Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
|
Last |
Change |
Percent |
|
|
S&P Futures |
1547.8 |
3.4 |
0.18% |
|
Eurostoxx Index |
2744.5 |
42.6 |
1.40% |
|
Oil (WTI) |
91.3 |
-0.2 |
-0.27% |
|
LIBOR |
0.281 |
0.001 |
0.36% |
|
US Dollar Index (DXY) |
82.41 |
-0.045 |
-0.05% |
|
10 Year Govt Bond Yield |
2.06% |
0.05% |
|
|
RPX Composite Real Estate Index |
194.9 |
-0.3 |
|
Markets are higher this morning after a positive jobs report. Payrolls increased by 236k in Feb, higher than the 165k forecast. January was revised down. The unemployment rate fell to 7.7% from 7.9%, however the labor force participation rate fell as well, which means that number isn’t as great as it initially appears. Bonds are getting clocked, with the 10-year solidly above 2% again. MBS are down as well.
The rally in the stock market and rebounding house prices has returned US wealth to its pre-crash levels. Of course the main driver has been the stock market, not real estate, so don’t expect this to get us back to pre-crisis levels of consumer spending. Still, its a start.
The Fed has released the results of its stress tests for the banks. The stress test is a scenario of 12.1% unemployment, a 50% drop in the stock market, and a 20% drop in real estate. They predict that Tier I capital would fall from 11.1% to 7.7%, which is still above minimum standards.
Filed under: Morning Report |
All Things in Moderation 
Good piece by Roger Cohen in the NYT today. I pretty much agree with the quote from John Authers that he cites:
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jnc:
I pretty much agree with the quote from John Authers that he cites:
He said: “Limit the leverage that banks can use, and require them to hold more capital, and bonuses will be less variable. Tell them that they cannot trade with depositors’ funds, or split the biggest banks, and compensation will be less variable.”
Why should depositors be prevented from reaping a return on successful “trading” activities? Why is it OK to allow banks to use deposits to “bet” on things like credit quality and real estate but not on other things like interest rates and foreign exchange? (Ignore for now the fact that any loan or borrowing is in fact an implicit “bet” on interest rates.) Especially when, as Brent has pointed out, the most recent crisis was the result of too much betting on credit and real estate?
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Why regulate banks at all, really? How has it prevented anything?
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Didn’t we have, prior to bank regulation, recessions and depressions? Bank failures? It seems more like an opportunity for government graft than for helping citizens. Tell me a proven benefit?
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McWing:
Tell me a proven benefit?
You know me…I’m as anti-regulation as anyone. But I do think a reasonable argument can be made that the mere existence of FDIC insurance helps to prevent bank runs, which in turn helps to limit the instances of bank collapses. It won’t eliminate bank collapses (obviously), but if it prevents panicked runs on a bank, it prevents at least one cause of collapse.
The problem with deposit insurance is pricing it properly. There is no reason to think the government has either the capability or the incentive to properly analyze individual banks and charge them for the risk they pose. If deposit insurance was priced properly, there would be no legitimate reason for the government to regulate the types of risks banks take on with depositors money.
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Greek debt woes may not cause the end of the European project, but this probably will:
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At the end of the day, what collapses banking systems is real estate bubbles. Burst Residential Real Estate bubbles are the Hurricane Katrinas of banking. No amount of regulation can really prevent a collapse when a real estate bubble bursts. Residential real estate is too big, too widely held, and too levered. Even a “safe” real estate investor is still levered 4:1.
Tightly regulated banking systems like Japan and Sweden also collapsed when their resi bubbles burst. I am sure that the Canadian banks will be in deep trouble in a few years as their bubble bursts.
The trick is to prevent bubbles from occurring in the first place. And that requires a central bank to act responsibly. Unfortunately the Fed is handcuffed by the dual mandate which requires the Fed to hold interest rates as low as they can as long as we are under full employment and inflation (solely as measured by the CPI) remains in check. This is a recipe for bubbles, as we have seen since the 1970s, with gold and commodities in the early 80s, junk bonds in the mid 80s, Texas real estate in the early 80s, emerging market debt (late 80s, early 90s, late 90s), the stock market bubble in the late 90s, the resi real estate bubble of the 00s, and now bonds.
