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Because they are more important than the goverment. If the big banks die the entire US economy dies with them. Why Americans would let a few bankers wield such

Because they are more important than the goverment. If the big banks die the entire US economy dies with them. Why Americans would let a few bankers wield such power and be accountable to no one is another question.

toomuchtodo 7y ago
Perhaps “die” is the wrong word. I prefer “nationalized and converted to financial utilities”. Shareholders? Gone! Existing management? Gone! Put adults in charge and have a relationship similar to the USPS or the Fed. Require an open platform so the APIs and underlying back office are solid but innovators can still get access to innovate (Europe mandated this via PSD2).
- piiswrong 7y ago
  But nationalizing private business is the symbol of communism! How dare you say such a thing!
  - toomuchtodo 7y ago
    Everyone is a socialist during a financial crisis.
    - piiswrong 7y ago
      but after the crisis do you give it back to the shareholders and let them brood for the next crisis, or do you remain a socialist forever?
      - toomuchtodo 7y ago
        Public goods must be protected. USPS does pretty well IMHO, as a similar example. No reason to recapitalize with public shareholders if you don’t need them. The Fed doesn’t have them (their shares are unique and essentially non transferable).
        totalZero 7y ago
        USPS lost $8.8 billion in fiscal year 2019.
        toomuchtodo 7y ago
        Public goods don’t have to break even or generate a profit. They still deliver my mail like clockwork, and we’ll cover any pension obligations with taxes if there’s a shortfall because of Congressional action (which is why USPS loses money, due to Congress having unreasonable pension funding requirements specifically for USPS). If you require a bailout, you had your chance as a for profit concern. Entirely reasonable to run services at a loss as a government entity. Some services are simply expenses.
        AnthonyMouse 7y ago
        > They still deliver my mail like clockwork "Makes the trains run on time" is a pretty weak argument when the alternative (e.g. UPS) has a demonstrated ability to do the same thing without losing billions of dollars. > If you require a bailout, you had your chance as a for profit concern. Entirely reasonable to run services at a loss as a government entity. Isn't this a double standard? A private entity loses money and requires a taxpayer bailout once, they've had their chance. A government entity loses money and requires a taxpayer bailout every year, cost of doing business?
        toomuchtodo 7y ago
        We have bailed banks and airlines out repeatedly, not once. UPS is not mandated to deliver to every address in the United States six days a week, such that USPS is.
        ta999999171 7y ago
        Are they still required to set aside 50-75 years of retirement funds for every employee?
  - manigandham 7y ago
    Please give some examples where this has worked out well.
waterhouse 7y ago
> If the big banks die the entire US economy dies with them. Can you clarify exactly how this happens? This has been claimed before, that these banks are "too big to be allowed to fail", but I haven't seen an explanation of why, and it is certainly in the interest of the banks to promulgate the idea "if we die it's the apocalypse" regardless of whether it's true.
- piiswrong 7y ago
  Because of fractional reserve banking. 90% of the money in your bank account are in fact credit created by the private banks out of thin air. If the banks fail, 90% of the money in the entire system will suddenly disappear. Imagine that.
  - waterhouse 7y ago
    I'm not necessarily a fan of how things currently work, but I believe the FDIC is supposed to insure up to $250k on each bank account. That would seem to mean it wouldn't hurt most people, only people (and institutions?) that put much more than that into individual bank accounts. I suspect most of those would have also put lots into other types of investments, so I don't think anyone would be completely wiped out. That doesn't sound apocalyptic to me.
    - deleted 7y ago
      [deleted]
    - manigandham 7y ago
      The economy is far more than just people's personal checking accounts, and many people do accumulate more than that over their life. The loss of money in the commercial sector means (after a series of cascading failures) we're all unemployed and burning dollars to stay warm.
    - dragonwriter 7y ago
      > I believe the FDIC is supposed to insure up to $250k on each bank account. Close, it's actually $250K per depositor per ownership category per institution. Multiple accounts in the same category don't add insurance limits.

toomuchtodo 7y ago

Perhaps “die” is the wrong word. I prefer “nationalized and converted to financial utilities”. Shareholders? Gone! Existing management? Gone! Put adults in charge and have a relationship similar to the USPS or the Fed. Require an open platform so the APIs and underlying back office are solid but innovators can still get access to innovate (Europe mandated this via PSD2).

piiswrong 7y ago
But nationalizing private business is the symbol of communism! How dare you say such a thing!
- toomuchtodo 7y ago
  Everyone is a socialist during a financial crisis.
  - piiswrong 7y ago
    but after the crisis do you give it back to the shareholders and let them brood for the next crisis, or do you remain a socialist forever?
    - toomuchtodo 7y ago
      Public goods must be protected. USPS does pretty well IMHO, as a similar example. No reason to recapitalize with public shareholders if you don’t need them. The Fed doesn’t have them (their shares are unique and essentially non transferable).
      - totalZero 7y ago
        USPS lost $8.8 billion in fiscal year 2019.
        toomuchtodo 7y ago
        Public goods don’t have to break even or generate a profit. They still deliver my mail like clockwork, and we’ll cover any pension obligations with taxes if there’s a shortfall because of Congressional action (which is why USPS loses money, due to Congress having unreasonable pension funding requirements specifically for USPS). If you require a bailout, you had your chance as a for profit concern. Entirely reasonable to run services at a loss as a government entity. Some services are simply expenses.
        AnthonyMouse 7y ago
        > They still deliver my mail like clockwork "Makes the trains run on time" is a pretty weak argument when the alternative (e.g. UPS) has a demonstrated ability to do the same thing without losing billions of dollars. > If you require a bailout, you had your chance as a for profit concern. Entirely reasonable to run services at a loss as a government entity. Isn't this a double standard? A private entity loses money and requires a taxpayer bailout once, they've had their chance. A government entity loses money and requires a taxpayer bailout every year, cost of doing business?
        toomuchtodo 7y ago
        We have bailed banks and airlines out repeatedly, not once. UPS is not mandated to deliver to every address in the United States six days a week, such that USPS is.
        ta999999171 7y ago
        Are they still required to set aside 50-75 years of retirement funds for every employee?
- manigandham 7y ago
  Please give some examples where this has worked out well.

waterhouse 7y ago

> If the big banks die the entire US economy dies with them. Can you clarify exactly how this happens? This has been claimed before, that these banks are "too big to be allowed to fail", but I haven't seen an explanation of why, and it is certainly in the interest of the banks to promulgate the idea "if we die it's the apocalypse" regardless of whether it's true.

piiswrong 7y ago
Because of fractional reserve banking. 90% of the money in your bank account are in fact credit created by the private banks out of thin air. If the banks fail, 90% of the money in the entire system will suddenly disappear. Imagine that.
- waterhouse 7y ago
  I'm not necessarily a fan of how things currently work, but I believe the FDIC is supposed to insure up to $250k on each bank account. That would seem to mean it wouldn't hurt most people, only people (and institutions?) that put much more than that into individual bank accounts. I suspect most of those would have also put lots into other types of investments, so I don't think anyone would be completely wiped out. That doesn't sound apocalyptic to me.
  - deleted 7y ago
    [deleted]
  - manigandham 7y ago
    The economy is far more than just people's personal checking accounts, and many people do accumulate more than that over their life. The loss of money in the commercial sector means (after a series of cascading failures) we're all unemployed and burning dollars to stay warm.
  - dragonwriter 7y ago
    > I believe the FDIC is supposed to insure up to $250k on each bank account. Close, it's actually $250K per depositor per ownership category per institution. Multiple accounts in the same category don't add insurance limits.