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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (38491)	11/12/2009 6:22:52 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "So you would forbid them from borrowing to lend if the loans to the bank are not backed by collateral?" Me?????? No. (What I would choose to do is to set floors on the amount of CAPITAL RESERVES that these "too-large-to-be-allowed-to-fail" banks are mandated to keep --- and set those reserve levels in higher and higher amounts, in higher tiers, as the banks' size grew larger and larger. This would incentivize away from massive systemic risks, but do it in a non-bureaucratic and Capitalism-friendly and low cost way.) (But remember: when you say "borrow" above, with respect to these "too-large-to-be-allowed-to-fail" banks, you are nearly in entirety speaking only about them borrowing at subsidized lower then market rates directly from the federal government. The "borrow" you are speaking about is a subsidy from the taxpayers....) Now however, the author of that article is taking a different tack: He wants to say that they should not be allowed to loan IN EXCESS of the collateral's value. Which, in itself, does not seem like such a radical concept to me! After all... what banker in his RIGHT MIND would want to loan at 150% of a firm's real worth? :-)