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“The trick is to prevent bubbles from occurring in the first place”
that’s no fun.
also, the consensus at MedPAC is that the only way to get health care costs under control is to get patients to take ownership of their health care. This doesn’t necessarily mean HSAs, but simply understanding what is it they are purchasing and whether its worth it or not. meaning, don’t get a knee replaced because you’re told to if you have no intention of doing the physical therapy. basically, become educated consumers, as for a large number of acute instances, there no “right” answer clinically. Granted, there was talk about how the system makes this difficult and is currently aligned against in (in Medicare anyway. private health insurance is better about this)
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Agree with Scott. Presumably there’s also an opportunity cost associated with prudent people keeping more assets in cash or otherwise outside the banking system due to fear of bank runs, etc.
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jnc:
Presumably there’s also an opportunity cost associated with prudent people keeping more assets in cash or otherwise outside the banking system due to fear of bank runs, etc.
Yes, and to be totally honest I think this was the real motivation behind the introduction of deposit insurance way back when. It wasn’t to protect depositors just for the sake of protecting them. It enticed risk averse people of modest means (ie most people) to put their meager savings to work in the economy rather than stashing it under the mattress or in a coffee can buried in the back yard.
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I think this was the real motivation behind the introduction of deposit insurance way back when.
Certainly the primary motivation. Another cute idea of the time that is no longer with us but which I loved was “school banking”. It was invented by Rex Stout, the author of the Nero Wolfe series. It was supposed to teach us the beauty of compound interest as we saved our nickels each Monday in school. Its primary motivation was building trust in banks from childhood.
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Heard this rebroadcast on NPR today. It’s worth a read.
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I argue that the FDIC (and hence the need for most regs, right? Even lefties agree that if there is no FDIC, then there is no need for Federal regulation) distorts the market in ways that are worse than if there was no FDIC.
First, it makes for exceedingly lazy consumers (see J’s medregs lament, no one (and I mean no one!) will shop unless there is something in it for them. Human nature.) Who gives a shit about solvency, investment strategy, management and corporate governance if I’m assured my money is safe no matter what happens. In fact, a savvy consumer distorts it even further by looking for the bank that takes the biggest risks because my money is insured, if the risk is too great, so what? I lose… nothing!. Banks then, to attract depositors, take risks that push the envelope to get bigger returns.
And that brings us to another distortion, lobbying. There is now an incentive to lobby due to regulation. All the lefties here hate (hate!) money in politics. Who’s the biggest campaign contributers? Banks, investors, who are regulated. Take away regulation you take away a need for lobbying (at least by the banks.) This also would lower the barrier to entry to become a bank, and increase competition, which I argue, is innately good.
Now, why are bank runs bad? Their bad if you can’t get your money out before the bank runs out, on the other hand, the risk of a bank run would make you verrrrrrry careful about where you’d put your money. Why, one might educate oneself about investments and security. I’d venture that companies may start popping up that, I don’t know what you might call it, insure your deposit. Say, you pay a small fee and they (depending on where you keep it) would insure your deposit. Let’s say you want to deposit in bank X but Allstate says, nope, no insurance if you go there. Might be a clue that bank X is not to be trusted.
I’m arguing that removing the risk of a bank run actually makes a banking collapse more, not less likely. Tell me how we avoided a bank collapse because of FDIC? We had one in ’08 with it!
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McWing:
I argue that the FDIC (and hence the need for most regs, right? Even lefties agree that if there is no FDIC, then there is no need for Federal regulation) distorts the market in ways that are worse than if there was no FDIC.
That may well be. I can’t really argue with your logic. Your view is the pure, free market view which I obviously appreciate. Reading your argument, I get the sense that you agree that deposit insurance has value, but that the government ought not be involved in providing it. That is precisely what I was alluding to when I said that the trouble with FDIC is that there is no reason to think that the government is either capable of or motivated to price such insurance correctly.
