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

To: TimF who wrote (41545)	3/1/2010 4:15:24 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "Propietary trading by banks was not a significant cause of the real estate bubble" Never argued that it had been... but I DO BELIEVE it could easily be a big contributor to the NEXT CRASH. (The seeds were laid way back with the Long Term Credit hedge fund crisis.) Do not be confused though! I have ZERO problem with banks, or I-banks, or Hedge funds doing all the proprietary trading that they WANT TO! Just NOT in any possible way, shape, or form, (or structure or magnitude) that could POSSIBLY risk capsizing themselves and forcing the taxpayers to make good on the federal DEPOSIT INSURANCE GUARANTEES that they carry on their deposit base --- the source of much of their funding. So... if it is necessary for them to spin-off their prop. trading activities into a separate corporate form that can have NO RECOURSE to the asset base of the parent corp., (and/or the insured deposits), or some completely different policy is required to guarantee this --- for example, vastly raising the fees that they must pay into the deposit insurance guarantee fund if they insist upon keeping their risky prop. trading inside the same house where insured deposits go, or vastly raising Reserve Requirements on all of the "too big to fail" firms that have insured deposit bases and maintain prop. trading.... Makes no 'never-mind' to me. I'm fairly agnostic about the exact policy: I just want what will WORK BEST at defraying this risk to the taxpayers. If banks want to speculate wildly like Hedge funds that's FINE with me --- just completely SEPARATE that action from all of the insured deposits --- so if and when it periodically BLOWS UP it can be allowed to sink beneath the waves without any hit to the taxpayers. And the stodgy old deposit-taking bank can roll on it's merry way.... 'Cause the ABSOLUTE WORST model of all is "Private Profits and Socialized Losses".