America’s non-banks —- The anointed


Posted on 14th June 2013 by MuckAbout in Economy |Politics |Social Issues

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Another wonderful addition to the TBTF list – and we don’t even know haw many public companies are on the list or who they are!  

This will be guaranteed to throw yet more money printing/asset fudging and sucking up productive funds to kick the can of break the bastards up and liquidate then when fail just a few more feet down the ditch of insolvency.  

I hate it….
The number of too-big-to-fail institutions gets bigger


Jun 8th 2013 | New York |Courtesy of the Economist

ALTHOUGH the names on the list are supposed to be secret AIG and Prudential, two insurers, this week confirmed they are on it. So too did GE Capital, the conglomerate’s financial arm. These firms, and perhaps others, have joined America’s largest banks and clearinghouses in being designated “systemically important financial institutions” (SIFIs) by the new Financial Stability Oversight Council, a regulatory watchdog [ posters' note: Another committee the help us out]. What that means in practice is that because they are thought to be significant enough to blow up America’s economy, they should get special attention.

An appeals process against being labelled a SIFI will last for 30 days, but discussions have been going on for years so it is hard to believe minds will be swayed now. The immediate consequence is that the firms will be regulated by the Fed [ poster's note:  Now this is going to be a great addition to the Fed's obnoxious powers, isn't it!]

and subjected to tougher capital and operational requirements. Jack Lew, the treasury secretary, said the designations would “protect taxpayers, reduce risk in the financial system, and promote financial stability.” [poster's note: Count on it doing the exact opposite.]

Others are less enthusiastic. “This is a catastrophe,” says Peter Wallison, a fellow of the American Enterprise Institute, a think-tank, and a former White House counsel. Putting these institutions under the thumb of the Fed will inevitably undermine their ability to innovate, he argues. And joining the group of entities perceived to be too big to fail means they will enjoy an implicit government guarantee. That will put them at a funding advantage against smaller companies, he says, and imply that their products are government-backed, a huge help for insurers in particular.

Firms themselves appear to have mixed feelings about the SIFI label. AIG seems to approve; MetLife, an insurer that has not been designated, thinks that the higher capital requirements it brings could undermine the viability of some products. Much depends on whether SIFIs are now perceived to have an implicit guarantee, and on whether that can be monitised. It also matters how many other firms are designated SIFIs. Lots of financial firms in America are large: there are rumblings about money-market funds, asset managers and private-equity firms. Risk can move around the financial system. The question today is which firms should be on the list. Eventually it might be which to leave off.

  1. JJ3 says:

    Someone please explain to me what the definition of fascism is again?

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    14th June 2013 at 10:55 am

  2. AWD says:

    “systemically important financial institutions” (SIFIs) by the new Financial Stability Oversight Council

    It’s not that hard to figure out. Getting this classification means you are above the law, cannot be prosecuted (as if they’d prosecute them anyway) by any government agency, and that you can, officially, do whatever you want, steal as much as you want, and commit as much fraud as you want. It’s like giving them a “get out of jail” free card.

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    14th June 2013 at 1:12 pm

  3. Calamity says:

    Let them fail. Let them explode the economy. At least then we can pick up the pieces and finally fix this mess. We all know it has to crash at some point. Why delay the pain? They are just intensifying the horror that will be unleashed once these institutions collapse.

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    14th June 2013 at 1:12 pm

  4. MuckAbout says:

    So true…..

    With the possiblity of failure eliminated, the urge to ever expand, generate ever larger and dangerous hazardous practices and adopt the insane fiscal policies now run amok at the Federal level.

    For inovation and true growth and real Capitalism (of which we have none left) failure MUST a consequence of bad judgement, mistakes or fraud. It MUST be a consequence otherwise the bad investments and bad judgement and incompetent or crooked operators will NOT be swept away making room for new enterprise and innovation..

    Sorry, this move is EXACTLY THE WRONG thing to do. If a bank or company is TBTF then break them up into smaller, discrete units so that the failure of one or two or even more will not affect the general economy. We need anti-trust action and Glass-Steagle reinstated and we need it yesterday.

    Otherwise we continue to mark to our collective doom, lower yet standards of living, early die off of a lot of nice people in the aftermath of general collapse and will have to essentially go to Kuntsler’s “World Made by Hand” scenario which, in itself may not be that bad except for the absolutely disastrous path from where we are to that lower general standard of living (and inability to feed the FSA)..

    The transition will be a bitch and will make us or break us. Time will tell..

    Have a happy day!


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    14th June 2013 at 2:16 pm

  5. BUCKHED says:

    Pitchforks at the ready !

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    14th June 2013 at 4:00 pm

  6. Chicago999444 says:

    The most economical way to deal with dishonest bankers involves lamp posts and a length of rope.

    We’ll need every bit of hemp we can grow just to have rope enough for all of them. Legalize hemp now.

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    14th June 2013 at 12:37 am

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