The too big to fail problem has been central to the degeneration and corruption of the financial system in the north Atlantic region over the past two decades. The ‘too large to fail’ category is sometimes extended to become the ‘too big to fail’, ‘too interconnected to fail’, ‘too complex to fail’ and ‘too international’ to fail problem, but the real issue is size. The real issue is size. Even if a financial business is highly interconnected, that is, if its total exposure to the rest of the world and the exposure of the rest of the world to the financial entity are complex and far-reaching, it can still be allowed to fail if the total amounts involved are small. A complex but small business is no threat to systemic stability; neither is a highly international but small business. Size is the core of the problem; the other dimensions (interconnectedness, complexity and international linkages) only matter (and indeed worsen the instability problem) if the institution in question is big. So how do we prevent banks and other financial businesses from becoming too large to fail?
Remedies for too big to fail
(1) Become too big to save
In a few cases, banks have been not just too big to fail, but also too big to save. The fiscal spare capacity of the state that ultimately backs the financial institutions deemed too big to fail turned out to be insufficient to save them. This happened in Iceland in September-October 2008. The four international banks of Iceland now have all defaulted on their debts. It could happen in other places. Anne Sibert and I have pointed to the dangers of the ‘inconsistent quartet’: a small open economy with a large internationally exposed sector, its own ‘small’ non-global reserve currency and limited fiscal spare capacity. Apart from Iceland, which imploded, this category includes Switzerland and possibly the UK. Ireland, the Netherlands and Belgium have 3 of the four inconsistent characteristics. But for their membership in the Euro Area, their banking systems might have been toast already. For the -US banks and most Euro Area banks, the banks top managers and boards know, however, that they are too big to fail but not too big to save. And they play that card for all it is worth to extract the maximum amount of resources from the hapless tax payer.
Wednesday, March 17, 2010
Too Big to Fail is Too Big
Tuesday, March 16, 2010
Help Your Community Not Big Banks - Move Your Money
If you leave your money with the big banks, they will use it to pay lobbyists to keep Congress from fixing the system. Be a part of the solution and move your money.
For more info, go to http://moveyourmoney.info/
For more info, go to http://moveyourmoney.info/
Monday, March 15, 2010
Big Banks Want You Back - But Don't be Fooled
You may have noticed that big banks have started some new ad campaigns in the last couple months where they call themselves “community-minded.” We’re not fooled by it and we hope you aren’t either. Stacy Mitchell, at the New Rules Project’s Community Banking Initiative, takes a look:
Big banks are being deceptive by using all the right words or appearing to "change"They're using words like “local” and “community,” because they know quite well that there’s a rival for our affections. A recent Zogby poll found that nearly one in ten Americans had moved at least some of their business to small banks or credit unions.
One jilted lover, Citibank, has launched a blog devoted to showcasing the “new Citi.” The site, which Citibank is promoting through newspaper and magazine ads, features a video statement by CEO Vikram Pandit, who offers a few vaguely apologetic statements before detailing how Citi is a changed bank.
We’ve given up boozing and gambling, Citibank seems to be saying as Pandit assures us that the new Citi has embraced “a culture of responsible finance.”
Read more The facts, of course, show that the banks’ statements aren’t true. Big banks continue to do less small business lending than the little guys, and they charge more fees. Nothing “local” or “community” about that.
The only real change that's honest and good for all citizens is for us to move our money out of the big banking system as soon as possible!
Sunday, March 14, 2010
"Too big to fail" financial services institutions have crashed the U.S. economy | BanksterUSA
Toxic Assets Getting You Down?
"Too big to fail" financial services institutions have crashed the U.S. economy, throwing millions out of work, collapsing retirement funds and college savings accounts, and forcing many hard-working Americans into homelessness and poverty.
Due to the complexity of the financial issues and the lack of clear avenues for input, average citizens have had zero role in shaping the policy solutions being proposed by government and industry, even as we are stuck footing the bill for the largest Bankster bailout in history.
If you want to rein-in the Banksters and make sure they never get a chance to do it again, join us. We want www.BanksterUSA.org to be your go-to site for updates on the financial services re-regulation fight in Congress and for progressive net-roots campaigning against the big boys on Wall Street.
We are in a big hole and it is going to take big ideas to get us out of it. We will follow the debates in Congress and update our website with new information and concrete action items on a weekly basis. But we will also launch public education campaigns to put bigger reform ideas on the table, ideas like:
* a new Glass-Steagall Act for a new century ("Break Up the Banks")
* a financial transaction tax ("Repo the Dough"), and
* credit allocation policies ("Putting Wall Street to Work for Main Street.")
Sign up for our regular email alerts and action items under "Get Email Updates" above. Your voice is needed in these debates to ensure that the interests of Main Street are prioritized over the narrow, special interests of Wall Street.
The www.BanksterUSA.org site and our larger Real Economy Project are part of the Center for Media and Democracy (CMD). CMD is a national organization based in Madison, Wisconsin. It was founded by John Stauber in 1993 as an independent, non-profit, non-partisan, public interest group. Lisa Graves became Executive Director of CMD in July, 2009. She previously served as a senior advisor in all three branches of the federal government, as a leading strategist on civil liberties advocacy for the ACLU and others, and as an adjunct professor at George Washington University Law School. Mary Bottari is responsible for the content on BanksterUSA and is the Director of the Real Economy Project for CMD. She formerly worked on global trade issues for Public Citizen's Global Trade Watch division and as Press Secretary for U.S. Senator Russ Feingold.
CMD's mission includes promoting transparency and informed debate by exposing corporate spin and government propaganda. We work to inform and assist grassroots citizen activism in promoting economic justice, public health, ecological sustainability and human rights. CMD publishes SourceWatch.org, PRWatch.org, the Weekly Spin, and now BanksterUSA.org.
Inquiries about this site can be directed to info@banksterusa.org.
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Phone: 608-260-9713, Fax: 608-260-9714
via banksterusa.org
Be sure to check out my newest blog advocating financial reform and moving our money out of big banks and into Community Banks and Credit Unions - http://breakupbigbanks.blogspot.com/
Homeowners Walk Away
This is such a tragedy that so many homeowners are being forced to walk away from their homes while big banks flourish and prey on homeowners.
USbank Fails in Customer Service, Preys on Homeowners
USbank is part of the problem of banks that are too big. Want to be treated like a human being? Then avoid this bank - especially if you are considering getting a Mortgage loan.
This bank dishes out poor customer service and will NOT work with homeowners for any sort of temporary mortgage loan modifications. Instead, this bank works hard to force homeowners into foreclosure.
We're only 1 of many examples. Read more on my blog - http://breakupbigbanks.
Don't feed these greedy big banks. You're not human to them. Instead, put your money into Community Banks and Credit Unions. Read more here - http://www.anewwayforward.org/ and http://www.banksterusa.org/
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