Tuesday, 19 January 2010 18:00

For All of You Guys Who Thought Goldman Was Invincible and the Administration Wouldn't Touch Them...

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I have been advocating this limitation for some time.

For those that listen to CNBC pundits knocking the separation of deposit taking entities from trading risk assuming entities, here are some common sense rebuttals.

This proposal would not have stopped the AIG failure

No, it would not have. It would have prevented deposit taking institutions such as Citibank and JP Morgan from trading on a speculative basis with AIG though. Theoretically, it would have allowed those that would have got jerked on the AIG to have sunk or swam on their own accord. We never had to stop AIG, we had to stop the repercussions of what an AIG would have caused.

  This proposal would harm lending and jobs. This is a bad time.

I don't see how. The banks aren't lending now, and they have the capital. The reason why they aren't lending is #@%$% balance sheets and credit impaired assets.

It's unfair!

What the hell is this? Kindergarten! You're right, it's not fair. The banks have received more than their fair share of assistance. See 10 Ways to say No, the Banks Have Not Paid Back Their Bailout from the Taxpayer! I am all for limiting the size and risk federally insured institutions can take. You don't have to face limitations, just leave the insurance program!

The big foreign banks will just come and take all of the American business if "Glass-Steagal" lite is enacted.

Bullshit! Wall Street has been the leading financial center of the world for many, many decades. We just repealed Glass Steagal in the Clinton administration. Are we suffering from short-term memory-itis?

Ben Bernanke might have outperformed Wall Street on the AIG bailout. The Maiden Lane protfolio has thrown off over $6 billion of cash plus capital appreciation...

This is slightly off topic, but I must correct another CNBCism. Are you guys daft? Let's get this straight. I buy a portolio in distress and back stop the seller for $181 billion. I then take another $350 billion to artificially inflate the bid under these assets. I then sit back as some obvious "non-investor" types claim I am this expert trader that outperformed the other traders that I bailed out and gave an implicit taxpayer put option to. Can you guys even calculate such a small ROI?

 

 I've been calling for reducing risk and breaking up the big banks for some time. It is good to see that politicos read my work :-)

 

 

 

Read 4293 times Last modified on Thursday, 21 January 2010 07:40
Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

Disruptor-in-Chief at Veritaseum.com, where we're ushering the P2P Economy.

 

www.boombustblog.com
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