Why We Need The Big Banks



Banks so large our brains have trouble picturing them.



by J John Swanko

(People Port) From relocation expenses for short sellers, keeping a family in their forclosable home to financing construction during the Great Depression, It is our largest banks that can bridge a Great Recession.

My Mom has always said, "Johnny, we need the big banks." She worried, big banks would all be banned and a Depression would take its place as it did once before.  Today's small banks are as large as those -big banks- she remembers from her childhood.  The new definition, a bank is big

-if it is over $50 billion.  

The big banks routinely criticize any attempts at over-regulation.  They do have to make money during the good times and the bad.  Making money means taking serious risks.  Loans they made, rolled-over, during this Great Recession were very risky, even when backed by a local government.  

Trading for their own account, makes sense withing rules set out by the big bank and governments.  Today we know, the big problem was a run on the biggest banks.  Real Estate loans were toxic.  

Our Federal Reserve has done fairly well buying the toxic assets, so has the U.S. taxpayer and the big banks. 

Our Treasury Department continues to pound the table, "We need guardrails, and shock absorbers." 

Our Treasury Secretary's wife reminds him of what we went through.  He headed the New York Federal Reserve Bank as the run on our biggest banks took our economy down.    He understands the -Big Bank's- place in society, even when a big bank, a taxpayer, elected leader, does not.

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People Port




Photo credits: Crestock


Editors Note: I am trying to have the Treasury's OFR buy my Monte Carlo training.  I wrote "Decision Support Applications For(In) Business Planning," Long ago and once again solicited firms beginning last year.  My last Monte Carlo article   Why You Need Monte Carlo Simulation came out April 26th the day before we learned our economy may be going down once again.


Copyrighted, 2012, J John Swanko, All rights reserved. This work is licensed under a Creative Commons Attribution 3.0 Unported, It may not be published, broadcated, redistributed, rewritten, without meeting the terms and conditions.