So ultimately I think we agree.
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McWing:
BTW, I doubt it is true that even lefties agree that without FDIC, there is no need for regulation. Lefties seem to me to want to regulate pretty much any activity that doesn’t appeal to them, regardless of whether it poses a financial risk to tax payers.
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“Take away regulation you take away a need for lobbying (at least by the banks.) ”
my kryptonite … losing influence … can’t capture government ….
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“ScottC, on March 8, 2013 at 1:23 pm said:
jnc:
I pretty much agree with the quote from John Authers that he cites:
He said: “Limit the leverage that banks can use, and require them to hold more capital, and bonuses will be less variable. Tell them that they cannot trade with depositors’ funds, or split the biggest banks, and compensation will be less variable.”
Why should depositors be prevented from reaping a return on successful “trading” activities? “
Depositors aren’t seeing any benefits from these trading activities. The benefits accrue to the individual traders themselves and to a lesser extent the banks shareholders.
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jnc:
Depositors aren’t seeing any benefits from these trading activities. The benefits accrue to the individual traders themselves and to a lesser extent the banks shareholders.
If this is true, it is true only because of the existence of FDIC. So let’s assume that is true…that depositors would receive precisely the same returns whether or not the bank runs a global trading operation. So what? Why is it OK for bank shareholders to “gamble” depositors money on real estate and credit but not on, say, interest rates and foreign exchange?
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“I argue that the FDIC (and hence the need for most regs, right? Even lefties agree that if there is no FDIC, then there is no need for Federal regulation) distorts the market in ways that are worse than if there was no FDIC.”
Only if the politicians have the fortitude not to bail out the banks anyway when push comes to shove.
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Well with no campaign teets to suck on, less incentive to bail out, no?
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Scott, you may well be right. Regulations are about, first, graft, and second, control, power.
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We had life before FDIC. It was unsatisfactory.
http://eh.net/encyclopedia/article/wicker.banking.panics.us
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mark:
We had life before FDIC. It was unsatisfactory.
Apparently life after FDIC is also unsatisfactory, otherwise we wouldn’t have all these calls for restricting FDIC insured institutions from doing certain things.
I’d also point out that the fact that something might be unsatisfactory is no justification for wanting the government to do something about it. As always, the problem is the question of what government is for, certain defined and limited tasks or all-purpose problem solver.
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Scott, insurers/underwriters weigh risks. They warn the insured against unnecessary risks if they are doing their jobs.
As for your second point, in 1933 there was no private insurance market for commercial banks and if insurance were to be offered, that job fell to the federal government.
Times have changed. I readily concede that market alternatives might be available now.
Whether a government program that is working at no direct cost to the taxpayer should be abandoned because a market alternative now exists is a question that might be debated. I would be pleased to have banks opt out of FDIC if they could be insured privately, but since they are government chartered banks I think depositors should expect insurance of some sort.
You would know whether there still exist private banks that have neither state nor federal charters. We had one here in Austin in the 60s-70s.
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Mark:
Scott, insurers/underwriters weigh risks. They warn the insured against unnecessary risks if they are doing their jobs.
Well, the way they warn them is through increased premiums. If the government thinks that “trading” activities are inherently more risky than lending to Joe Blow to start a restaurant or buy a house, then it should charge banks with trading operations higher premiums for insurance, not outlaw trading activities.
But I would like to know what objective evidence exists that trading operations are inherently more risky than traditional lending activity. It is not at all clear to me that they are, and I think the widespread impression that they are has been deliberately fostered by politicians trying to distract attention from their own culpability for the recent financial crisis. As Brent has repeatedly pointed out, the crisis was caused not by irresponsible bank trading operations but rather by a housing bubble. And both government policy and government sponsored institutions were at the very heart of causing that bubble.
I suspect that objections to FDIC insured banks running trading operations has a lot more to do with social and economic engineering preferences than with any objective measure of financial riskiness. Lending to Joe Blow to buy a house or start a small business is deemed to be a “social good” no matter how risky, while trading activities are deemed to be at best socially and economically inconsequential if not actually detrimental, again no matter how risky they actually are.
