A Breaking News article in today’s New York Times details some of the complexities involved in preventing large financial institutions from destroying the economy again as the did in 2008:
Five giant banks — including JPMorgan Chase and Bank of America — failed to fulfill a crucial regulatory requirement that Congress introduced after the 2008 financial crisis to help make large financial institutions less of a threat to the wider economy, federal banking regulators said on Wednesday.
Congress demanded that big banks regularly provide regulators with careful plans for how they would enter bankruptcy in an orderly fashion. But the Federal Reserve and the Federal Deposit Insurance Corporation found that the plans of five banks were “not credible” or “would not would not facilitate an orderly resolution” under the United States bankruptcy code.
[emphasis mine]
The other 3 banks that both the F.D.I.C. and the Fed failed are Wells Fargo, Bank of New York Mellon, and State Street. These 5 banks have until Oct 1st to fix their plans, which are known as ‘Living Wills’. If their revised plans are again found to be unsatisfactory by both of the regulatory agencies, the banks are given another 2 years to devise acceptable ‘living wills’. If, after that time, the banks still have not developed credible ‘living wills’, the regulatory agencies:
have the power to require the banks to sell off assets and businesses, with the aim of making them less complex and simpler to unwind in a bankruptcy.
Talk about euphemisms! “sell off assets and businesses “ is nothing more than jargon for “BREAK UP THE BANKS!”. The thing is, the banks were told back in 2014 that they had to produce credible ‘living wills’ by 2015, or
the regulators could take action, including requiring banks to sell units to shrink and simplify their corporate structures if they failed to comply with other orders, officials of the agencies said.
Living Wills
are intended to give bankers and regulators a clearer understanding of a bank’s operations and its assets and liabilities. The plans also aim to map out the steps the banks would take to distribute large losses among stakeholders. The process should also require large complex banks to adopt simpler corporate structures — and make their relationships with each other more transparent.
Another great euphemism for breaking-up the banks: “The process should also require large complex banks to adopt simpler corporate structures “ .
So in 2014, the F.D.I.C. and the Fed, using the powers invested in them by Dodd-Frank, told these banks that they had until 2015 to get their ‘living wills’ together or they would face being broken up by the regulators. But now, in 2016, these same regulators are telling these same banks they now have until 2018 to submit credible ‘living wills’ or they will then face… what? Another 2 year hiatus?
Obviously, we either need better regulators, or better regulations. This gets to the point that Bernie Sanders was trying to explain to the editorial board of the New York Daily News as to the complexities involved in breaking-up too-big-to-fail banks — does Dodd-Frank grant the authority to the regulators to break-up the banks, or does additional regulatory authority need to be established in order to prevent banks from destroying the economy if their paper-chase, fee-based pyramid schemes collapse like the house of cards they really are?
But most people want simple answers to problems (e.g., the rise of Trumpism), and when presented with the true complexities of most aspects of modern societies, they reject the messenger as being “confused” or “unsure” or even “weak”. Another great example of a simple solution to a complex problem: AUMF-Iraq.
Though the media narrative regarding Bernie’s NYDN editorial interview has painted him a negative light, those of us who are capable of thinking outside the box of conventional knowledge understood exactly what Bernie was alluding to (eat that prep ending, grammar cops). And admitting that you’re not really sure of how to solve a problem is the first step to gaining knowledge, not an admission that you’re ignorant as to what the problem is.
But when you’re part of a “movement” based on personality (#ImWithHer) as opposed to one based on policies (#He’sWithUs), then it doesn’t matter what policies your candidate claims to represent, or how often (s)he changes from being a guilty moderate/centrist to a supposed progressive. As long as your candidate is winning, you’ll just go along with whatever the flavor of the day you’re fed. And you’ll love it, even if just a few short years ago you claimed to have hated it.