U.S. banks told to make plans for preventing collapse

http://www.reuters.com/article/2012/08/10/us-banks-recoveryplans-idUSBRE87905N20120810

by uptown • 14 years ago

41 98 14 years ago

macavity23• 14 years ago

Emphasizing that the banks could not count on government help

Absolute bollocks. If any of the major banks collapse, there will be a crash much, much worse than 2008. There is precisely zero chance of government sitting by and allowing that to happen - and the banks know it.

chimi4• 14 years ago

In a mathematical sense, how is what has happened with the US banks any different than living under a monarchy where the king can take risks at the expense of the ruled? Isn't escape from this kind of tyranny the reason the first colonists left England?

I'm feeling very John Galt here. 10% of the country is getting unemployment. N% additionally is getting subsidized rent, subsidized farmland, subsidized food, subsidized corporations and banks.

I'm an Entrepreneur and I need every penny. Every penny I keep is reinvested into a business that creates value for the world. HFT doesn't create value for the world. Food Stamps. I don't get bailed out when the weather is bad and my garden dies. I don't have any debt. I don't have a car payment or a house payment.

I'm responsible -- and I'm starting to wonder, really, what's in it for me? We are in a drought and our city has banned outside water usage. We can't fill pools, wash cars, or even water our garden, yet, last night, I go for a walk with my wife and what do I see? Two little kids playing in a big pool of fresh clean city drinking water. People don't care enough.

How are we going to fix our society? It's broken fundamentally. It's like people have disconnected from their role in a larger group of people around them. We get food from a store sold by someone we only know by a plastic name tag. We don't grow anything. We don't know anyone except those who work in the next cube and our family and friends who we don't really depend on unless we are a struggling recent college grad who can't find a job and moves home and those stories are mostly not enjoyable tales told by the disgruntled.

The banks have caused immeasurable suffering to millions, tens, no HUNDREDS of millions of people, perhaps even BILLIONS of people -- and the only banking employee arrested or tried or even simply just stopped from doing what they did to cause that pain is a programmer who took some code from Goldman Sachs. Goldman Sachs itself was cleared of ANY wrong doing in this mess: http://www.keyc.tv/story/19239634/goldman-sachs-cleared-in-s...

We have to fix it. It has to be fixed. We can't keep going down this road, but I don't see anything really changing. Why isn't anything really changing? Why aren't we having serious existential conversations that really deeply change our society to one that will not collapse?

Do we really think telling the banks to do it will work? Do we really still trust them?

I'm really dismayed by all this.

rayiner5• 14 years ago

At the core of our problems is the John Galt mentality. The idea that you do all these things and other people are mooching off it. The idea that we're anything other than the highly complex and completely inter-dependent society that we really are.

If you're an "entrepreneur"... you didn't build that. Your employees are the result of subsidized education. Your customers get to your location driving on subsidized roads. Your electricity, water, sewage, etc, is all subsidized infrastructure. You depend on subsidized legal infrastructure to mediate your interactions with other businesses and customers. If you're a tech business, then 90% of the theoretical foundations of your business are the product of subsidized research.

You can't create wealth without community. The only real "John Galt's" in the world are primitive hunter/gatherers. Romanticized portrayals aside, these people have no wealth--they constantly live at the edge of death. You're not John Galt. You're privileged to live in a sophisticated, organized, interdependent community.

twoodfin9• 14 years ago

This isn't an argument. It's rhetoric. If it were an argument, it would attempt to establish the criteria for deciding whether a particular set of government programs and the means for paying for them were ideal. Surely there must be some level of democratically ordained wealth redistribution that would qualify as "mooching", no?

HNx013• 14 years ago

And who do you think built the infrastructure you're describing? I'll give you a hint: it wasn't the leeches.

And what exactly do you think will happen to entrepreneurs who continue to build more infrastructure for future generations as the cost of working within our system begins to outweigh its benefits?

lupatus7• 14 years ago

This is incorrect, for the USA at least, and I suspect other countries as well, because you are ignoring the facts of history.

Those roads exist because people had to get somewhere. In the beginning, those somewheres were private Trading Posts that were often setup at the crossroads of Indian trails or the confluences of rivers. The successful Trading Posts gradually attracted more settlers and those settlers subsidized the construction and maintenance of the roads to and from the Trading Posts.

You have the cause and effect reversed. The successful entrepreneurs don't exist because of subsidized infrastructure. Subsidized infrastructure exists because of successful entrepreneurs.

cheap• 14 years ago

Wait a second, the man was complaining about society disconnecting from their overall objective. The only people today that understand anything that is going on are the ones trying to contribute. The rest are turning off, tuning away and dropping out through THEIR subsidized living. How do we continue to maintain that? You are basically saying the status quo is a perfectly fine environment for a society when its not. Not at all.