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Mark, one of the things they cite about bank runs are the consequences of them, bankruptcy, unemployment, business failures, economic displacement, etc. Those things occur now, with FDIC. I would be curious to know, for example, the level of personal bankruptcy as a percentage of population before as well as after FDIC. Also, ditto for unemployment.
They also seem to use “bank run” and “bank failure” as the same thing. Is it? They pointed out several different instances where there were bank runs on individual institutions that were solvent. On the other hand, a bank can fail without a bank run. Another thing I was thinking about was putting all our “economic problem thinking eggs” in the “fault of bank runs basket” rather than other possible factors, such as, in thinking about the 19th century anyway, weather as that would have an impact on a largely agrarian society. A crop failure could/would crater an economy if it was essentially made up of agriculture producers. Also, war elsewhere, effecting a key trading partner (the Napoleonic wars for example) might impact the US economy indepently of any regional bank run.
Another thing that is interesting is that before the Fed, bank runs were much more localized.
I’m not sure that the study you provided gives us the evidence needed to put the matter to rest, do you?
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It does put the matter to rest.
It does not, however, assure that FDIC is the only model that is better than no insurance.
For that, the evidence is mixed. You may recall that as late as the 70s there were many state chartered banks in TX that chose to be insured by Global Re or AIG or Lloyd’s, not by FDIC.
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It is not at all clear to me that they are, and I think the widespread impression that they are has been deliberately fostered by politicians trying to distract attention from their own culpability for the recent financial crisis.
I think there are a few things going on here. First, the “banksters did it” meme polls well, and the solution “reinstate Glass Steagall” is a facile one that everyone can rally around. As I have said before, Glass Steagall is a solution in search of a problem, because it doesn’t matter if you were long real estate through a plain old mortgage loan on the balance sheet, or long through a mortgage backed security, or long because you sold protection on a CDO full of MBS, you were still long real estate and you still got clobbered when real estate dropped. And don’t forget, the rest of the planet doesn’t separate investment and commercial banking – in fact they don’t even draw a distinction between the two.
Second, bubbles are driven by psychology, and there was this sense that real estate could never go down and was therefore a safe speculative vehicle. That means you have to put some of the blame on John Q Public, and John Q Public votes. So, John Q Public was not stupid when he took out a “pick a pay” cash-out refi and used the proceeds to buy a boat, he was conned by Wall Street Sharpies. All of those loans were meant to be refinanced, not repaid. And yes, Wall Street made the same bet that John did – that real estate price appreciation would make everything right.
The biggest culprit in this is the Fed, and I think most people who criticize the Fed are immediately labeled as cranks who want to put us back on the gold standard. You can disagree with Fed Policy without believing in black helicopters and thinking that gold is on its way to $5,000 an ounce. I have said before, I blame the dual mandate. It didn’t help that Greenspan’s “irrational exuberance” comment was 4 years early. Certainly his statement of standing by to provide liquidity in the aftermath of the 1987 crash was the right thing to do, but then the Fed eased for a lot of mini-crises, from the Mexican Peso Crisis to Long Term Capital Management, to Y2K. This created the Greenspan Put and it lives today. IMO the left will protect the dual mandate tooth and nail, and anyone who goes after it will be labeled a handmaiden of the 1%.
Last, yes the government has used Fan and Fred as a tool of social policy via HUD. We subsidize the residential real estate market six ways to Sunday and then wonder why we had a real estate bubble. There are so many disingenuous arguments happening when we discuss this matter that I don’t know where to start. Basically there are two arms to Fannie Mae – the securitization Fannie, which buys and securitizes conforming loans which are generally pretty conservative – 80% LTVs, 660+ FICOs, etc, and the “hedge fund” Fannie, which purchases mortgages for its own balance sheet. Defenders of the GSEs point to the “securitization Fannie” and rightly say that there was no subprime going on here. Fair enough. But the “hedge fund” side of Fannie bought $2 trillion of the stuff, all in the name of social engineering and shareholder return. Again, anyone who points this out is labeled as a racist who doesn’t want to make loans to “those people” as Krugman says so often. I still find it amazing that Franklin Raines, who presided over an accounting fraud that rivaled Enron and paid himself 10s of millions of bonuses in the process emerged from the crisis virtually unscathed.
