sensible bank regulation
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Rob Roy
Well-Known Member
Don't fall for it. They aren't about to do something right, just something different. Government does not belong in the money supply. Regulation inhibits choice.
Dr Kynes
Well-Known Member
Teh Fux?
government is now and has always been the SOURCE of the money supply.
if the government makes honest currency and keeps it's value year over year allowing people to trust the coins and currency then government has done the most important job they have.
if your buffleheaded statement were true we would all have to assay every coin and consult massive currency exchange rate tables for every transaction, or ALL money would be essentially worthless.
you would be advocating a return to barter, which is ridiculous. it would destroy the basis of human society reverting us back to the dark ages.
The US government doesn't issue dollars, the Federal Reserve Does. Says so right on the dollar bill, says its a FEDERAL RESERVE NOTE. If it were issued by the government is would say UNITED STATES NOTE on it.
The US Government issues Coins. The banks issue credit and paper dollars. The federal reserve is a bank, not a government entity, Congress has no oversight when it comes to the Fed.
kpmarine
Well-Known Member
The federal reserve and congress may both disagree with you on that. http://www.federalreserve.gov/monetarypolicy/bst_oversight.htm
The Federal Reserve System--including the Board of Governors and the 12 Federal Reserve Banks--is subject to a number of levels of oversight to help ensure that the System operates as a prudent, well managed, and effective public organization.
General
The Federal Reserve is subject to oversight by Congress. Board governors and staff testify before Congress frequently to discuss issues within the Federal Reserve's purview. For example, in 2008, governors and Board staff testified 35 times before Congress. During the first quarter of 2009, governors and staff have testified 12 times. Board staff also meet with Congressional staff to brief them on topics related to the Federal Reserve's operations and future direction.
The Government Accountability Office (GAO) has broad authority to review and audit Federal Reserve activities.1 The legislative limits on the GAO's access to the Federal Reserve System are very specific and stated in the law.2 The GAO conducts reviews and audits at the direction of the Congress and also under its own authority. These engagements cover a wide variety of Federal Reserve activities. As of March 31, 2009, there were 20 GAO engagements underway, 17 of which were initiated by Congress. During 2008, the GAO completed 15 similar engagements.
The Board of Governors orders an annual external audit of the financial statements of the Board and the Reserve Banks.3 The current independent auditor is Deloitte and Touche.4 Each Reserve Bank publishes its audited financial statements, and the Board of Governors publishes the audited combined Reserve Bank financial statements and the Board's financial statements in its annual report to Congress. The Reserve Banks and the Board comply voluntarily with the internal control requirements of the Sarbanes-Oxley Act. The external auditors also perform an evaluation of internal controls over financial reporting.
desert dude
Well-Known Member
Or at least makes the fractional reserve a reasonable fraction, say 50% or 70%. As it is, it is around 5%.
Who went bankrupt and brought the financial crisis upon us? Some of the biggest names: Bear Stearns, Washington Mutual, Lehman Brothers, Wachovia, AIG, Merrill Lynch, Fannie Mae, and Freddie Mac. Had Glass–Steagall still been in place, which of those companies would have been impacted? The act is irrelevant because its repeal did not actually cause the cancer that we're still excising.
The real causes of the housing bubble are certainly more complex. After 2000, people were understandably suspicious of the stock market when it melted down and all the paper wealth they thought they had disappeared. Government subsidies and tax benefits favored home ownership and artificially reduced mortgage interest rates; credit was cheap, so interest rates were temporarily very low; and housing--a physical product that every human being needs--had a sterling investment reputation.
Low interest rates left investors demanding higher returns, which incentivized securitization. Using magic models where housing prices never declined and presuming that loan originators had conducted themselves properly, the ratings firms called them investment grade, and the money poured in. Had Glass–Steagall been in place, I think this would have happened anyway; the only difference is that the banks would have been passing loans off to investment banks and insurance companies to collect their fees. When the housing market was good and billions of dollars were in sight, the banks were going to find a way to get their cut; the fight for market share between banks led to declines in lending standards and poor origination practices (like not confirming that the $350,000 borrower has a job).
Why didn't anyone care about these problematic risks? First, I'd say you can thank government intervention in large part: Fannie and Freddie either owned or guranteed a majority of the mortgages in the United States; they assumed a huge portion of the financial risk and took the several hundred billion dollar hit when things went bust. Second, because there was no clearinghouse for derivatives and it was difficult to realistically gague counterparty risk, financial institutions genuinely believed they had shifted their risks to other parties and were free and clear. Because derivatives were purely private contracts and there was no central source of information about them, people didn't understand how easily the counterparties could be rendered insolvent.
