Proponents of breaking up the big banks found themselves a very unlikely ally today, Sandy Weill. He is the former CEO and Chairman of Citigroup, one of the conglomerates once deemed "too big to fail." More importantly, Weill is considered to have had one of the biggest hands in repealing Glass Steagall in 1999.
Let's start with the facts. Glass-Steagall refers to the Banking Act of 1933. It essentially protected those who deposited their money in a bank from getting hit by a failing risky bet by a securities firm. Essentially, Bank of America wouldn't be allowed to take your savings and invest it into their investment banking unit. When Glass Stegall was repealed you saw the creation of mega banks that had both a consumer bank arm and an investment banking arm. This allowed banks to muddle the investments they made on securities — like the ill-fated mortgage backed securities — and the bank deposits made by main street. I think we all now know how this worked out...
On Wednesday, Weill told CNBC’s Squawk Box, "What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail."
Now he tells us. Better late than never?
Weill isn’t the only former banking big wig to call for a breakup of the big banks. Weill now joins a chorus of former bank execs, John Reed and Dick Parsons from Citigroup and Philip Purcell from Morgan Stanley. We shall see if anyone in Washington is listening.
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Sections 501-506 of the Patriot Act caused the Great Recession by creating housing abandonment.
There was no recession in Texas because they didn't implement Sections 501-506 of the Patriot Act, so the Texas population did not collapse.
Real estate value represents over half of accumulated US wealth, and real estate value depends upon population.
This wealth is destroyed when real estate abandonment becomes common, and that is caused by population decline.
The most important changes are periods of unusually high unemployment and poverty. California personal value dropped from 2007 for the first time since 1938 (Legislative Analysis Office, California, 2009).
Every period of economic decline corresponds with population decline.
These are as follows.
Illegal immigrants contribute about $200 billion in GSP across the entire US. That consumer demand employs about 10 million US residents.
Three important events occur from 2000 to 2006 during the Bush presidency.
These regulatory changes cause real estate prices and stock prices to skyrocket as investors borrow as much money as is possible. This is intended to restore economic losses that followed the attack of September 11, 2001.
This deregulation does create rapid economic growth, and illegal immigrants flood into the country at the highest rate since the Mexican Revolution from 1910 to 1920. This fuels a construction boom in the American south and west as hundreds of thousands of excess dwellings are constructed.
The following begins in 2006.
The Mexican economy improves in 2007, and the US population begins to decline. Population decline creates over a million extra dwelling vacancies by 2009.
Real estate prices plummet in 2007 and a foreclosure boom begins in 2008 as foreclosure rates increase by 400%.
Pres. Bush realizes the magnitude of the coming disaster caused by eliminating depression era financial regulations. Bush signs the Emergency Mortgage Loan Modification Act of 2007 in an attempt to prevent the coming banking system collapse, but it is too late.
State Attourney Generals are authorized to conduct deportation under Sections 501-506 of the Patriot Act. Immigrant drivers licenses are banned, and every foreign car owner becomes a criminal. Millions are deported as their vehicles are sold at auction. Texas is the only state that does not do this. California deports more immigrants that any other state so real estate values collapse by half.
Real estate value depends upon people to demand dwellings in which to live (US Census Bureau).
Immigration departing the US accounts for a drop of about 1.6% in the population in less than 2 years.
Each US resident creates consumer demand for real estate, vehicles, food, and consumer goods, and that consumer demand includes illegal immigrants.
The illegal immigrant population of Arizona produced $42 billion in GSP during 2008, and immigrant population decline is one of the underlying causes for economic collapse in the American south and west (Immigration Policy Center, 2011).
Birth nearly equals mortality during this period, so this population change is entirely due to migration that contributes the following to the US economy.
The following shows how migration contributed to part of the decline in US real estate values, which collapses real estate value in the American south and west.
The resulting foreclosure boom and real estate collapse in 2007 leaves inadequate asset recovery from foreclosure sales, which reduces bank assets to dangerously low levels.
Banks issue margin calls for stock market investments to cover lending losses in an attempt to avoid bankruptcy.
Margin calls result in rapid trading that collapses the stock market. Over 60% of value is lost from 2007 to 2009 as the population declines.
@Crackhead Awards
Very informative. Funniely enough I have owned houses in three of the states in question during that time period. Texas 86-99, California 99-11 and now Nevada 11-?. I remember during the 90's that financial institutions worked very dilligently to eliminate a 'Depression era' homestead act that prevented homeowners from borrowing against the equity in their homes or owning more than one mortgage at the same time, this law was to allow the homeowner to stay in their homes and prevent foreclosure. Somehow the finance companies got this law repealed, but still there was not the big foreclosure rate in Texas as was in California Florida and Nevada.
Very interesting corlelation you make there also I do not have a membershp to Lexis Nexus.
Thanks!
What are you smoking and how can I get some of that, Crackhead Awards. I especially marvel at your vision of illegal immigrants being a positive to the US Gross National Product, instead of a drain...do you know how much of their ill gotton income gains are sent or taken back to their countries of origin? Or the drain of taxpayers dollars necessary for the social needs that they bring to us even as we deal with their illegal work at wage rates that undercut the American workers that go without the jobs?
Get you story on a reality track, and someone just might pay attention to your pipe dream nonsense!
Petitions/ End Bush Tax Cuts and a few other good ones!
http://action.ourfuture.org/p/dia/action/public/
Done.
Thanks xxx
done.
The only reason for the consolidation of the Investment Banks and the Traditional Banks in the first place in 2007-2008 was for the merger of weal banks into strong banks, and the ability to obtain capitzlization infusions of tax and borrowed TARP funds and to have Investment Banks Money Market Funds and Overnight Receipts come under insurance copverage of the FDIC! That merger business is over, the financial markets are working again, adequate capitalization exists, and the ability to spin off from these "two big to fail" banking super cororations is there, as the gambling and leverage of the Investment banking side of their houses is still going on, and is very dangerous, and weakens the capability of traditional loans for home purchases, commericial realestate, and business pursuits in our nation.
Split em up! NOW!