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.

-

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).

US tax redistribution is greatest by absolute volume from the middle class to the middle class, although the per person benefits the wealthier get through subsidies and deductions are higher.

The issue is, a lot of them are not explicitly specified and are not large programmes but form various subsidies already built into prices such as the Home Mortgage Interest Deduction.

Comparing to Australia, the actual tax take is 25% of GDP for both, yet the expenditure is roughly 40% for the US and 35% for AU, despite the fact we both have a generous welfare which doesn't expire and a public health care system.

http://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP

The Submerged State is a good book on this from what I've heard, here's a summary:

http://www.minnpost.com/eric-black-ink/2012/04/our-%E2%80%98submerged-state%E2%80%99-invisible-government-policies-may-surprise-you

Stop banking in the 19th century people. I can honestly count the number of times I've used cash in the last year on one hand.

I constantly see credit card companies attempt to prey on people in malls or with mailouts. Hell, they did it to me when I was young and stupid. When I started work, I got a credit card with a $500 limit on it for travel and expenses, etc. Less than 6 months later the bank had increased the limit 4 times to over $3000. If I was smart I should have refused each increase, but like an idiot I basically looked on it as free money. Suddenly I was paying a fortune in interest and struggling to clear the card. Every penny I earned went on it, and then I'd rack up the bills over the next month again just to live.

But credit cards are great if you know how to use them. Eventually I paid mine off and now I live completely off it; fuel, groceries, the works. I pay for everything on it, and I get reward points that easily cover the cost of the annual card fee. I make sure it's cleared every month. Meanwhile, my salary sits in my bank account offsetting my mortgage. Now it literally is free money.

I actually feel kinda bad, because essentially people who are bad with money and run up credit card bills at 20% interest are basically subsidising my card for me.

@chingalera
ill take a crack at that deconstruction.
@Sagemind was basically prefacing the fact that the few remaining jobs are low paying crap jobs,like walmart for instance.

but you are correct that it is NOT a job of last resort.
you dont HAVE to apply at walmart.
nobody is FORCING you to work for slave wages.

you could always suck a dick.
handjobs in the local gas station bathroom for a quick buck.
sell plasma,blood,semen.
sell a kidney.
sell drugs..but not weed..might as well work at walmart.

you could always sell your integrity.
i hear wall street is a good place for that,but they require your soul as well.
how about insurance fraud?
reverse mortgages? fuck those old people..they gonna die anyways.

ya gotta eat,so ya do what ya gotta do.

who am i kidding?
while i would never work at walmart nor any corporation,some people have to do what they have to do.
and sometimes its a short list and working at walmart is the trade off for them.

guess they dont like dick.

so im with @Sagemind or is my skewed line of non-reasoning still a retarded polemic?

because at the end of the day who are we to judge anybody for their choices?

Where do you draw the line though?

CMBS or RMBS made money for "bankers". Well some bankers anyway.
http://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)

However it also drove home sales (and home building). Are the home builders responsible for people taking mortgages on houses they could not afford?

What about the realtor/broker who showed them the house?

Or the developer who developed it?

Or the appraiser who appraised the property for hundreds of thousands of dollars more in value than it is worth now?

Or the people at Freddie Mac who earnestly wanted to put lower income people in homes?

Now, you take all the money from the bankers that survived and you give it to who?

The people who bought a house, put very little money into it, and now have to give it back?

The real estate developers who lost everything? (Of which there are many)

It all sounds well and good to take from one group and give to someone else, but I think it is easy to point the finger at the bankers and not take a look in the mirror. We all did this and allowed it to happen.

