Volcker: Obama plans maintain 'too big to fail' (1 Viewer)

dapperdan

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A top White House economic adviser says the Obama administration's proposed overhaul of financial rules preserves the policy of "too big to fail," and could lead to future bailouts.

Former Federal Reserve Chairman Paul Volcker said Thursday that by designating some companies as critical to the broader financial system, the plans create an expectation that those firms enjoy government backing in tough times. That implies those financial companies "will be sheltered by access to a federal safety net," he said.

Lawmakers should make clear that nonbank companies will not be saved with federal money, he said.

Emergency measures by the Fed, Treasury and Congress during last year's financial crisis created the expectation that the government would step in to protect failing companies, their bond holders and stockholders, Volcker told the House Financial Services Committee.

Volcker said he does not differ with the administration on most of its proposals, and takes "as a given" that banks will be bailed out in times of crisis.

But he opposed bailouts of insurance firms like American International Group Inc., automakers' finance arms and others.

"The safety net has been extended outside the banking system," Volcker said. "That's what I want to change." He said the administration's proposal to create a new system for winding down large nonbank companies would make that easier.

The administration should make it clearer that a "safety net" will apply only to traditional banks, not investment companies or others. Investors must understand that if a nonbank company fails, stockholders and bondholders' money would be at risk, he added, while endorsing other options for these companies, including forced mergers or liquidation.

Deputy Treasury Secretary Neal Wolin said the administration's proposals are intended to emphasize "that being among the largest, most interconnected firms does not come with any guarantee of (government) support in times of stress."

http://www.realclearmarkets.com/new...__obama_plans_maintain__too_big_to_fail_.html
 

blackadder

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If you recall this great article form a few months back:

http://www.theatlantic.com/doc/200905/imf-advice

Then you might question whether these are all Obama's plans or they are the same direction pushed by Wall Street, which Bush was also embarking on.

You can quibble about details. Would the bailouts have been as big under the Republicans? But the same general direction at a comparable expense to the taxcpayer would have been there, because the same interests are orchestrating things.

As such, it seems that "too big to fail" is indeed the goal, that it should be extended, because it permanently protects the vested interests. If they are big enough and can claim to touch every household in America, then they are forever insulated from accountability or performance requirements and can deflect scrutiny by fearmongering on the economy.

Diablolical.
 
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N.O.Bronco

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This is pretty much a non-starter at this point for three reasons:

1.) its still early

2.) The White house isnt writing the regulations

3.) Barney Frank and others on the senate finance committee have already stated there are some strong disagreements between them and the white house.

And lastly, this article is vague and the plans by Obama are still vague as well. We need more details before drawing conclusions.

I will say this. I personally worry that the Obama administration, due to a recovering economy, may pull back on some of the more intense ideas of reform and regulation because people are growing complacent again.
 

blackadder

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This is pretty much a non-starter at this point for three reasons:

1.) its still early

2.) The White house isnt writing the regulations

3.) Barney Frank and others on the senate finance committee have already stated there are some strong disagreements between them and the white house.

And lastly, this article is vague and the plans by Obama are still vague as well. We need more details before drawing conclusions.

I will say this. I personally worry that the Obama administration, due to a recovering economy, may pull back on some of the more intense ideas of reform and regulation because people are growing complacent again.
Volcker is pretty credible source.

If he's concerned, I'd listen.
 

N.O.Bronco

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Volcker is pretty credible source.

If he's concerned, I'd listen.

Oh im a big fan of Volker, believe me. Except for the fact that if it weren't for Volker we probably would have only had a one term Reagan presidency.

I see this more as a public posturing to levy his position within the white house by getting people talking about where the Obama regulations may fall short. Therefore raising the influence of his voice to the president and his other advisers. Now if the administration comes out in a couple of weeks when this regulatory reform is really getting rolling, and Volker is still showing a lot of hesitation, I will quickly be all over any details I can find to understand what the hell the White House may be thinking.
 