Yes, we are "privileged to live in a sophisticated, organized, interdependent community". Does the rest of the community know this? No, and they're not demonstrating that at all. Just look over the past 100 years and tell me which generations knew they had it good and strived to continue that effort.

Only dead societies can tell the tales we're starting to.

kamaal4• 14 years ago

From where do you think subsidies come from? They don't appear from thin air do they?

They are there as some one is paying taxes.

People are worried about a middle class segment of crowd being taxed to teeth and every body else really leeching on their contributions. Look at it, corporations play every trick valid by the rule book to avoid paying taxes. Rich have their money parked in tax havens. Poor need social security.

The middle class is heavily burdened by taxes.

On top of this government wants to be in endless wars. Most of which makes zero sense. The rich at wall street- most of who are practically adding zero value. They earn the most, and demand the most financial security in case of economic collapses. They take zero responsibilities for their actions. If all this had happened with some ordinary citizens they would go to jail. When you look at all this, it looks like a cartel.

No wonder people are pissed.

Note: I am Indian, staying in Bangalore. I am not a US citizen.

13rules9• 14 years ago

"Your employees are the result of subsidized education, etc, etc, etc"

That's all find and dandy, but the fact is that there are millions out there sitting on their collective assess while the few of us are doing the work.

There are roads, bridges, education, internet, all accessible to them as well, yet they do nothing.

InclinedPlane• 14 years ago

You have it exactly backwards. Entrepreneurs and workers very much do "build that". Not only that, they build our government. They're the ones who pay taxes. Yes, they get benefit from those taxes but don't forget that they still pay them.

HotKFreshSwag• 14 years ago

If you're feeling very John Galt take a deep breath. Remember that you're not a fictional character in a fictional society. You're a real person in real society where Entrepreneurs(with a big E) get subsidized security, roads, mail, water, food, electricity, education, health care, etc.

Ayn Rand was a very disturbed individual.

"In her notebooks Ayn Rand worshiped a notorious serial murderer-dismemberer, William Edward Hickman, whose gruesome, sadistic dismemberment of 12-year-old girl named Marion Parker in 1927 shocked the nation. Rand used this killer as an early model for the type of "ideal man" she promoted in her more famous books."

"What did Rand admire so much about Hickman? His sociopathic qualities: "Other people do not exist for him, and he does not see why they should," she wrote, gushing that Hickman had "no regard whatsoever for all that society holds sacred, and with a consciousness all his own. He has the true, innate psychology of a Superman. He can never realize and feel 'other people.'" "

GFKjunior• 14 years ago

I hate Rand but that was an ad hominem attack and not much else.

But more importantly;

"Entrepreneurs(with a big E) get subsidized security, roads, mail, water, food, electricity, education, health care, etc."

I'm pretty sure it's the other way around. The taxes levied on businesses and individuals pay for the (often shoddy and wasteful) infrastructure and services.

mrbgty2• 14 years ago

"You're a real person in real society where Entrepreneurs(with a big E) get subsidized security, roads, mail, water, food, electricity, education, health care, etc."

Just because they get those things, doesn't mean it's the best way to get them, or that they wouldn't prefer to get them in some other way.

twoodfin9• 14 years ago

The banks have caused immeasurable suffering to millions, tens, no HUNDREDS of millions of people, perhaps even BILLIONS of people...

How does that work, exactly? I mean were Amazon and Qualcomm and eBay responsible for the "suffering" of the dot com crash and the subsequent global recession?

A speculative bubble burst and the result was a serious, systemic credit crunch and a deep recession. That's not a crime.

uptown2• 14 years ago

"A speculative bubble burst and the result was a serious, systemic credit crunch and a deep recession. That's not a crime."

I'll give you an example. Take a look at LIBOR (somebody should, 'cause the mean-stream media has hardly mentioned it):

http://en.wikipedia.org/wiki/Libor_scandal

From CNN: "Libor is the world's most important benchmark for interest rates. Roughly $10 trillion in loans -- including credit card rates, car loans, student loans and adjustable-rate mortgages -- as well as some $350 trillion in derivatives are tied to Libor."

dev_jim4• 14 years ago

Urgh, Hacker News gets worse and worse every day. When did crazy Libertarian rants become part of the popular discourse here?

debacle• 14 years ago

When reddit learned to ignore them.

enraged_camel• 14 years ago

I was thinking the exact same thing!

mcantelon2• 14 years ago

>Isn't escape from this kind of tyranny the reason the first colonists left England?

The power of the banks is harder for people to understand, so banks have been very powerful, yet even less accountable than monarchs.

