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View Diary: Tough Choice: If DOJ Prosecutes Wall Street, Banks Could Collapse (196 comments)

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  •  the administration had a golden chance (25+ / 0-)

    to really restructure the banks when they came hat in hand, begging to be bailed out, several years ago.

    They could have taken the opportunity to do a temporary nationalization, break the banks down into smaller pieces in a controlled manner, do a cleanup and re-regulate to make sure this kind of crisis didn't happen again, and then re-privatize. They did not.

    They just put the banks back on their feet and gave them tons of money at sweetheart interest rates. Now the problem is ten times worse, because the banks used that money to buy out other banks and consolidate even further into fewer institutions.

    Now, to avoid a bank collapse, the administration has little choice but to become complicit in covering up their crimes. They have given up their leverage over the banks, and now the banks have leverage over them.

    Actions have consequences. Missed opportunities do not come again. Obama and Geithner have no one to blame but themselves for not taking the chance that was offered them.

    I think you are right--there will be an economic shock that will precipitate a systematic bank failure, just as happened during the Great Depression. The austerity policies the administration is pushing, coupled with a drought-induced rise in food prices, could well do it.

    "In America, the law is king." --Thomas Paine

    by limpidglass on Wed Feb 06, 2013 at 04:14:25 PM PST

    •  Yes, the govt. had them by the short hairs (7+ / 0-)

      when all the big banks were insolvent. Government seizure is the standard response to bank insolvency. The problem was twofold. Dismantling multiple giant banks all at once would be very difficult and would strain government resources. And these banks were deeply connected to foreign governments. So they didn't do that. What they also didn't do, unfortunately, was prevent many of the reckless practices that pushed the banks into insolvency and may do so again. High speed trading, private security exchanges, opaque and complex derivatives, it is hard to tell what will cause the next blowup. The real solution is to dial back the exotic financial manipulations that these banks routinely engage in and turn them back into boring and predictable businesses. Most of the high tech, innovative new ways of trading and dealing do not ever benefit ordinary consumers and investors. They only exist to boost profit at firms for which plain old ordinary banking is not lucrative enough. And since the government has taken on the risk (by bailing out firms in risk of failing) there is no downside to the high-risk manipulations the banks are so fond of.

    •  The administration chose the first time (1+ / 0-)
      Recommended by:
      Ray Pensador

      around to be complicit. They've been covering up for four years. The whole damn economy is built on these lies. That same economy is destroying the biosphere that we need to survive.

      You'd think the combination of those two facts would make someone decide that now is the time to stand up for what is right, but no.

      They are all complicit.

    •  I disagree (1+ / 0-)
      Recommended by:
      Ray Pensador

      with the idea that "they have no choice this time around".  Bullshit.  They had a better chance the first time, but there's nothing to prevent them doing their jobs now except pure puking cowardice and/or corrupt complicity.  The could CHOOSE to do better.  That they don't is as clear an indication of the true loyalties of our "government" as you are going to see.

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