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

To: TimF who wrote (41617)	3/2/2010 3:22:04 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "If the subsidiary is so totally separate as to effectively be another company, than that's the same as saying "the trading is not alright with me". WRONG! It's saying: Keep it separate from the taxpayer guarantees! Re: "the taxpayers on on the hook for deposit insurance. That insures the deposits, not the bank itself. Wrong in degree! You forget that we operate under a system of Fractional Reserve Banking. (Reserve requirements are at 9% now. So lending is very much greater then the deposit base. So, as we have sadly seen over-and-over again, can also be the magnitude of other risky activities.) When the the institution is put at risk by failed bets from massive risk taking, the ENTIRE FINANCIAL HOUSE wobbles and goes 'boom'. Re: "And if by I-Banks you mean investment banks, than they don't have taxpayer backed deposit insurance." Wrong. They have all converted to bank holding companies now (even Goldman!) so as to have access to the CHEAP FLOW of FUNDING from taxpayer-insured deposit bases, and cheap funding from the Fed window. Re: [the slow, stodgy (but economically systemically IMPORTANT) normal deposit-taking and lending operations!] "Limiting them to such activities creates risk of them being unprofitable when such activities are unprofitable." WRONG! If prop. trading is so very profitable then a subsidiary for prop. trading will 'always' be increasing the company's PROFITS, right? (I mean... damn, you can't have it both ways.)