That said bankers shouldn't be making big money when they are losing big money...

i wanted to jump on board for this video.
made some points that should be made but the message gets lost in the fear-fear-fear-mongering.

is there a dumbing down of american youth?
yeah..i think there is enough evidence to support that.
are the teachers in some conspiratorial cabal in the execution?
oh hell no.they have been corralled and cornered into a NCLB and standardized testing nightmare.

this video is not being fair to teachers by implying that somehow they are responsible for the brainwashing of an entire generation.
many teachers i know took early retirement out of sheer disgust but many others did not have that luxury.so many i know are to the point of being broken,crushed by an institution that is meant to enlighten and educate but instead has turned into a human fear factory.

they have come to realize that their job is not to instill and cultivate curiosity but rather to institutionalize and create obedient workers.

not all i know but enough.

hard to fight a system when you have a mortgage and two car payments.

yet what do we see?
day in and day out.
its all the teachers fault.
no.
it isnt.

...Buy a house?

Be $58,000 into your mortgage instead? Cripes, if you're willing to be on a freaking campground than you're not looking for a 2.5 million dollar house close to downtown, so get a house in a developing area for cheap.

Property ownership makes more sense in some situations than others.

In countries where long term rental is common, there tend to be safeguards in place to protect renters. In countries where ownership is more common, not so much.

For me, buying a house made sense. Right now, I am paying as much as possible of my income on the mortgage. In a few years, the house will be paid for, and I'll have saved roughly $100k in interest payments.

My mortgage currently costs me ~ 1.5 times what renting the equivalent house would. But the mortgage payments stay the same, so they actually grow less over time (as a combination of inflation and salary increases). Rent, OTOH, goes up to match inflation, and you have to pay it until you die.

All that said, I think buying your own house for a capital gain is a stupid investment. You will always spend more than is necessary on it, because it's your home.

Yeah iirc I heard something once that the reason why home ownership was always promoted as part of the 'American Dream' was to get people into debt.
And really, for the first 30 years or so you are still basically a renter, only a renter with more responsibility; don't even get me started on zombie mortgages, those things are just diabolical.
http://videosift.com/video/Zombie-Titles-More-Horrifying-Than-Home-Foreclosure

Before you tell us how better your European country is, remember we are currently trying to purchase it.. with a Chinese mortgage.

"I got that fixed mortgage."
"I got that live in cleaning lady."
"I got that comfort fat."

@eric3579, here is a transcript. So you can get the info without the annoying delivery:


And finally, New Rule: there are scandals, and then there are scandals. And perspective is important. Yes, to explain Benghazi, Susan Rice used talking points. But at least she didn't have to read them off her hand! [graphic of Palin looking into her palm]

Now this week, someone was taken off a cross-country flight in handcuffs for singing "I Will Always Love You" for three straight hours. And that's still fewer times has said "Benghazi". I've seen this woman [Megyn Kelly] say Benghazi on my TV so many times, I don't know if it's a problem with the set, or I'm in an Asian horror movie, and there's a monster named Benghazi.

Congressman and friend of Real Time Darrell Issa is the Chairman of the Oversight Committee, and as most Californians know, he made his fortune in car alarms. And now, ironically, has become a loud, repetitive, but ultimately pointless device that you wish to God someone would shut off so you could get some sleep. (audience applause)

But here's the difference between Darrell Issa and a car alarm. Sometimes when a car alarm goes off, there's an actual crime. I keep looking for the crime here, I feel like Reese Witherspoon arguing with the cop. Why are you arresting me? Susan Rice said "mob" instead of "al-Qaeda"? Obama said "act of terror" instead of "terrorist act"?

Republicans are constantly coming up with these never before stated secret rules, that they only tell you about once you've broken them.

"You don't make important speeches from a teleprompter!"

OK.

"No golfing until we have a budget!"

All right.

"Thou shalt not criticize the President when he's on foreign soil, unless he's a Democrat, of course, then it's OK."

Congressman Peter King thundered that the President was almost four minutes into his first Benghazi statement before he mentioned an act of terror! Ah yes, the four-minute rule. Fuck, how could I forget?!

'Scuse me, Nixon ran a burglary ring out of the Oval Office. Reagan traded arms with terrorists. Bush ginned up a war where thousands died by sending Colin Powell to lie to the UN with props, remember that? He turned an American hero into General Carrot Top! But I let it go. I said this is the business we've chosen.

