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This is how we end up in another 2008 crash. Regulators asleep at the wheel, again

by xyst 2y ago

ToucanLoucan 2y ago
Not at all. They're not asleep, they knew about it. A few isolated people had reported exactly how 2008 was going to go down. The banks know the economy is underpinned by their assets, Uncle Sam is NEVER going to let them actually die, not in a million years. It would be the end-toll of the U.S. dollar as the defacto world currency, it would shred trillions of dollars in assets, far beyond the actual homes, I don't think Wall Street could ever actually recover from that. And like, I don't even think that's necessarily wrong? Like I don't know how you would let some of these banks actually die in such a way that wasn't immensely worse for everyone. My only real issue with it is that these are for-profit businesses that funnel absolutely stressful amounts of money up the proverbial chain. If we just as a society want to say that we're comfortable with the notion of supporting banks with public money because ultimately letting them fail is worse for everyone, that's fine. I get that. I just don't think anyone at the top of those banks should be ripping millions of dollars a year out of that institution. At that point, that's not a business, it's more analogous to a utility and it should be owned and operated by the state.
- AnimalMuppet 2y ago
  I saw at least once in 2008 that it was done right. I don't remember which institution, but it got taken over, the depositors were protected, the stockholders lost everything, and the management was replaced. And that's just about what you want, right? You want the depositors protected, both because they didn't make the bad loans, and because wiping them out is going to cause ripple effects that spread the damage. But the stockholders, the ones that profited (temporarily) from the bad loans? Wipe them out. The management? Wipe them out.

This is how we end up in another 2008 crash. Regulators asleep at the wheel, again

by xyst 2y ago

This is how we end up in another 2008 crash. Regulators asleep at the wheel, again

Not at all. They're not asleep, they knew about it. A few isolated people had reported exactly how 2008 was going to go down. The banks know the economy is underpinned by their assets, Uncle Sam is NEVER going to let them actually die, not in a million years. It would be the end-toll of the U.S. dollar as the defacto world currency, it would shred trillions of dollars in assets, far beyond the actual homes, I don't think Wall Street could ever actually recover from that. And like, I don't even think that's necessarily wrong? Like I don't know how you would let some of these banks actually die in such a way that wasn't immensely worse for everyone. My only real issue with it is that these are for-profit businesses that funnel absolutely stressful amounts of money up the proverbial chain. If we just as a society want to say that we're comfortable with the notion of supporting banks with public money because ultimately letting them fail is worse for everyone, that's fine. I get that. I just don't think anyone at the top of those banks should be ripping millions of dollars a year out of that institution. At that point, that's not a business, it's more analogous to a utility and it should be owned and operated by the state.

AnimalMuppet 2y ago
I saw at least once in 2008 that it was done right. I don't remember which institution, but it got taken over, the depositors were protected, the stockholders lost everything, and the management was replaced. And that's just about what you want, right? You want the depositors protected, both because they didn't make the bad loans, and because wiping them out is going to cause ripple effects that spread the damage. But the stockholders, the ones that profited (temporarily) from the bad loans? Wipe them out. The management? Wipe them out.