So when 3 out of the 4 culprits – the voter, the Fed, and do-gooder social engineers at the GSEs are above criticism, that leaves the banksters and Glass Steagall to take the fall.
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Am I the only one here who thinks The Big Lebowski is the funniest movie ever made?
Yeah, Raising Arizona and Moonstruck are exquisite, and Fargo is sublime, but The Dude? It is the best.
And do not, I say again, do not try the Blazing Saddles counter on me. It’s good, but hell, The 40 Year Old Virgin is funnier.
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This is Spinal Tap
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Life of Brian
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Oh my. It is definitely #2 for comedy. Plus, it goes to eleven.
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Apparently life after FDIC is also unsatisfactory, otherwise we wouldn’t have all these calls for restricting FDIC insured institutions from doing certain things.
I would state it differently. Life before or after anything is not static. Flash crashes illustrate the vulnerability of the system to high frequency,algorithmic trading. There are solutions to the problem that do not involve eliminating all regulation of trading.
Scott and Troll appear to be advancing an argument that there should be no FDIC, because there are problems with the current financial system I’ve seen such an argument before. It is similar to the argument that creationists make against evolution. Any gap in the theory means that the theory is wrong and the correct answer is God did it.
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FB:
There are solutions to the problem that do not involve eliminating all regulation of trading.
I didn’t propose an elimination of all regulation of trading. I said that, as a matter of financial risk, there doesn’t seem to me to be a reason to allow FIDC insured banks to make “bets” with depositor’s money on credit and real estate but not on other things such as interest rates, foreign exchange, or other trading activities. I am not aware of any reason to think the latter poses more risk to taxpayers than the former.
But as a more general proposition with regard to FDIC insurance, I think your notion that “there are solutions to the problem” is wrong. In fact there are no solutions that address both the problems that FDIC is meant to address and the problems that FDIC introduces. This basic contradiction between wanting the government to guarantee that depositors never lose money while at the same time ensuring that such a guarantee will never cost taxpayers any money is fundamentally irreconcilable.
It is similar to the argument that creationists make against evolution.
Actually it bears no relation whatsoever to such arguments. The argument between creationists and evolutionists is an argument about what is, ie what are the facts of existence. The argument between those who are in favor of the government guaranteeing bank deposits and those who object to it is an argument about values and benefits, ie is the benefit of federally guaranteed deposits worth the costs.
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FB,
I object, among other things, to the notion that the distorting effects of regulation can be fixed by more regulation.
I am not a believer in no regulation, I am a believer, philosophically, in as little regulation as possible, and that regulation, if needed, should occur at the closest level, ie locally, so that those effected by regulation(s) can leave if the find it to onerous. The worst regulations, and the most distorting, are Federal regulations as they are unescapable. There are myriad downstream effects to all regulations as well, such as corruption and increasing bureaucratic encroachment, which I view as a negative. Further , there is a, for lack of a better way to phrase it, a intellectual killing effect of regulation as well as a desire of regulators to increase trust in government.
Do you see the following example as an exception or inevitability of regulation? There is no wrong answer, but it goes to philosophical underpinnings.
http://www.coyoteblog.com/coyote_blog/2013/03/another-california-coastal-commission-horror-story.html
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Try attending a condo association meeting sometime, Troll. It’s hardly unique to state commissions to go too far. As long as we’re trading examples, I will see your tree and raise you one dead baby.
There is a natural tendency tension regarding the right level of regulation. If I agree that one shouldn’t have to file with the CCC to remove a dead tree, will you agree that it is reasonable to have licensing requirements that don’t allow meth addicts to run daycare centers?