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -Thomas Jefferson

visava• 14 years ago

Who Rules America http://www2.ucsc.edu/whorulesamerica/power/investment_manage...

wolfpackk2• 14 years ago

HFT doesn't create value for the world. False. Liquidity. How can you feel like John Galt if you don't know dick about finance?

bryanlarsen5• 14 years ago

Before HFT liquidity was measured in 100s of millseconds. Now it's measured in microseconds.

Please tell me how this benefits anybody.

kamaal4• 14 years ago

Liquidity is just cash representation of existing wealth.

HFT doesn't create any value. You take already created wealth and based on demand supply equations some one looses and some one gains. Think of it like a kilogram of potatoes changing 100 hands in a day during some make money and some lose depending on how the demand for potatoes is in a city. The HF traders don't actually do anything to grow potatoes or help the process of growing potatoes.

pradocchia• 14 years ago

I think we've all had our John Galt moments. A righteous indignation at rentiers, large and small. It comes from a good place--the sense that you are giving something to others.

But there is a lot of give and take in the world, some easily observed and measured, some not. Some attributable, some not, and in proportions that vary over time.

Frankly, I don't know how much I take. Some dimensions are visible and quantified, but not all. So when I do give, I am happy--happy to be filling the well of life.

lowkey• 14 years ago

I accept your premise but reject your conclusion. Rather than claiming that the problem is an interdependent society and the solution is every man/woman for him/herself consider the following quote by Thomas Paine (a liberty-minded founding father of the United States)

"Personal property is the effect of society; and it is as impossible for an individual to acquire personal property without the aid of society, as it is for him to make land originally.

Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. So inseparably are the means connected with the end, in all cases, that where the former do not exist the latter cannot be obtained. All accumulation, therefore, of personal property, beyond what a man's own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."

I used to be a fierce Libertarian and then I realized that Ayn Rand's Objectivist utopia ALREADY exists in Somalia and Sudan and many other nations in the world - none of which I would call civilized.

Now if you were to call out the massive corruption in the current system as the root cause, I would jump to your defense.

kamaal4• 14 years ago

The only problem is gains from "effect of society" is benefited by everybody. But not every body contributes their equal share.

That is where the problem begins. When a part of the society just refuses to contribute their share, but still expects that other absolutely must. You can't really justify contributing to "effect of the society".

Its difficult to understand why one should pay for economic troubles of HF traders, especially when they are known to cheat on taxes, when they take 0 responsibilities for their actions and above all don't add any value.

A man definitely benefits a lot from the collective contributions of the society. But those benefits apply equally to everybody, yet please note not every one achieves the same things in life as everybody else. There fore to now say the sum total of a man's accomplishments is all due to society is wrong. That is why a man contributes back only as much as what he benefited.

Therefore, take responsibilities for both your successes and failures. Applies not just to individual but to every other entity like corporations and banks. Its difficult to understand why a common man should bail out a bank. While the common man has already contributed his fair share of taxes.

If I make a mistake or do well. I take responsibility for both my successes and failures. So should banks and corporations. Both should contribute their share of taxes. But you almost always see, that the rich and powerful cheat yet benefit from the taxes contributed by everybody else. Same with the poor.

Yet the middle class is always expected to pay up for every body Else's party.

tzs2• 14 years ago

Benjamin Franklin on property is also interesting:

--------------

All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.

--------------

rbanffy4• 14 years ago

> I'm feeling very John Galt here

So do the bankers. After all, they have all that money, all those politicians they paid for and all the money investors gave them to gamble with and those regulators keep intruding into how they should reward themselves for all their initiative.

People not caring enough about the welfare of others, as the parents of those kids, is part of the problem. People feel entitled when, in reality, nobody is "more special" than anyone else. A wonderful quote comes to mind.

"Your position never gives you the right to command. It only imposes on you the duty of so living your life that others may receive your orders without being humiliated" -- Dag Hammarskjöld, then Secretary General of the United Nations

jcromartie• 14 years ago

> I'm responsible -- and I'm starting to wonder, really, what's in it for me?

Do you honestly think the people on food stamps have it easy? You have your reward: happiness, self respect, accomplishment, etc..

executive• 14 years ago

plan: tell government we'll crash the whole economy if you don't bail us out

tomrod2• 14 years ago

If true: that sucks

If false: the money has to be paid back, with interest. So a cash loss for the bank.

rurabe• 14 years ago

In other news, overweight people told to make plans for heart failure.

Too big to fail is the most obvious economic problem of our time. The real question is why current economic leaders (Bernanke, Geithner, and Obama) have been so slow to support or indeed demand resolution to this issue.

sukuriant• 14 years ago

So, in light of this news, where does FDIC come in? In a calm, yet serious sense, the reason people in the US trust our banks is because our money is insured by the US government. Does what has been said here have any effect on that? --- or, does it at least have the potential for affecting that?

U.S. banks told to make plans for preventing collapse

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