Tuesday, May 5, 2015


The US bank bailouts following the 2008 economic crisis, have been called 'corporate welfare'. The irony is, that the very people who suffered because of lack of regulations and casino type investment gambling, are the ones who paid the bill of the bailouts. Simplistically, this amounts to victims being made to pay  perpetrators for their crimes..
The idea behind this tortuous logic, is that the banks were 'too big to fail.' In the case of Greece, the public was also required to cut back on their social services (which had already been paid for by the taxpayers).
What is puzzling to me is why the private banking system wasn't given a radical overhaul. There have been some mild attempts at reform, such as the Volcker Rule.This was part of the  landmark Dodd-Frank Wall Street Reform and Consumer Protection Act of 2013. This required  five federal financial regulatory agencies – the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Commodity Futures Trading Act to stop risky short term  trading activities, and terminate private equity funds and hedge funds.

Bear in mind the Volcker Rule is just a rule.  The trick about policies is not that they are legislated, but whether they are being implemented. As one New York Times reporter wrote 'The main issue now is whether the regulators force enough additional transparency so that it is possible to see the new ways that proprietary bets are hidden.....Will data be available on trading activities, allowing independent researchers to look for patterns that might otherwise elude officials?" 
http://economix.blogs.nytimes.com/2013/12/10/making-the-volcker-rule-work/?_r=0 (Links to an external site.)