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Too big to Fail OR Jail
Old 03-21-2013, 02:29 PM   #1
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Too big to Fail OR Jail

This is a rather sobering article. When government officials admit that they don't go after the TBTF banks and insurers its a sad day in America

https://news.fidelity.com/news/artic...&topic=economy
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Old 03-21-2013, 03:08 PM   #2
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Here are my main take-aways from this article:

Quote:
In short, we have the top law enforcement official in the United States admitting that if a bank is big enough and systematically important enough, it will not be subject to the same laws as the rest of us.
Quote:
Lots of people were getting rich off of Citigroup for example, but they weren't the widows and orphans with Citi shares in their mutual funds; they were employees who took big risks, took home big rewards and didn't have to stand good for the mess they made.
As Sheil Bair has been quoted as saying, it's been an "I'll be gone, you'll be gone" game for a very long time.

So why did I work so hard for so many years, keeping my nose clean, working within the rules, paying my taxes, etc. Oh yeah! I have a conscience! I can sleep at night! What we have, we actually earned. There is some sense of gratification in that.
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Old 03-21-2013, 04:34 PM   #3
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It's even worse than this. Because of all the "stuff" that the "big boys" have pulled over the past 20 years, the regulators have laced the land with mines and snipers to show that they are "doing something" (Think of regulations like Sarbanes-Oxley and many others.) If one of us committed some minor technical violation of banking or similar laws (or even rules), it would not be unheard of to be fined a ridiculous amount (or even jailed) - to make an "example" of some poor schnook. No, thankfully, it isn't common, but it can happen. The whim of a regulator is all it would take. And as in any legal fight with the gummint "even if you win, you loose". YMMV
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Old 03-21-2013, 06:24 PM   #4
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It will take some courage to read this, but if you wanna know what's happening, it's all here.

GF&Co: JPM - Out of Control

Explains everything. Reading the whole thing could change your attitude towards banks... forever.
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Old 03-21-2013, 06:57 PM   #5
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Not sure how insurers got included in your post as they are not mentioned in the article at all. Bias perhaps?

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Originally Posted by dtbach View Post
This is a rather sobering article. When government officials admit that they don't go after the TBTF banks and insurers its a sad day in America

https://news.fidelity.com/news/artic...&topic=economy
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Old 03-21-2013, 07:12 PM   #6
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Not sure how insurers got included in your post as they are not mentioned in the article at all. Bias perhaps?
Almost certainly.
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Old 03-22-2013, 08:56 AM   #7
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Originally Posted by Koolau View Post
It's even worse than this. Because of all the "stuff" that the "big boys" have pulled over the past 20 years, the regulators have laced the land with mines and snipers to show that they are "doing something" (Think of regulations like Sarbanes-Oxley and many others.) If one of us committed some minor technical violation of banking or similar laws (or even rules), it would not be unheard of to be fined a ridiculous amount (or even jailed) - to make an "example" of some poor schnook. No, thankfully, it isn't common, but it can happen. The whim of a regulator is all it would take. And as in any legal fight with the gummint "even if you win, you loose". YMMV
As I read all of this I can't help but thinking of playing Chess. Or maybe it's easier to say we are all just pawns in their game.
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Old 03-22-2013, 09:04 AM   #8
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The problem is that to convict someone you have to prove intent, and while there is evidence, all the evidence is circumstantial. The real problem of the institutions is "too big to manage". The country's banking system will remain at risk until the Glass-Steagall Act is reinstated.
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Old 03-22-2013, 09:09 AM   #9
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Quote:
Originally Posted by Koolau View Post
It's even worse than this. Because of all the "stuff" that the "big boys" have pulled over the past 20 years, the regulators have laced the land with mines and snipers to show that they are "doing something" (Think of regulations like Sarbanes-Oxley and many others.) If one of us committed some minor technical violation of banking or similar laws (or even rules), it would not be unheard of to be fined a ridiculous amount (or even jailed) - to make an "example" of some poor schnook. No, thankfully, it isn't common, but it can happen. The whim of a regulator is all it would take. And as in any legal fight with the gummint "even if you win, you loose". YMMV
Over/under regulation at the same time...

From my somewhat limited research on this topic, many of the regulators pre-crash (and likely now, too) were woefully under-qualified; i.e. they didn't really understand what all those fancy-schmancy financial instruments were (and, apparently, neither did the firms' management), and so were unable to "regulate' them intelligently. Mostly what they did was make sure all the right forms were filed...
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Old 03-22-2013, 11:29 AM   #10
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I like Barry Ritholtz's idea for a Too Big To Fail ETF.

http://t.ritholtz.com/bigpicture/#!/...fc7b56707a7f39

In particular, his ideas for a leveraged ETF XTBTF, and the triple-leveraged UTBTF funds are very appealing. Just think. We could invest in a set of large cap companies guaranteed not to fail, and soon to have even less regulatory oversight or pesky capital requirements! These already look like winners:



Just think! We could invest in large cap financials, regulated under the Rules of Acquisition, and backed by the Federal government!
http://en.wikipedia.org/wiki/Rules_o...entioned_Rules
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Old 03-22-2013, 12:24 PM   #11
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Socialism for the rich and powerful, capitalism for everybody else.
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