August 24, 2011

David Trainer on Banks and Lending and Glass-Steagall

David Trainer on Banks and lending and Glass-Steagall.

The bailout strategies, despite costing taxpayers $1.6 trillion, have not worked because they rely on "the same financial companies that got us into this mess. " The "Fed's Bazooka" is the option to break up all the banks that are "too big to fail." Breaking up means separating the deposit taking and lending arms of the banks from all trading, investment banking and other speculative activities in which broker-dealers engage.
Repealing Glass-Steagall was one of the biggest mistakes ever made. As long as banks are allowed to fund the high risk/return investments with consumer deposits (super cheap capital), they will continue to do so. If you were faced with a choice between high-profit trading and investment banking investments or loans to sleepy ol' Main Street America, which would you choose? Let them have checking accounts with service charges. The money goes to the highest return opportunity every time.