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Adding video to channels (News) - requested by MrFisk.

The issue with telling the banks to just raise more capital, without changing the regulations....means they would just leverage that extra capital to increase their profits yet again.

It adds fuel and oxyegn to the fire, they have a feduciary responsibility to behave like this too, as they are publically listed entities.

The only way to fix this, is to regulate the leveraging ratios they can use. That FORCES them to both reduce the risky behavior, and increase their capital levels.

But good luck with that one, you think lobbyists are strong? Id like to see how much money lobbyists make trying to defend the banks from losing their profits.

Unless of course you re-enact glass steigel act, forcing the investment banking arms to separate away from the traditional banking arms....again, damaging bank corporation's overall profits (they lose the mum and pop capital in their vaults to use as investment leverage....less profit)

Wont...ever....happen. Ever.

Fuck It. Let It All Burn Down.

This is sort of where I'm at too. I'm not sure if it's a good thing or not but I think we need a giant reset and a mobilizer of the people. What will get people into the streets, well when they problems come to your backyard. The Last big crash and Occupys reaction was a pretty good mobilizer, this one will be even bigger.

When they lose their homes en` mass.
The housing market crash went only part way towards that....needs to be a lot bigger.

The Basel 3 accords are essentially doing this. Basel and its previous incarnations are essentially non-binding guidelines established by an international agency for banks that domestic regulatory agencies in countries then enact. Even if they don't, banks follow these anyway because it's effectively an international standard.

Basel 2 (which we had prior to the GFC), had 2 tiers of capital that could be held. The actual shareholder stock capital that is rock solid (tier 1) and various loose definitions (including at the time AAA rated mortage backed securities) - tier 2. The last I heard, that 2nd tier has essentially been done away with and the overall capital requirements (%) required to be held, has been raised.

The problems though are:

1 - Unless you raise capital to stupendous levels (like seriously inhibiting bank lending), you wouldn't have anywhere near the buffer to prevent another 2008. The problem then was not insufficient capital. It's that the industry as a whole made a large judgement error in valuing mortgage backed securities.

2 - This also highlights the problem that breaking up the banks wouldn't solve the issue of groupthink because availability of credit and economic conditions are a universal thing. An analogy is the oil price. Even though the US is a major oil producer in it's own right, events like Iraq recently still heavily impact prices in the US because global prices don't change in a vacuum.

3 - As far Glass Steigel, even if investment and traditional banks were separate, operating in the same field, if credit dries up (say because a investment bank made a bad decision), that will still affect the traditional merchant banks.

All banks work through fractional lending. You take a deposit, keep a buffer for capital. You lend out the rest. Some returns back as a deposit, again you keep a buffer and lend out the rest. In bad economic conditions, regardless of whether caused by them or other players in the finance industry, some of their lenders default and there is potential for their entire capital buffer to collapse and the bank to default if the crisis is bad enough. Even if it's purely a merchant bank.

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What splitting the banks probably would do is increase competition, and lower banking costs as well as salaries, which is generally a good thing and I would agree here that this is something that banks have lobbied heavily against (as well as things like the Consumer Protection Agency, for the same reason, margins). Having said that, there are a lot much more monopolistic companies with lower risk and much more stable margins (e.g. Wallmart).