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Should ‘TBTF’ strategy continue?
Let me start out with a question.
Are you familiar with the abbreviation in the banking and brokerage industries known as TBTF? It’s simple, and it’s been the tail wagging the dog for at least six years.
Simply, TBTF is banking, Federal Reserve and U.S. Treasury jargon for too big to fail. Harking back to 2008, the federal government helped save some of the big banks, General Motors and Merrill Lynch, along with American International Group at an initial cost of $700 billion of taxpayers money.
As they “saved” the big companies, dozens of regional banks were allowed to sink, because they weren’t as “important” to the economy. One handout was done like a card trick. An enormous amount of money was given to, I think, Goldman Sachs – but it might have been AIG – which in turn spread it around European banks. We still don’t know if the Fed knew where the money was going.
Now, in many cases, the money was paid back to taxpayers when the banks or automakers had climbed out of the financial hole. It’s interesting that Ford Motor Co. was the only one of the Big Three not to take any government money. Ford did, however, mortgage everything it owned, including the paper towel dispensers. (I’m not sure of that last one!)
Just when we thought that “too big to fail” would be unnecessary in the future, it’s back. The Fed expects any bank that wishes to pay big dividends to submit to a “stress test.” Some big, well-known banks have so far failed the stress test, albeit not by much, but it brings up the subject of TBTF again.
Back to my original question: In the event of a serious recession, should the taxpayers once again bail out the big banks while letting some of the community banks sink? Or should certain big banks pay the price for their largesse to shareholders in the form of giant dividends?
In short, should they be forced to sink or undergo a forced merger, such as when the government forced Merrill Lynch into the arms of Bank of America.
Personally, I think the public airing of what we do with drones is unseemly and at one time would have been a violation of national security. I recall when I was in Vietnam 45 years ago, the use of B-52s had the nickname “arc-light.” I was told that the term arc-light was confidential and I shouldn’t use it with civilians. It turned out that the term was well-known to everyone by then.
But now the banks – and their allies in government – are demanding a stronger security wall than we had in Vietnam so that the public, and their competitors, won’t know what kind of shape they’re in. This is in spite of the fact that if another bailout is necessary it will once again be money that is ultimately from taxpayers that will fund the bailout.
And we have absolutely no say whether regional or community banks might be in need of money. Doesn’t seem right, does it?
Bud Stevenson, a stockbroker, lives in Fairfield. Reach him at Bsteven254@aol.com.
Discussion | 13 comments
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Rich GiddensMarch 17, 2013 - 8:07 am
The smaller banks should sue Obama and the rest of the communists in the Federal Government. Government intervention in the economy just makes things worse. Price controls, bailouts, stimulis, quantitative easing, Keynesian BS at its finest---with high unemployment and high consumer prices for all!
Reply |JonesyMarch 17, 2013 - 7:16 pm
Wasn't it "W" that gave us TARP?...
Reply |Mike KirchubelMarch 17, 2013 - 8:23 pm
Excellent point. The answer is, yes.
Reply |bud stevensonMarch 18, 2013 - 8:18 am
you've noticed, I'm sure, that as time goes on, more and more people lean on the government for support.
Reply |Don't fear the The General Atomics MQ-9 Reaper DronesMarch 17, 2013 - 10:31 am
http://www.youtube.com/watch?v=yen7UVKTWC0
Reply |Do you Love the Smell of Napalm in the Morning?March 17, 2013 - 10:39 am
All our times have come... Here but now they're gone... Seasons don't fear the MQ-9 reaper... Nor do the wind, the sun or the rain..we can be like they are... Come on baby...don't fear the MQ-9 reaper... Baby take my hand...don't fear the MQ-9 reaper... We'll be able to fly...don't fear the MQ-9 reaper Baby I'm your man............ Valentine is done..... Here but now they're gone........ Romeo and Juliet.... Are together in eternity...Romeo and Juliet 40,000 men and women everyday...Like Romeo and Juliet... 40,000 men and women everyday...Redefine happiness... Another 40,000 coming everyday...We can be like they are... Come on baby...don't fear the MQ-9 reaper... Baby take my hand...don't fear the MQ-9 reaper... We'll be able to fly...don't fear the MQ-9 reaper... Baby I'm your man......... Love of two is one... Here but now they're gone... Came the last night of sadness... And it was clear she couldn't go on... Then the door was open and the wind appeared... The candles blew then disappeared... The curtains flew then he appeared...saying don't be afraid...... Come on baby...and she had no fear... And she ran to him...then they started to fly... They looked backward and said goodby...she had become like they are... She had taken his hand...she had become like they are... Come on baby...don't fear the MQ-9 reaper
Reply |All Wars are Bankers' WarsMarch 17, 2013 - 11:24 am
http://www.youtube.com/watch?v=5hfEBupAeo4&feature=youtu.be
Reply |riovistaniteMarch 17, 2013 - 11:33 am
STR fills these pages daily, sometimes she and her many aliases over-run the entire section. She goes on and on for days with inane rants and bizarre episodes. This has become quite annoying but mostly disturbing. Free speech is great and having a voice is good too. But really, she has gone way beyond what is considered normal thought-provoking points of interest. Maybe it is time to take a good long break? Seriously, where is the off button?
Reply |Rich GiddensMarch 17, 2013 - 2:13 pm
You got that right. Mrs. E needs to stuff a sock in it and refocus on the topic----government destruction of the economy by counter-productive intervention.
Reply |The Money MastersMarch 17, 2013 - 12:00 pm
http://www.youtube.com/watch?v=H56FUHgqRNE
Reply |Are you Programmed Mr. Stevenson?March 17, 2013 - 12:09 pm
A quote from somewhere else....“The first time I had ever had a tear in my eye was when he told me that little girls and little boys aren't normally scraped by their fathers, that is not the standard of living in which we lived. And that upset me to such a point – that was the first time I ever felt a tear on my face. Because I really felt so bad that children were not being loved by their fathers. And it took me a long time to understand the difference, because right is wrong, and wrong is right, that's how you are programmed. Isn't it something, when you really think about it? I look back on it now, and I cannot believe the ability they had to do to my mind and so many other survivors out there. To what degree they would go. ...”...I started to crack the code...when I played on a softball team on Offutt AFB and noticed that the coach and the husbands of the lady players were treating their kids nice...I always thought men had just a public code..persona and that yes at home wives and children were tools to be used. Maybe there was a different reality....Please check out these videos...I am telling you that we are all PROGRAMMED to a certain extent....WAKE UP....You only know what you know, till you look outside the box they taught you to be in, till some kind soul shows you the truth.
Reply |Mike KirchubelMarch 17, 2013 - 5:23 pm
We broke up Ma Bell and Standard Oil, why not the TBTF banks? Then let them fail if they screw up. Isn't that the way it's supposed to be?
Reply |rlw895March 17, 2013 - 11:02 pm
Yes, but then where would all the Ivy graduates go to work? And where are we going to find a government that will do that? If we ever do, then we should apply anti-trust to health insurance and the media empires too.
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