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dapperdan

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I see this more as a public posturing to levy his position within the white house by getting people talking about where the Obama regulations may fall short. Therefore raising the influence of his voice to the president and his other advisers.

I wouldn't see it this way at all. The man is 81 years old...he's not looking to get in the middle of all that political gamesmanship, he doesn't need to. I think he's simply calling it as he sees it. Paul Volker doesn't have to worry about his voice not being heard, he doesn't have to worry about a Larry Summers snipping at his feet. In terms of personal, nonpartisan credibility, Volker has more gravitas than anyone in this Administration.(And an honest assessment would probably be more nonpartisan credibility than the remainder of the entire Administration combined.) All this manuevering for power that occurs in every administration simply does not apply to Volker at this time, with this administration.
 

N.O.Bronco

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I wouldn't see it this way at all. The man is 81 years old...he's not looking to get in the middle of all that political gamesmanship, he doesn't need to. I think he's simply calling it as he sees it. Paul Volker doesn't have to worry about his voice not being heard, he doesn't have to worry about a Larry Summers snipping at his feet. In terms of personal, nonpartisan credibility, Volker has more gravitas than anyone in this Administration. All this manuevering for power that occurs in every administration simply does not apply to Volker at this time, with this administration.

Just like me you are making an assumption.
 
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dapperdan

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Just like me you are making an assumption.

Yes, I'm assuming that Obama has half a brain. Because if he ignores Volker he's truly an idiot. Actually let me ammend that...if he ignores Volker, Obama has been completely and totally corrupted.
 
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dapperdan

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The issue is crony capitalism...Too Big To Fail is simply crony capitalism at it's worst. While it occurs with every Administration to some degree, the scale that it is occuring right now threatens the future of this country. As a nation, we are headed for financial insolvency at the Federal Government level. This is not some far off notion. As things stand, we could be looking at insolvency in the second term of an Obama Administration. Just run the math.
 

N.O.Bronco

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Yes, I'm assuming that Obama has half a brain. Because if he ignores Volker he's truly an idiot. Actually let me ammend that...if he ignores Volker, Obama is completely and totally corrupted.

No your making assumptions here

he's not looking to get in the middle of all that political gamesmanship, he doesn't need to

and here:

Paul Volker doesn't have to worry about his voice not being heard, he doesn't have to worry about a Larry Summers snipping at his feet. In terms of personal, nonpartisan credibility, Volker has more gravitas than anyone in this Administration.(And an honest assessment would probably be more nonpartisan credibility than the remainder of the entire Administration combined.) All this manuevering for power that occurs in every administration simply does not apply to Volker at this time, with this administration.

Stick to numbers and economics. Everytime you spill over into assessing the Obama administration psychological motives you expose yourself for the extreme anti-Obama partisan you are. i dont need the smart *** response, i merely wanted to point out to you that your response to me is no more verifiable than mine because we are both making assumptions about the level of influence, council, politics and policy that is going on in the administration. And neither of us has the access or intel to discern which one of our assumptions are more meritable.

Can I take back my rep? I mistakingly thought this wasnt you cherry picking more evidence to get on your soapbox to scream about how horrible a person Obama is and how awful this administration is on everything they do based on the cherry picked evidence and psychological analyses you pull out of thin air mostly based on the pre-conceived notions of ill favor you carry about Obama and democrats.

Edit: and that wasnt me who negative repped you.
 
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1yearOlder

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the White House may be thinking.
This usually leads to trouble.:mwink:

If you recall this great article form a few months back:

http://www.theatlantic.com/doc/200905/imf-advice
A good article indeed, especially for those who fear the word oligarchy
when in fact, it's the dominant form of government on the planet.