Resurrecting Glass–Steagall won't solve any problems. Stricter oversight of derivatives and ratings agencies seems like a far better solution to me.
You're correct that the reserve banks are not government entities, but they also don't issue Federal Reserve Notes. The statute authorizing Federal Reserve Notes explicitly states that the Board of Directors has discretion over their issue; the Board of Governors is a federal government agency, with its members appointed by the president and confirmed by the senate. The Board of Governors is required to appear at oversight hearings in congress several times a year (which is why Bernanke goes to congress).
The Federal Reserve could not constitutionally exercise the powers congress delegated to it without being subject to congressional oversight. That's why they are and must be.
I'm guessing what NoDrama really means is that congress has no veto power over what the Fed does because it's entirely independent (that's why they aren't funded out of an appropriation--congress could just withhold the Fed's budget in order to manipulate its policy). The senators can lecture Bernanke all they like, but he doesn't have to give a fuck about what they're saying. But that doesn't alter that congress remains the ultimate authority. If congress has a direction for the Fed, it can amend the Federal Reserve Act at any time--as has often been done before--and make its direction law, or it could just repeal the whole thing. Since congress could do this tomorrow, any claim that they aren't in control is truly incomprehensible.
Rob Roy
Well-Known Member
Barter is not ridiculous. The basis of human society/ free trade can go in two directions. Either people decide in a consensual way, without an authoritarian third party intervening what to barter with and what has value as a designated currency or other parisitic types (bankers, bureaucrats, legislators) decide. I prefer that people decide, you apparently prefer to pledge allegiance to the blood suckers.
The basis of human society if it is to be peaceful is that consensual exchanges are better than coerced and fiat exchanges. I assumed you knew this, I guess I gave you too much credit. I suspect you are not a real doctor.
beardo
Well-Known Member
You are totally wrong and your ignorance shows
care to prove he's wrong?
how would a barter society be better than paper currency. please, provide historical and mathematical proof for your bogus hypothesis.
you are wrong. the act prevented another great depression for over 70 years. securitization is not even in the dictionary because it's a made up term. the reason that is wrong is because banks, deposit, and savings and loans institutions cannot, by law, be involved in certain investment activities under glass steagall. they cannot, by law, pass off loans, as you call it, it would be against the law. the government would have the power to stop this from happening. this is the truth. call it socialism, i don't give a damn.. the truth is that all this that did indeed happen would not have happened because there would have been a legal framework to stop it as it was happening. the SEC would not have stood idly by.
securities would still exist, i have no doubt about it, but selling shit as gold would not have happened... the ratings agencies are partly to blame but if you think all the people that made off with a lot of money during this so-called recession were listening to ratings agencies... because no...
abandonconflict
Well-Known Member
Gov't will be the property of whom ever controls money supply.
I don't think that makes any sense. Currency really has no value; goods and services have value. The purpose of a common currency is just to enable value to be universally denominated in common terms. If you work 40 hours a week for currency, you're really just trading labor, valued at a certain rate in currency, for whatever goods and services you then buy, also valued at a certain rate in currency. These values in currency are relative and adjust based on market activity.
No authoritarian third party is telling you what to barter. You can barter whatever you want, whenever you want. Using currency is a convenience and a choice.
A forged quotation that was never actually uttered. You know where it actually originated for the very first time? A book written in the 1930s, which is very peculiar when you consider that Rothschild died in 1812.
And which activities were limited by the act? 1) Selling securities, 2) being affiliated with a firm that underwrites and sells securities, 3) taking deposits if you underwrite and sell securities, 4) Sharing officers and directors with a firm that underwrites and sells securities.
I agree that banks, under the act, could not create and sell their own mortgage securities. I don't see how this would have stopped the banks from selling individual loans to other parties for the purpose of packaging them into securities and selling them.
Indeed, you want to know who started mortgage securitization? The federal government! Fannie and Freddie have been buying mortgage loans from banks, packaging them into mortgage securities, and selling them to investors for more than 40 years now. You're telling me that it was illegal under the act for banks to sell loans to Fannie and Freddie for this purpose? If not, why would it have been illegal to sell loans to anyone else?
Funny, no where does it say that congress has ANY authority at all. They can audit and make sure the fed isn't engaged in any illegal activities, but they have zero control over monetary policy.