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> The financial industry arises naturally from the time-value of money combined with human greed. Well, no. There are very definite regulatory changes that al
by eli_gottlieb 11y ago
> The financial industry arises naturally from the time-value of money combined with human greed.
Well, no. There are very definite regulatory changes that allowed bigger banks to eat smaller banks, for instance. I still remember how my parents opened my first savings bank at a bank that was regional to Northern New Jersey, which was then later eaten by something I don't remember, than by Bank of America. Likewise, the whole "mortgage tranche" fiasco happened because we allowed loan originators to sell off the ownership of loans to other parties, rather than having to eat the lunch they'd made for themselves with their own levels of risk-taking.
- Avshalom 11y ago"rather than having to eat the lunch they'd made for themselves with their own levels of risk-taking" This is sort of the big problem. All the money being made is justified by citing the risk banks/traders/funds take and yet we are constantly told that X is a good thing because it increases liquidity/decreases risk.
- autokad 11y agoselling loans wasn't ever a problem, and I'm not aware of any time in recent history it wasn't allowed. the problem was that companies were allowed to buy insurance against bad loans they didnt even make, and insurers were allowed to sell more of that insurance than they had capital to back them up. so when a person defaulted on their home, the homeowner lost, the bank lost, the insurer lost, and the company who bought the near garentee win insurance also lost. capital flows froze, then companies who needed liquidity lost, and losses just kept chaining.