But please, don't tell me that freedom died because Susan Rice broke the scared bond between citizens and talk shows. In a poll this week, 4 in 10 Republicans said Benghazi is the worst scandal in American history. Second worst? Kanye West snatching the mic from Taylor Swift.

If you think Benghazi is worse than slavery, the Trail of Tears, Japanese internment, Tuskegee, purposefully injecting Guatemalan mental patients with syphilis, lying about WMDs, and the fact that banks today are still foreclosing on mortgages they don't own, then your hard-on for Obama has lasted more than four hours, and you need to call a doctor. (wild audience cheering and applause)

And while the press has been occupied with scandal, the biggest scandal, and the most important story of the century so far, happened last week. Scientists reported that the level of carbon dioxide in the atmosphere has passed the long-feared milestone of 400 parts per million. And unless you're a chimney sweep, that's bad news. Because humans have never lived through it.

You think Susan Rice gave bogus talking points about Benghazi? What about the bullshit talking points the entire Republican Party has been spewing on climate change since the 90s? (audience applause)

I wanna see the e-mails to find out who came up with the talking points that global warming is just a theory, and that it needs more study, and climate change is a hoax. The Obama administration isn't dirty, the air is.

The accountant in me says -- you saved for years? Why didn't you pay down her mortgage instead of putting it in the bank?

It isn't just Ethopian mothers who are Dramatic.

And. She seems like an amazing woman. And. It looks like maybe he grew up a bit. So for all the kvetching -- Good on him.

@Jerykk said "gross generalisations based on no evidence and a complete lack of understanding of how society currently works (or, in this case, does not work)."

The mentally ill: I live in Switzerland and, while our politics are far from perfect, you will not see mentally ill homeless people because they are cared for and given work by social institutions. If the mentally ill are homeless, it is society's fault.

The uneducated: almost unequivocally poor as well; it is the responsibility of any self-respecting, "civilised" society to make sure their entire population gets proper education. This doesn't mean everyone should have a PhD; learning a trade is also an education (& no useful job a human can do should be denigrated).
The way you say it, it's as if you're blaming uneducatedness on the uneducated, but would you know anything about how our societies work, you'd know that is completely illogical.

The irresponsible: considering what you follow up with, you basically mean here "the poor/uneducated", and you regurgitate the Fox News cliché of the dumb and reckless poor person wasting money and making all the wrong decisions. Yes, people with limited-to-no education (see above) will be easier to dupe into debt, bad credit/mortgages, etc, and they will also be less likely to know of (or accept the use of, you asshole Christianity) contraceptives, nor be able to afford abortions should they need one.

Second chances and recidivism: there's an interesting quote from an article on recidivism (taken from the Wiki): "Former criminals rose to become some of America's greatest leaders in law, industry, and politics. This possibility seems to be narrowing as criminal records become electronically stored and accessible."
The fact that, the more you treat a person who has committed a crime as a criminal, during and after hir internment, the more that person will have hir choices narrowed to exactly that. Especially when, on leaving detention during which nothing was learned (countries with the lowest recidivism have their inmates work and learn trades), society still brands them as criminal and refuses to let them survive in a legal fashion. Not to mention the ridiculously out-of-proportion rates of incarceration in the US, and for a number of non-crimes as well; what a great way to harden and anti-socialise your youths.

Are there lazy moochers and irreconcilable criminals out there? Definitely, but they are not the norm.

Comment hidden because you are ignoring dag. (show it anyway)

Oh, also - a 3 bedroom basic house will cost you at least $500K here in most major city suburbs and mortgage interest is over 6%. Yeah, Australia is expensive. :-(.

On the plus side, the labour market is very tight, especially if you are in IT, and say, working in the Microsoft stack. .Net or Sharepoint developers with a bit of experience make over $1,500 a day contracting.