>>6
Libertarians are suicidal as hell.
There's a good reason why we
have regulations.
Glass-Steagall wouldn’t have prevented the last financial crisis but it would have reduced the damage done in the long run. The loss occurred on the commercial side of the bank, not at the investment bank. But parts of the bet were made with synthetic credit derivatives — something that George Bailey in “It’s a Wonderful Life” would never have touched.
If history is any guide, it has been the result of speculative bets. It has been the result of banks making loans to individuals and businesses who can’t pay them back.
Yes, standards became so lax that buyers didn’t have to put money down or prove their income, and financial firms developed dangerous instruments that packaged and sliced up loans, then magnified their bets with more borrowed money.
It starts with banks making basic loans. Making loans “is one of the riskiest businesses banks engage in and has been a major contributing factor to most financial crises in the world over the last 50 years,” Richard Spillenkothen, former director of the division of banking supervision and regulation at the Federal Reserve, wrote in a letter to Politico’s Morning Money on Monday. He said that if Glass-Steagall still existed, it “alone would not have prevented the financial crisis.”
If banks had been limited to ‘plain vanilla’ lending, notwithstanding its admitted riskiness, the financial crisis may well have been less severe or more easily managed and contained.