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I am still angry that banks too big to fail were not nationalized at this time.

by Iv 9y ago

croon 9y ago
Bingo. You've as a country determined that an institution is too important to your population and your country's stability to have it go bankrupt. But instead of growing your economy through it, you through actions deem it okay to siphon money to the private owners instead of the people paying for it through taxes.
PhantomGremlin 9y ago
They sort-of were nationalized. But it was done somewhat subtly. The existing common equity (and IIRC preferred stock) in a number of entities was massively diluted by issuing new preferred stock and warrants to the US government. Here are two examples, they were among the worst offenders. Look at the share price for Citigroup and AIG: https://finance.yahoo.com/quote/C?p=C https://finance.yahoo.com/quote/C?p=C https://finance.yahoo.com/quote/aig/?p=aig https://finance.yahoo.com/quote/aig/?p=aig If you owned pre-crisis C common stock, you're still down about 84%. If you owned pre-crisis AIG common, you're still down about 95%. (that's approximate, done by eyeballing the charts). Edit: Yahoo Finance charts have been getting worse and worse, you need to click "Max" to see the proper timeline. I don't follow UK equities closely, but I think the same thing happened to a number of UK banks at the time. E.g. RBS. Unfortunately the whole thing was quite uneven. E.g. Goldman Sachs took advantage of the morons at AIG who sold them very cheap "insurance" such as credit default swaps. But Goldman was made whole. What should have happened is that Goldman should have been made to share the pain. Edit: I'm of course talking about the '08 financial crisis in general. I don't agree that the Libor scandal was significant enough to nationalize the banks as punishment. I'd much rather see a few bad actors taken out back and shot. That would be much more salutary in terms of deferring future bad behavior.
- joejerryronnie 9y ago
  Too many ex-Goldman execs are in positions of political power for that company to ever be punished in any meaningful way.
- tinokid 9y ago
  No, no shooting. They should have just let the market work and the banks go under. It would have been a financial loss but a moral victory. An important lesson about carefully choosing who you trust.
pjc50 9y ago
Not necessarily an improvement. RBS was nationalised, in 2008 when it was failing. It's still majority state-owned. But since then as part of the bank attempting to return to profitability another scandal emerged - squeezing small business customers into bankruptcy in order to take their assets. http://www.telegraph.co.uk/business/2017/09/07/nicky-morgan-demands-publication-report-rbss-controversial-restructuring/ http://www.telegraph.co.uk/business/2017/09/07/nicky-morgan-...
- arethuza 9y ago
  I can recommend the book Shredded: Inside RBS: The Bank that Broke Britain - by its account RBS actually seems to be worse behaved after their bailout than before. Before the bailout they were just incompetent, since then they have been downright malevolent.
  - TheOtherHobbes 9y ago
    The results of nationalisation depend on the people running the nation. If they have questionable ethics, so will the industries they run. The real problem isn't banking, it's neoliberalism's sanctification of individualistic greed. When collective morality decides that almost any behaviour is acceptable as long as a few people make a big profit, the political and moral consequences are unlikely to be positive.

I am still angry that banks too big to fail were not nationalized at this time.

by Iv 9y ago

I am still angry that banks too big to fail were not nationalized at this time.

Bingo. You've as a country determined that an institution is too important to your population and your country's stability to have it go bankrupt. But instead of growing your economy through it, you through actions deem it okay to siphon money to the private owners instead of the people paying for it through taxes.

PhantomGremlin 9y ago

They sort-of were nationalized. But it was done somewhat subtly. The existing common equity (and IIRC preferred stock) in a number of entities was massively diluted by issuing new preferred stock and warrants to the US government. Here are two examples, they were among the worst offenders. Look at the share price for Citigroup and AIG: https://finance.yahoo.com/quote/C?p=C https://finance.yahoo.com/quote/C?p=C https://finance.yahoo.com/quote/aig/?p=aig https://finance.yahoo.com/quote/aig/?p=aig If you owned pre-crisis C common stock, you're still down about 84%. If you owned pre-crisis AIG common, you're still down about 95%. (that's approximate, done by eyeballing the charts). Edit: Yahoo Finance charts have been getting worse and worse, you need to click "Max" to see the proper timeline. I don't follow UK equities closely, but I think the same thing happened to a number of UK banks at the time. E.g. RBS. Unfortunately the whole thing was quite uneven. E.g. Goldman Sachs took advantage of the morons at AIG who sold them very cheap "insurance" such as credit default swaps. But Goldman was made whole. What should have happened is that Goldman should have been made to share the pain. Edit: I'm of course talking about the '08 financial crisis in general. I don't agree that the Libor scandal was significant enough to nationalize the banks as punishment. I'd much rather see a few bad actors taken out back and shot. That would be much more salutary in terms of deferring future bad behavior.

joejerryronnie 9y ago
Too many ex-Goldman execs are in positions of political power for that company to ever be punished in any meaningful way.
tinokid 9y ago
No, no shooting. They should have just let the market work and the banks go under. It would have been a financial loss but a moral victory. An important lesson about carefully choosing who you trust.

pjc50 9y ago

Not necessarily an improvement. RBS was nationalised, in 2008 when it was failing. It's still majority state-owned. But since then as part of the bank attempting to return to profitability another scandal emerged - squeezing small business customers into bankruptcy in order to take their assets. http://www.telegraph.co.uk/business/2017/09/07/nicky-morgan-demands-publication-report-rbss-controversial-restructuring/ http://www.telegraph.co.uk/business/2017/09/07/nicky-morgan-...

arethuza 9y ago
I can recommend the book Shredded: Inside RBS: The Bank that Broke Britain - by its account RBS actually seems to be worse behaved after their bailout than before. Before the bailout they were just incompetent, since then they have been downright malevolent.
- TheOtherHobbes 9y ago
  The results of nationalisation depend on the people running the nation. If they have questionable ethics, so will the industries they run. The real problem isn't banking, it's neoliberalism's sanctification of individualistic greed. When collective morality decides that almost any behaviour is acceptable as long as a few people make a big profit, the political and moral consequences are unlikely to be positive.