Scott – Insurers are well familiar with the basic contradiction that you outline. That’s the whole point of setting premiums and having a reserve pool. The reserves were about $53B in mid-2008, prior to the failure of IndyMac. According to this Bloomberg article, the deposit insurance fund went $20B into the red and has since recovered to about $11B with projections to be fully funded by 2018.
I don’t know the exact numbers, but Congress made the FDIC’s mission much more difficult when it raised the caps on covered deposits. Kind of like setting premiums for a $1M umbrella policy and then being able to make a $10M claim. That is, however, the fault of the Congress, not he concept of an FDIC.
I’ll stick with my analogy. That the worst global financial crisis since the Depression stressed the FDIC is not justification to abolish it.
∂ß
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FB:
Insurers are well familiar with the basic contradiction that you outline.
The contradiction I outline is not a function of insurance. It is a function political ideology…ie a desire to have government guarantee deposits competing with a desire to protect those standing behind the guarantee, the taxpayers, from bearing the ultimate cost of such a guarantee. Private insurers face no such contradiction because they charge premiums based on the risks being insured against, and the shareholders accept the risk that they will bear the cost if the risk is not properly assessed and charged for.
That is, however, the fault of the Congress, not he concept of an FDIC.
The concept of FDIC requires that Congress make these kinds of judgments. So yes, it is the fault of the concept of FDIC.
That the worst global financial crisis since the Depression stressed the FDIC is not justification to abolish it.
Nor is it justification for disallowing FDIC insured banks from engaging in trading activity.
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The funniest thing I ever read was a comic strip that used to run in The Dragon magazine by TSR Games. What’s New with Phil & Dixie was a humorous strip about RPGs, such as D&D. It had a few long running jokes, such as the plans to have an issue on Sex and D&D as well as the known legal troubles between TSR and the Tolkien Foundation. The original version of D&D had hobbits. Tolkien sued and subsequent editions of D&D had halflings. At TSR, phones band-around-the-finger when someone calls.
The best bit was when a dragon started chasing them around a Ren Fest. Phil had it follow him into a tent with a thunderstorm. He assumed that rain would make the dragon go away. Instead, they multiply when wet. The subsequent issue of the magazine had Phil’s dragons popping up everywhere in the magazine.
Phil Foglio also inked the graphic novels based on the MythAdventures series. At one point, he had Phil and Dixie pop up with one of their dragons. I don’t remember the details of what set me off, but I think I laughed without stopping for ten minutes.
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“The funniest thing I ever read was a comic strip that used to run in The Dragon magazine by TSR Games. ”
I have an almost complete collection of Dragon, all boxed up and in plastic protective bags. I remember the strip well.
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“I said that, as a matter of financial risk, there doesn’t seem to me to be a reason to allow FIDC insured banks to make “bets” with depositor’s money on credit and real estate but not on other things such as interest rates, foreign exchange, or other trading activities. I am not aware of any reason to think the latter poses more risk to taxpayers than the former.”
With regards to “other trading activities”, to the extent that derivatives aren’t traded on a central clearing house I’d argue that there is a difference between them and other areas where pricing is more transparent.
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jnc:
With regards to “other trading activities”, to the extent that derivatives aren’t traded on a central clearing house I’d argue that there is a difference between them and other areas where pricing is more transparent.
A clearing house doesn’t make pricing transparent. It eliminates counterparty credit risk. Or, more accurately, it concentrates all credit risk in a single place, namely the clearing house itself. And as of tomorrow, most common OTC derivative transactions between banks must be cleared.
I think you might be confusing exchange traded products with cleared products, and there is a difference. Exchange traded products are cleared, but not all cleared products trade on an exchange. For example, a USD interest rate swap between JPM and BOA will be cleared as of tomorrow (and in fact have been clearing for several years) but they are not traded on an exchange.
BTW, trading a product on an exchange can make prices more transparent, but the push for more price transparency in the derivative markets has nothing whatsoever to do with making bank trading activities safer for bank depositors. In fact quite the contrary, the ostensible motivation for requiring more price transparency is to protect all those innocent and naive corporate clients from being conned by greedy and dishonest banksters who are making “too much” on trades with those corporate clients.
