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> while at the same time believing that lack of regulation in finance is destroying the economy It's not a lack of regulation in finance that's destroying the

by retube 15y ago

> while at the same time believing that lack of regulation in finance is destroying the economy It's not a lack of regulation in finance that's destroying the economy, it's too much. The rules and regulations now are so punitive, so lengthy and so complex that it's making some (many) banking services non-viable or at best very expensive. And ultimately it's the end consumer which bears these increased costs as they get passed on. This means banks make less money, customers have to pay more, staff get paid less or cut, shareholders get reduced dividends, pension funds lose out from suppressed stock prices etc. Many of these rules don't make sense or make the bank "safer" - they're really just a penalty for conducting finance-orientated business - with such rules sadly being driven by politicians attempting to appease the baying mob. It's unfortunate that these regulations will have the opposite effect of what they are trying to achieve. Indeed some very large names may actually go out of business as a result which would be catastrophic for the economy.

nl 15y ago
The evidence doesn't really back you up. Countries with stronger financial regulations didn't have to bail out banks in 2008/09.
- retube 15y ago
  I can assure you that new regulations are strangling growth. And that they will not prevent or avert some other disaster. No amout of regulation can prevent a bank or indeed any company making reckless or badly informed business decisions. > Countries with stronger financial regulations didn't have to bail out banks in 2008/09. That's because other countries didn't have retail banks or mortgage brokers dishing out 700k mortgages to fruit pickers on 14k. _This_ was the root cause of the banking crisis and this is the industry which needed tightened regulations (such as those seen in the UK or most European countries). Inventing punitive rules on banks' capital ratios and funding reserves etc doesn't help anyone or address the root cause of the 2008 implosion.
  - yardie 15y ago
    That's because other countries didn't have retail banks or mortgage brokers dishing out 700k mortgages to fruit pickers on 14k. This was one of the root causes but there were many. You should take a step back and really understand what happened. In fact fruit pickers weren't the problem at all. They never applied for those loans and the ones that did were in the minority. No, what you had were a bunch of middle-class people with houses buying up investment property to secure their future. The condo I used to live in (in Miami) had a 50% occupation rate and it wasn't occupied by fruit pickers. Instead you had doctors, lawyers, and even hackers looking for a 2nd or 3rd or 4th home to rent out. And they all had good credit. Everyone likes to think it was poor people buying up McMansions (and I don't doubt there were some) but the mortgage crisis was caused by normal people who were way over leveraged and a Fed that let it continue until it collapsed. This
    - retube 15y ago
      Sure, I realise the fruit-picker example is extreme. But it was the sub-prime / alt-a mortgage market that imploded with default rates in some pools hitting 90%. But yes of course everyone jumped on the bandwagon across all of society - I'm not for a minute attempting to blame "poor" people for being financially irresponsible - far from it - I realise there was a complex interplay between the lenders/brokers/borrowers, the banks that securitised the pools and the people that bought the end product. My point is that the rules and regulation around mortgage lenders and lending were lax to the point of non-existence and that penalising banks (most of whom didn't originate these mortgages in the first place) is just easy scape goating and is exacerbating the very issues it's trying to solve.
      - yardie 15y ago
        You and I know it's an extreme example but there are lots of people that honestly believe the mortgage crisis was caused by poor people getting mortgages. Then they reference some civil rights era act that they believe forces the banks to lower their lending standards. In fact the law says you can't deny loans based on where the applicant lives (aka, redlining).
  - 15y ago

by retube 15y ago

nl 15y ago

The evidence doesn't really back you up. Countries with stronger financial regulations didn't have to bail out banks in 2008/09.

retube 15y ago
I can assure you that new regulations are strangling growth. And that they will not prevent or avert some other disaster. No amout of regulation can prevent a bank or indeed any company making reckless or badly informed business decisions. > Countries with stronger financial regulations didn't have to bail out banks in 2008/09. That's because other countries didn't have retail banks or mortgage brokers dishing out 700k mortgages to fruit pickers on 14k. _This_ was the root cause of the banking crisis and this is the industry which needed tightened regulations (such as those seen in the UK or most European countries). Inventing punitive rules on banks' capital ratios and funding reserves etc doesn't help anyone or address the root cause of the 2008 implosion.
- yardie 15y ago
  That's because other countries didn't have retail banks or mortgage brokers dishing out 700k mortgages to fruit pickers on 14k. This was one of the root causes but there were many. You should take a step back and really understand what happened. In fact fruit pickers weren't the problem at all. They never applied for those loans and the ones that did were in the minority. No, what you had were a bunch of middle-class people with houses buying up investment property to secure their future. The condo I used to live in (in Miami) had a 50% occupation rate and it wasn't occupied by fruit pickers. Instead you had doctors, lawyers, and even hackers looking for a 2nd or 3rd or 4th home to rent out. And they all had good credit. Everyone likes to think it was poor people buying up McMansions (and I don't doubt there were some) but the mortgage crisis was caused by normal people who were way over leveraged and a Fed that let it continue until it collapsed. This
  - retube 15y ago
    Sure, I realise the fruit-picker example is extreme. But it was the sub-prime / alt-a mortgage market that imploded with default rates in some pools hitting 90%. But yes of course everyone jumped on the bandwagon across all of society - I'm not for a minute attempting to blame "poor" people for being financially irresponsible - far from it - I realise there was a complex interplay between the lenders/brokers/borrowers, the banks that securitised the pools and the people that bought the end product. My point is that the rules and regulation around mortgage lenders and lending were lax to the point of non-existence and that penalising banks (most of whom didn't originate these mortgages in the first place) is just easy scape goating and is exacerbating the very issues it's trying to solve.
    - yardie 15y ago
      You and I know it's an extreme example but there are lots of people that honestly believe the mortgage crisis was caused by poor people getting mortgages. Then they reference some civil rights era act that they believe forces the banks to lower their lending standards. In fact the law says you can't deny loans based on where the applicant lives (aka, redlining).
- 15y ago