“It was not the highly visible acts of Congress but the seemingly mundane and often nontransparent actions of regulatory agencies that empowered the great transformation of the U.S.
Thanks. Maybe, but the regulators are now requiring OTC derivatives to be centralized, which will put them in the grasp of the DTCC if the banks go bankrupt. See Concoda.com if you're keenly interested, but it's a bit complicated.
I've studied the Great Taking, and concluded that the whole point of the explosion in the notional value of derivatives over the past decade is so that they go bust. That will then entitle the banks to directly seize as collateral the shares in brokerage accounts that are held in street name. Incredibly bold and incredibly evil...
BTW, I've long admired your work on public banking.
Isn’t the problem that the division of banks between commercial and investment is obscured by the investment banks becoming bank holding companies. The Volcker Rule applied to both because now they were both banking entities under the definition of bank as used in Dodd Frank.
That rule could be rephrased to apply only to commercial banks as it was in Glass Steagall. The wording of section 16 of Glass Steagall could be used:
“S 16 The business of dealing in investment securi¬ties by the association shall be limited to purchasing and selling such securities without recourse, solely upon the order, and for the account of, customers, and in no case for its own account,…”
That was the provision that kept the financial system sound for decades.
Thanks. Maybe, but the regulators are now requiring OTC derivatives to be centralized, which will put them in the grasp of the DTCC if the banks go bankrupt. See Concoda.com if you're keenly interested, but it's a bit complicated.
I've studied the Great Taking, and concluded that the whole point of the explosion in the notional value of derivatives over the past decade is so that they go bust. That will then entitle the banks to directly seize as collateral the shares in brokerage accounts that are held in street name. Incredibly bold and incredibly evil...
BTW, I've long admired your work on public banking.
Thanks David. Agreed that's a likely and very dark scenario.
I can only add one thing - when you use the word derivatives, it should be UNREGULATED derivatives. Excellent article.
Isn’t the problem that the division of banks between commercial and investment is obscured by the investment banks becoming bank holding companies. The Volcker Rule applied to both because now they were both banking entities under the definition of bank as used in Dodd Frank.
That rule could be rephrased to apply only to commercial banks as it was in Glass Steagall. The wording of section 16 of Glass Steagall could be used:
“S 16 The business of dealing in investment securi¬ties by the association shall be limited to purchasing and selling such securities without recourse, solely upon the order, and for the account of, customers, and in no case for its own account,…”
That was the provision that kept the financial system sound for decades.
Good suggestion. Thanks Jan!