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View Diary: Wall Street might not be growing tulips, but it's still spreading manure (153 comments)

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  •  How TBTF's should function, vs. how they are... (4+ / 0-)
    Recommended by:
    Boris49, DrJohnB, caul, mightymouse

    functioning: What Good is Wall St.?

    When the banking system behaves the way it is supposed to...it is akin to a power utility, distributing money (power) to where it is needed and keeping an account of how it is used…But when banks seek to exploit their position and make a quick killing, they can cause enormous damage…And in the country at large…the power still isn’t flowing properly…

    The other important role of the banking industry, historically, has been to finance the growth of vital industries, including railroads, pharmaceuticals, automobiles, and entertainment…

    In effect, many of the big banks have turned themselves from businesses whose profits rose and fell with the capital-raising needs of their clients into immense trading houses whose fortunes depend on their ability to exploit day-to-day movements in the markets.

    The taxpayer rescued the TBTF’s, yet the TBTF’s are continuing to sit on big piles of cash and refusing to loan money to finance growth of the economy.  In one of the most damning (and IMHO spot on) evaluations of the current role of the “TBTF’s”, here’s what one financial watchdog had to say:

    Lord Adair Turner, the chairman of Britain’s top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as “socially useless activity”—a comment that suggests it could be eliminated without doing any damage to the economy.

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