Citigroup Bailout Shows 'Too-Big-to-Fail Endures': Simon Johnson

Bloomberg:

Democrats like to say that the Dodd- Frank financial overhaul legislation ended the problem of too big to fail because large failing financial institutions can now be wound down in an orderly manner.

Read the whole story: Bloomberg

Comments

[Kuncous]

09:18 PM on 01/18/2011

Who expected finical reform or change??? Watch their actions don't read their lips....

[cassie reinara]

03:33 PM on 01/18/2011

It not only endures. It seems it has been permanently imprinted on the American capitalist system. Wall Street gets the profits while we get to eat the losses. What a wonderful system our so-called leaders have built.

[Dewts]

01:36 PM on 01/18/2011

the dodd-frank reform bill was written by wall street lobbyists. it codifies TBTF.

[peaceandfreedom]

12:53 PM on 01/18/2011

"The marketplace as it functions now “adds up to higher costs to all Americans,” said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives. More oversight of the banks in this market is needed, he said. "

This remark from one of the cabal of deregulationists under Clinton who created our current depression. He was a member, along with Rubin, Greenspan, Summers and Geithner, who not only ignored Brooksly Born's warnings re derivatives and the banks, but forced her into silence.

It's time to rid the govt. of these neo-libs and replace them with people like William Black who will get to the root of the problem!

[GravitonX]

12:36 PM on 01/18/2011

Because Americans reject Socialism, the US government depends on private corporations to provide certain functions.

[FoxIslander]

03:01 PM on 01/18/2011

...this is corporate socialism.

[Steve Rockett]

12:08 PM on 01/18/2011

Too big to fail means that government must bail it out. No more government bailouts means that corporations will self-regulate. Illogical, because we have seen too many corporate boards drive their own corporations into the ground and walk away with lots of money, while the workers go begging. How should this be handled? What is your opinion?

[Passerineblue]

06:32 PM on 01/18/2011

Anyone who's worked in high finance for more than a few months knows that self regulation is a myth. The academics believe it as do the financial talking heads on TV but anyone who's worked with this crowd knows corporations do not "self regulate." Essentially, greed trumps all. Law firms and accountants are hired to figure out how to avoid regulation. The only thing that matters is the bottom line.

The feds have to go in and force these huge mega financial corporations to spin off into smaller concrete units which are not interdependent financially. It can be done. A few bankruptcy lawyers could go into any corporation, look at all its operations and determine which operations could be feasibly spun off in a manner which would allow the spin off to operate but not crater the whole organization if the spin off fails. The problem is not that it can't be done, but rather that there is no WILL to force the corporations to do it. Glass Steagall's repeal was a disaster. It will not be resurrected.

Pres. Obama according to the NYT is introducing new "business friendly" regulations. Not sure of the details, but I can tell you that the will power to force these mega corps to slim down is not there. I believe Pres. Obama is being played like a violin by Wall Street and see no hope for any serious financial reform. The financial reform bill is a joke.

[pattileigh]

10:52 AM on 01/18/2011

Allowing banks to swallow up each other and become so huge they can bring down our country is the problem. As long as politicians continue to listen to corporate executives who stand to make billions on these deals, we will be destroyed but the executives don't care because they feel their billions will shield them from the misery of the working man.

[Steve Rockett]

12:09 PM on 01/18/2011

Yes, I agree, and how would you control things?

[peaceandfreedom]

12:45 PM on 01/18/2011

Do you have any ideas, Steve?

[FoxIslander]

03:04 PM on 01/18/2011

...reinstate glass-steagall, then begin the process of breaking up the 4 largest banks.

[bluekootie]

10:49 AM on 01/18/2011

I don't understand why a purportedly super-intelligent dude like Obama put people like Geitner in charge, unless he agrees with their modus operandi, or--one would think--is directing it. Any Obama fans out there want to explain this smart president's total capitulation to corrupt capitalism? Until someone can explain how all of this is good for the average American, this guy is nothing but a shyster in my book, no matter how effective his post-shooting speeches.

[pattileigh]

10:56 AM on 01/18/2011

It is weird and puzzling he's surrounded himself with these bankers but the only thing I can think of that would change his mind is they use either their money or financial ruin threats against him. It's just bizarre he has surrounded himself with the biggest welfare recipients in history.

[ralbol]

11:22 AM on 01/18/2011

have you ever thought about who runs the country?

it's the cabal of private banks called the fed--it's not that geithner or bernanke don't know what they are doing, they know perfectly well: they work for the fed, not necessarily for america or for americans--just look at their actions, not at what they are saying

[bluekootie]

11:31 AM on 01/18/2011

I think you're right, ralbol. Time for me to dust off the copy of Greider's Fed book I've been meaning to read for the last 15 years.

[Brad Majors]

10:15 AM on 01/18/2011

CSPAN is airing Chavez's State of the Nation. Venezuela is struggling like all countries. But he showed charts of their shrinking debt as a percent of their GDP. It's tiny, even as a percent - against Europe. And especially the USA which is the biggest ever.

So lurking Teabaggers and corporate Dems - what is wrong here? How has complete corporatist control during Bush ruined us, while socialist Venezuela is limping along alright?

