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Increased regulation in some regards has just driven further consolidation in the banking industry. It also makes it more and more difficult for would-be compet

Increased regulation in some regards has just driven further consolidation in the banking industry. It also makes it more and more difficult for would-be competitors to try and disrupt these banks. I'm not sure that increased penalties, sending execs to jail, or more regulation will fix banking. If the banks are "too big to jail/fail" then maybe we should make them smaller...

raverbashing 11y ago
> Increased regulation in some regards has just driven further consolidation in the banking industry. This a million times. As regulation increases, you make sure only the big guys follow it to their satisfaction. And of course in the end there will be a lot of "hows, ifs, buts" falling through the cracks. Some regulation of course is needed, but it seems the best regulation is not giving anyone the advantage to be the dominant player.
- astazangasta 11y ago
  I don't know if you've been reading any news, but too much regulation is not the issue here. There are something like a few hundred SEC employees to investigate the entire banking sector. In addition we have evidence of overt sycophancy in the New York Fed and a general refusal to correct bad behavior (see Carmen Segarra). Finally, the pattern of laws has been deregulatory, not vice versa. Enron was able to engage in fraudulent trade in energy derivatives because the derivatives market was deregulated. I don't know where you are getting this story (ideology, I suspect), but it is deeply wrong.
  - raverbashing 11y ago
    Apparently you missed the part where I said "Some regulation of course is needed", which is not surprising given your shallow interpretation of facts Over regulation is a problem exactly because it builds too big to fail corporations. It eliminates competition due to regulatory capture "Enron was able to engage in fraudulent trade in energy derivatives because the derivatives market was deregulated." Fraud is fraud. > I don't know where you are getting this story (ideology, I suspect) Yes, my ideology is opposed to having idiot bureaucrats stifling progress while regulatory capturing incumbents to their friends. See: Tesla vs. Car dealerships, Uber vs. taxi monopolies, this: http://www.motherjones.com/kevin-drum/2013/10/heres-why-your-asthma-inhaler-costs-so-damn-much http://www.motherjones.com/kevin-drum/2013/10/heres-why-your...
    - astazangasta 11y ago
      >Fraud is fraud. Yes, and lack of regulatory oversight (i.e., law enforcement) produces fraud. We saw this with Enron and later with Countrywide, AIG et al. The line seems pretty clear to me - we deregulated the derivatives market (via the CFMA), Enron makes use of the lack of oversight to perpetuate fraud. >Over regulation is a problem exactly because it builds too big to fail corporations. It eliminates competition due to regulatory capture You'll have to spell this out for me, because I just can't see it. Regulatory capture is not "over regulation", it is the opposite, at least in the case of finance - it is the regulatory apparatus failing to do what it should (regulate) because the power lies in those being regulated (e.g. the NY Fed's kowtowing to Goldman).
      - raverbashing 11y ago
        > You'll have to spell this out for me, because I just can't see it http://en.wikipedia.org/wiki/Regulatory_capture http://en.wikipedia.org/wiki/Regulatory_capture
        astazangasta 11y ago
        Could you give a real explanation? Obviously I can look this up on Wikipedia myself (and my understanding is more sophisticated than that). I want to understand why you think too much regulation caused TBTF.
ubernostrum 11y ago
And if only the government weren't making this stuff illegal, there wouldn't be any crimes committed by bankers.
- deleted 11y ago
  [deleted]
hnnewguy 11y ago
>disrupt these banks. What makes you think that the people involved in the disruption of the banks won't partake in the same shenanigans? Do you think "bankers" are inherently evil, while their replacements will be inherently good? The Bitcoin world says otherwise. "Tech people" are stealing people's money left and right. >If the banks are "too big to jail/fail" then maybe we should make them smaller... Sure, and then we'll let all the pseudo-government-controlled banks in say, China, or even Canada do all the large-scale banking business globally. The business of banking is vastly larger than cheqing accounts and ridiculous ATM fees that people like us deal with day to day and complain about. That's why the industry is heavily regulated, and why the banks are so large, and why the local credit union in Podunk isn't underwriting the Facebook IPO. It's also why some SV startup isn't going to ride in and up-end the industry without itself becoming some financial behemoth that needs to be regulated.
- jeffreyrogers 11y ago
  > The business of banking is vastly larger than cheqing accounts and ridiculous ATM fees Right, but until recently the various functions of finance were embodied in different institutions. Due to pressure from the banks themselves and from the threat of competing banks in Europe the Gramm-Leach-Bliley Act[1] was passed in 1999. This allowed banks to get much larger than they were before and to operate as insurers, commercial banks, and investment banks simultaneously, which they were previously prevented from doing. Now, I agree with you that these are reasons SV startups won't "disrupt" the banking industry. (Nor do I think this is desirable, but that is another topic.) However, the idea that it is good to have massive consolidation of bank functions into one large corporation is not immediately obvious to me. [1]: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bli...
threeseed 11y ago
"I'm not sure that more regulation will fix banking" ... "Maybe we should make them smaller". How do you think you make banks smaller ? Hint: it's through regulation. The GFC and all the problems it has caused was due to a lack of regulation. It's almost always a good thing. And the highly regulated nature of the Australian financial system is the main reason that it survived the GFC with zero casualties. Capital requirements, lending practices, public disclosure etc. These are aspects of the banking sector which need MORE regulation not less.

