[Armstead]

5. Bernie was and is absolutely right on this

Maybe instead of amplifying a few "ums" in that Daily News hit piece...and the Clinton campaign's Brockian/Rovian misleading spin jobs, people might want to watch how accurate Sanders was in 1998 when this crap was being put into place.



On Glass Stegal in 1998

[Impedimentus]

6. No problem. Hillary is going to tell them to "cut it out".

Don't worry, be happy.

FEEL THE BERN - 2016

[me b zola]

8. K&R