[pattileigh]

10:57 AM on 01/18/2011

They have oil and use the profits for their country.

[Tim in Tucson]

10:04 AM on 01/18/2011

Our deregulated "market" Capitalism is a complete failure.  There is talk of bailing out Citi again.  Really?  Will that be before or after the government is forced to bail out the States?  Or the cities?  Will there be a bailout of all the pension funds once the Muni market fails this year?  Of course, no one is going to stop the next foreclosure wave, which really gets going this year. 
 
It is time for all of us to wake up and realize that unregulated, or what I call MISMANAGED Capitalism doesn't work.  It inevitably leads to the failures we are currently witnessing.  We need to go back to a managed form of Capitalism.  It worked quite well from 1945 through the 1960's.  We need an industrial policy to bring back our industrial base, SO THAT WE CAN MAKE THINGS AGAIN instead of being a country that only imports goods. 
 
We need a government that will force our companies to be more patriotic by keeping the jobs here in this country, for our own citizens to have.  We need much more regulation of our financial sector.  We need a huge nation-wide program to repair and rebuild our infrastructure.  People need to be put back to work, at decent levels of pay, whether it's through the private sector or whether the government starts a jobs program.
 
If we continue to follow the current failed economic ideology that got us into this mess, our economy and our country will most certainly fail on a massive scale.  And it won't take long for that to happen.

[Tee McDonald]

09:53 AM on 01/18/2011

Regulatory oversight for banks. Really? How about yesterday's huge story that JP Morgan Chase, successfully sued by a military soldier, finally admitted that it had improperly foreclosed on 100s of properties belonging to military families who, by law, are given reduced interest rates to shield them from stress while they serve their country. Chase foreclosed on these homes based on higher interest rates in addition to taking money from homeowners it was not entitled to.

Chase is now admitting its mistake but it took a lawsuit to do it. Note that no one at Chase would even discuss this error with the military homeowner before he filed suit, refusing outright to entertain the notion that the bank was wrong.

And bill collectors called him on the front, where he was stationed!!!

Too big to fail. They've already failed in my view. Perhaps the president's new Chief of Staff, a JP Morgan Chase top executive, can ensure that these military families get their homes back and also propose a remedy for other Chase customers who get ignored and ripped off by this bank.

[Passerineblue]

10:15 AM on 01/18/2011

There's an act called the Serviceman' s Civil Relief Act which allows service members of all the forces (other than the Coast Guard) to get their interest rates reduced while they're on active duty. But they have to ask the creditor for a reduction. It doesn't happen automatically. The same act gives service members on active duty more time to answer foreclosure notices etc. -until a year after they are released from active duty.

[Tee McDonald]

05:14 PM on 01/18/2011

Well Chase is doling out tons of refunds for overcharges and promises to recover the homes it improperly foreclosed on, admitting that it erred with these loans. The soldier who sued was in the 6% program; for some reason the bank stopped acknowledging it and wouldn't even discuss over months the alleged error, which led to the suit.

[foxisms]

09:43 AM on 01/18/2011

First the setup. (It's been brewing for several weeks now.)
And then the sting.

[jhendrix]

09:42 AM on 01/18/2011

Obama Launches Regulatory Review, Pledging to Spur Jobs, Growth

http://professional.wsj.com/article/SB10001424052748703396604576088634252904032.html?mod=WSJPRO_hpp_LEFTTopStories

Two bills and 5,000 pages later...

[namewithheld]

09:39 AM on 01/18/2011

Financial Industry Reform - "Mission Accomplished"

[jo smith456]

09:12 AM on 01/18/2011

BREAK-UP Citigroup; Shutdown Fed Reserve (a govt-created association of PRIVATE BANKERS, tasked with just "creating liquidity/money" for its members benefits)
REAL JOBS (at least, most of it in US) from "REAL" (and not SPECULATIV­E) Investment­s. Our banking system (includes Fed Reserve), with skewed, politicall­y-motivate­d, lobbyiest-­controlled­, and MSM-trumpe­ted monetary and fiscal policies has favored get-rich-q­uick SPECULATIV­E investment­s (where liquidity or money is just being moved around) instead of REAL investment­s (where real factories are built, real products are produced and marketed, real hiring for long term, etc.)
FOR EXAMPLE: "CITIGROUP­": "eighty cents of every dollar in revenues came from buying and selling securities­, while just fourteen cents of every dollar came from raising capital for companies and advising them on deals." (a.k.a. "capital investment­")
"Between January and September, Citigroup’­s bond traders alone generated more than twelve and a half billion dollars in revenues—m­ore than the bank’s entire branch network in North America." (...from Nov 29, 2010 New Yorker mag) -Banks use 80% of Fed money for SPECULATIVE rather than REAL business (to create REAL jobs, "capital formation"): para 4 and 5 http://www.huffingtonpost.com/mark-blyth/the-real-reason-that-the-_b_802370.html
-Fed lends 3.3 TRILLION (90%, to few biggest banks): http://www­.huffingto­npost.com/­2010/12/01­/federal-r­eserve-doc­uments_1_n­_790433.ht­ml
-SECRETIVE ELITE BANKERS rule Derivatives Market:
http://www.nytimes.com/2010/12/12/business/12advantage.html?_r=1