raverbashing 11y ago

> Increased regulation in some regards has just driven further consolidation in the banking industry. This a million times. As regulation increases, you make sure only the big guys follow it to their satisfaction. And of course in the end there will be a lot of "hows, ifs, buts" falling through the cracks. Some regulation of course is needed, but it seems the best regulation is not giving anyone the advantage to be the dominant player.

astazangasta 11y ago
I don't know if you've been reading any news, but too much regulation is not the issue here. There are something like a few hundred SEC employees to investigate the entire banking sector. In addition we have evidence of overt sycophancy in the New York Fed and a general refusal to correct bad behavior (see Carmen Segarra). Finally, the pattern of laws has been deregulatory, not vice versa. Enron was able to engage in fraudulent trade in energy derivatives because the derivatives market was deregulated. I don't know where you are getting this story (ideology, I suspect), but it is deeply wrong.
- raverbashing 11y ago
  Apparently you missed the part where I said "Some regulation of course is needed", which is not surprising given your shallow interpretation of facts Over regulation is a problem exactly because it builds too big to fail corporations. It eliminates competition due to regulatory capture "Enron was able to engage in fraudulent trade in energy derivatives because the derivatives market was deregulated." Fraud is fraud. > I don't know where you are getting this story (ideology, I suspect) Yes, my ideology is opposed to having idiot bureaucrats stifling progress while regulatory capturing incumbents to their friends. See: Tesla vs. Car dealerships, Uber vs. taxi monopolies, this: http://www.motherjones.com/kevin-drum/2013/10/heres-why-your-asthma-inhaler-costs-so-damn-much http://www.motherjones.com/kevin-drum/2013/10/heres-why-your...
  - astazangasta 11y ago
    >Fraud is fraud. Yes, and lack of regulatory oversight (i.e., law enforcement) produces fraud. We saw this with Enron and later with Countrywide, AIG et al. The line seems pretty clear to me - we deregulated the derivatives market (via the CFMA), Enron makes use of the lack of oversight to perpetuate fraud. >Over regulation is a problem exactly because it builds too big to fail corporations. It eliminates competition due to regulatory capture You'll have to spell this out for me, because I just can't see it. Regulatory capture is not "over regulation", it is the opposite, at least in the case of finance - it is the regulatory apparatus failing to do what it should (regulate) because the power lies in those being regulated (e.g. the NY Fed's kowtowing to Goldman).
    - raverbashing 11y ago
      > You'll have to spell this out for me, because I just can't see it http://en.wikipedia.org/wiki/Regulatory_capture http://en.wikipedia.org/wiki/Regulatory_capture
      - astazangasta 11y ago
        Could you give a real explanation? Obviously I can look this up on Wikipedia myself (and my understanding is more sophisticated than that). I want to understand why you think too much regulation caused TBTF.

ubernostrum 11y ago

And if only the government weren't making this stuff illegal, there wouldn't be any crimes committed by bankers.

deleted 11y ago
[deleted]

hnnewguy 11y ago

>disrupt these banks. What makes you think that the people involved in the disruption of the banks won't partake in the same shenanigans? Do you think "bankers" are inherently evil, while their replacements will be inherently good? The Bitcoin world says otherwise. "Tech people" are stealing people's money left and right. >If the banks are "too big to jail/fail" then maybe we should make them smaller... Sure, and then we'll let all the pseudo-government-controlled banks in say, China, or even Canada do all the large-scale banking business globally. The business of banking is vastly larger than cheqing accounts and ridiculous ATM fees that people like us deal with day to day and complain about. That's why the industry is heavily regulated, and why the banks are so large, and why the local credit union in Podunk isn't underwriting the Facebook IPO. It's also why some SV startup isn't going to ride in and up-end the industry without itself becoming some financial behemoth that needs to be regulated.

jeffreyrogers 11y ago
> The business of banking is vastly larger than cheqing accounts and ridiculous ATM fees Right, but until recently the various functions of finance were embodied in different institutions. Due to pressure from the banks themselves and from the threat of competing banks in Europe the Gramm-Leach-Bliley Act[1] was passed in 1999. This allowed banks to get much larger than they were before and to operate as insurers, commercial banks, and investment banks simultaneously, which they were previously prevented from doing. Now, I agree with you that these are reasons SV startups won't "disrupt" the banking industry. (Nor do I think this is desirable, but that is another topic.) However, the idea that it is good to have massive consolidation of bank functions into one large corporation is not immediately obvious to me. [1]: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bli...

threeseed 11y ago

"I'm not sure that more regulation will fix banking" ... "Maybe we should make them smaller". How do you think you make banks smaller ? Hint: it's through regulation. The GFC and all the problems it has caused was due to a lack of regulation. It's almost always a good thing. And the highly regulated nature of the Australian financial system is the main reason that it survived the GFC with zero casualties. Capital requirements, lending practices, public disclosure etc. These are aspects of the banking sector which need MORE regulation not less.