Bring Back Boring Banks
GRAPHIC CREDIT:
Stephen Savage, New York Times
CENTRAL bankers barely averted a financial panic before Christmas by replacing hundreds of billions of dollars of deposits fleeing European banks.
Original Source Article By AMAR BHIDÉ, NEW YORK TIMES
But confidence in the global banking system remains dangerously low. To prevent the next panic, it’s not enough to rely on emergency actions by the Federal Reserve and the European Central Bank. Instead, governments should fully guarantee all bank deposits — and impose much tighter restrictions on risk-taking by banks. Banks should be forced to shed activities like derivatives trading that regulators cannot easily examine.
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The Dodd-Frank financial reform act of 2010 did nothing to secure large deposits and very little to curtail risk-taking by banks. It was a missed opportunity to fix a regulatory effort that goes back nearly 150 years.
Governments must fully guarantee all bank deposits — and impose much tighter restrictions on risk-taking by banks.
Amar Bhidé, a professor at Tufts’s Fletcher School of Law and Diplomacy, is the author of “A Call for Judgment: Sensible Finance for a Dynamic Economy.”
TOM’S COMMENTARY:
The recklessness of the Wall Street bankers has wreaked havoc on the American middle class, and, if not stopped immediately, will forever change who and what America is. This is an extraordinarily important opinion piece, and I urge everyone to read it.
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