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If banks are too big to fail

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    If banks are too big to fail

    If banks are too big to fail why are they allowed to get so big in the first place?

    #2
    Originally posted by BrilloPad View Post
    If banks are too big to fail why are they allowed to get so big in the first place?
    Barings, Lehmans to name but a few. Can you really be too big to fail?

    If it's a question of the cost of the damage done by letting a bank fail far outweighs the cost of propping them up then absolutely I agree, that's madness.

    It is my contention that certain banks are allowed to fail, and then the balance sheets are incorporated into a merged high street banking system. By reducing the number of banks, and giving the IMF and Eurozone more control it makes it more easy to implement a global monetary policy.

    Simples.
    Knock first as I might be balancing my chakras.

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      #3
      Originally posted by BrilloPad View Post
      If banks are too big to fail why are they allowed to get so big in the first place?
      And why are we allowing them to get bigger (Lloyds - HBos)

      Comment


        #4
        Originally posted by suityou01 View Post
        .. It is my contention that certain banks are allowed to fail, and then the balance sheets are incorporated into a merged high street banking system. By reducing the number of banks, and giving the IMF and Eurozone more control it makes it more easy to implement a global monetary policy ...
        A kind of communist government? Yeah, I'm sure plenty of EU politicians would love that.

        Why not just *let* big banks fail regardless of the cost - Everything conks out sooner or later, and it gives good opportunities for new or smaller and perhaps more sensible banks to grow.

        I mean it's no great tragedy when a large old tree keels over in the forest. It leaves a large hole and lots of nutrients for other life to exploit. including new young trees.
        Work in the public sector? Read the IR35 FAQ here

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          #5
          Too many people have their life-savings in banks. If you let the banks go under, there would be an uprising/revolution. They're too important in capitalist society.
          Speaking gibberish on internet talkboards since last Michaelmas. Plus here on Twitter

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            #6
            Originally posted by BrilloPad View Post
            If banks are too big to fail why are they allowed to get so big in the first place?
            In the US they repealed the Glass-Steagall Act (Wikipedia) I'm not sure if there was anything in the UK that formally separated the investment banks from commercial banks (in the UK they were known as clearer's).

            There is talk of re-enacting it on both sides of the Atlantic.

            I agree that there should be a separation and that the separate functions should also not be concentrated into a limited number of banks.

            By extension, this should be considered for other large companies. In the US the problems with GM is an example.
            How did this happen? Who's to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror.

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              #7
              I think Lloyds - hbos is a little different as lloyds basically did us all a favour and absorbed a lot of debt of from HBOS.

              Could you imagine what would happen if, for example, RBS just disappeared - with all the companies they own.

              The annoying part is that the government came out aftwards with 'we need radical changes, separate the banks up, tougher regs, etc' and now they are quietly trying to drop it all and say that they just need to be a little tougher and ask the banks what they are doing at some point.

              I agree that they should have been 'saved', but think as failed businesses they should have been slowly wound up and closed down. I think this was the original plan with Northern Rock?

              Perhaps the other option is to promote building societies more to consumers as they (afaik) don't seem to have suffered the same problems?

              Comment


                #8
                Originally posted by MrMark View Post
                Too many people have their life-savings in banks. If you let the banks go under, there would be an uprising/revolution. They're too important in capitalist society.
                All the more reason for them to be smaller. Reduces systematic risk.

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