I say “ostensible motivation” because the real reason, as always, is simply that a bunch of ill-informed and demagogic politicians want to appear to be Doing Something to prevent the next crisis, even if that Something has nothing whatsoever to do with the last crisis.
I still see no objective reason to think “gambling” depositor money on credit and real estate is any less risky than doing so on other activities like trading interest rate or FX risk.
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That FDIC is a government enterprise allows Congress to interfere, but does not require it. I presume that Congress foresaw a run on the banks as having negative consequences and decided the cost to the taxpayers and, eventually, solvent banks was worth it.
I always thought that if you had more than 100K in liquid cash, you should spread it around. If you have a lot more than 100K and the need to keep it liquid, then protect yourself in other ways. Not sure if supplemental insurance is available.
I will throw a counter-factual point at you. Money market funds are uninsured. Yet, the absence of a federal authority did not preclude intervention. In 2008, On September 19, 2008, U.S. Treasury Department announced that up to $50 billion in the Exchange Security FUnd would temporarily be made available to guarantee deposits in certain money market funds.
Exactly what would abolishing the FDIC accomplish, if the Treasury Dept. is going to intervene anyway?
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FB:
That FDIC is a government enterprise allows Congress to interfere, but does not require it.
FDIC is the creation of government legislation. While it is true that, once created, Congress can either oversee its operations or provide no oversight at all, depending upon Congressional whim, the concept of FDIC (which is what we were talking about), relies upon implicit, if not explicit, Congressional authorization for virtually everything that it does. Again, congressional “interference” is required by the concept of any government created corporation.
Exactly what would abolishing the FDIC accomplish, if the Treasury Dept. is going to intervene anyway?
It seems to me that Treasury’s actions in guaranteeing money market funds actually raises precisely the opposite question. What does the existence of FDIC accomplish if, when push comes to shove, the Treasury Department is going to guarantee deposits that are not FDIC insured?
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I’m afraid I’ll have to exit today’s discussion. Much more entertaining than the usual back and forth on Plum Line.
I am interviewing tomorrow for another job in the federal government. GS15. Woo hoo! If things go well, I’ll say more. Let’s just say that President Rick Perry would have eliminated my job, if he remember which department it was in.
Good night folks.
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FB, I wouldn’t object if the MethHead ordinance were from the most local jurisdiction possible, town, city or County.
I tend to believe that licensing requirements aren’t meant to protect consumers but meant to protect those who can afford a license.
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I read that article about home-based child care and the death of the infant yesterday. It seemed to me that it jumped the gun, as the cause of death is TBD. Seemed the Post simply filled in the blanks
1. unregulated
2. ?
3. death of a child
4. front page scare
But it did note that VA licenses dog groomers.
So, what will happen is the state will regulate, the cost will go up, and people will be priced out, leading to calls for state provided care. So we might as well just jump straight to that.
Also, Ghostbusters is a top 5 easy for best comedy.
“Lenny, you will have saved the lives of millions of registered voters”
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Also, Ghostbusters is a top 5 easy for best comedy.
“Lenny, you will have saved the lives of millions of registered voters”
Meh, too preachy.
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We’ve managed to have required licensing of dogs without state provided pooches.
There will always be unlicensed childcare. We had two women take care of our sons when they were very young. One still occasionally babysits for us. If one restricts licensing to in home care of 5 or more unrelated children (pick your number) and requires some basic information and investigation, the cost would be nominal.
Or, you could have Troll’s argument to make it as inefficient as possible with the purpose being to decrease trust in government.
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What does the existence of FDIC accomplish if, when push comes to shove, the Treasury Department is going to guarantee deposits that are not FDIC insured?
A $53 billion reserve fund, for one thing. FDIC went $20B into the red and is back in the black. I believe that’s without the taxpayer paying for it directly.
People went into money markets knowing that they weren’t FDIC insured, just to chase slightly higher interest rates.
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