There was a thread a couple of days ago, the featured article of which
included the issues here, along with eluding to the idea that all oligarchies
should be like minded if there is to be a new order.
http://www.guardian.co.uk/commentisfree/cifamerica/2009/sep/22/obama-un-climate-change-europe

My favorite quote :
Many leaders and supporters are beginning to wonder what is causing this growing gap between the Barack Obama that many people saw on the campaign trail, and the Obama they see in the White House?
My reply : Child,Please.
These leaders and supporters have obviously never witnessed the events
of a campaign/election to the next.

Then there was a reuters article with a similar stage setting that I discovered
(and didn't post) a while back.
http://www.reuters.com/article/topNews/idUSTRE58G34Z20090921?sp=true

My favorite:
The point of the meetings is to try to reassure themselves and everyone else that they're broadly on track and have a round of applause and some back patting," he said.
He forgot to mention the part where they rent puffed air to each other.

Well now ... that was fun.
 
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dapperdan

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Stick to numbers and economics. Everytime you spill over into assessing the Obama administration psychological motives you expose yourself for the extreme anti-Obama partisan you are. i dont need the smart *** response, i merely wanted to point out to you that your response to me is no more verifiable than mine because we are both making assumptions about the level of influence, council, politics and policy that is going on in the administration. And neither of us has the access or intel to discern which one of our assumptions are more meritable.

Can I take back my rep? I mistakingly thought this wasnt you cherry picking more evidence to get on your soapbox to scream about how horrible a person Obama is and how awful this administration is on everything they do based on the cherry picked evidence and psychological analyses you pull out of thin air mostly based on the pre-conceived notions of ill favor you carry about Obama and democrats.

Edit: and that wasnt me who negative repped you.

Honestly, I don't even know what a negative rep is...I'll assume it's some sort of EE board ranking that can be applied. Hopefully it won't keep me up too late tonight thinking about it, lol.

Yes, I've opposed Obama beginning early in the primaries. I felt at the time that he was an extreme leftist, that he was an immature politician, I've called him (during the primaries, it no longer applies as he has to make a stand now) a blank canvess. And now, 9 months into his Presidency, I stand behind each and every one of those criticisms. I didn't mention on the EE board that I felt he was corrupt because I was trying to be kind, and frankly I didn't have, nor did I want to spend time tracking down a bunch of "evidence". I figured it would turn up in the wash once he got elected. Now I suppose the evidence points to Chicago-styled corruption as well, it began with the funneling of money to the Unions in the Chrysler takeover. I make no apologies whatsoever, in fact, I feel quite vindicated in my initial beliefs. I've been pretty much spot-on in my assessment of Obama. Harsh, maybe. Accurate, yes.

Obama was suppose to bring the country together. What a load of pure, unadulterated BS.
 

blackadder

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No your making assumptions here



and here:



Stick to numbers and economics. Everytime you spill over into assessing the Obama administration psychological motives you expose yourself for the extreme anti-Obama partisan you are. i dont need the smart *** response, i merely wanted to point out to you that your response to me is no more verifiable than mine because we are both making assumptions about the level of influence, council, politics and policy that is going on in the administration. And neither of us has the access or intel to discern which one of our assumptions are more meritable.

Can I take back my rep? I mistakingly thought this wasnt you cherry picking more evidence to get on your soapbox to scream about how horrible a person Obama is and how awful this administration is on everything they do based on the cherry picked evidence and psychological analyses you pull out of thin air mostly based on the pre-conceived notions of ill favor you carry about Obama and democrats.

Edit: and that wasnt me who negative repped you.
How do you "neagtive rep"?

I only seem to see the option for "adding rep".
 

Jeff Miller

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No one, not even Obama, is going to go up against the international banking, monetary, financial system (whatever you want to call it). Money and its borrowing/lending/interest properties that it posses is the heart of the global economy, and the instiutions that channel its ebb and flow are the arteries of the system.

Sure we'll see occasional lip service by people in government (from both parties), they'll take away some salaries from some management people for some companies, but over all, nothing will change.
 

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