{"id":4598,"date":"2008-09-23T16:32:10","date_gmt":"2008-09-23T23:32:10","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=4598"},"modified":"2008-09-23T16:52:56","modified_gmt":"2008-09-23T23:52:56","slug":"break-up-the-banks","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4598\/break-up-the-banks\/","title":{"rendered":"Break Up The Banks"},"content":{"rendered":"

Wanna have some fun?\u00a0 I have an idea about how to “save” the banking industry.\u00a0 Through mergers and acquisitions, the banking cartel grew to become infallible.\u00a0 Dave Shafer pins the tipping point of this crisis to the repeal of The Glass-Steagall Act of 1933<\/a>.\u00a0 I’m not so certain he’s incorrect.<\/p>\n

The intention of The Glass-Steagall Act of 1933 was to avoid this:<\/p>\n

Commercial banks were accused of being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks<\/em><\/p><\/blockquote>\n

Do the 1920’s sound like this decade?<\/strong> As Dave Shafer points out,\u00a0 the Gramm-Leach-Bliley Act of 1999<\/a> ENCOURAGED\u00a0 the financial behemoths\u00a0 explaining\u00a0 “economies of scale” as the primary reason for the repeal of Glass-Steagall.\u00a0 While financial institutions with strong technology infrastructures can reduce the cost of banking processing functions, the GLB act of 1999 discouraged what Greg Swann calls “flinty banking practices<\/a>” and encouraged rampant speculation, this time in risky home loans rather than new stock issues.<\/p>\n

We were so interested in free online banking that we fed the growing gorilla until he bloated to 1600 pounds<\/strong>. Today, we’re shocked that he busted out of the cage and is chewing up the zookeepers and zoo patrons. <\/strong><\/p>\n

Let me try an analogy for those less interested in economic history .\u00a0 You once had neighborhood grocery stores.\u00a0 Certainly, economies of scale favor the supermarket approach.\u00a0 Distribution costs drop which lower retail food prices.\u00a0 As those supermarkets vertically integrate, they branch out into ownership of trucking companies, slaughterhouses and farms.\u00a0 Prices keep dropping and everybody is happy. A chicken in every pot becomes two and all praise is given to the phrase “economies of scale”<\/p>\n

Then, a company like Starbucks comes around and the demand for coffee, on a retail level, skyrockets.\u00a0 Supermarket companies, now owning the commodities Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Wanna have some fun?\u00a0 I have an idea about how to “save” the banking industry.\u00a0 Through mergers and acquisitions, the banking cartel grew to become infallible.\u00a0 Dave Shafer pins the tipping point of this crisis to the repeal of The Glass-Steagall Act of 1933.\u00a0 I’m not so certain he’s incorrect. The intention of The Glass-Steagall […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-4598","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2112,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2112\/hr-3915-is-dangerous-for-the-american-homeowner\/","url_meta":{"origin":4598,"position":0},"title":"HR 3915 Is Dangerous","author":"Brian Brady","date":"October 28, 2007","format":false,"excerpt":"HR 3915, The Mortgage Reform and Anti-Predatory Lending Act of 2007, was introduced by Barney Frank, (D-MA). Congressman Frank is also the Chairman of the House Committee on Financial Services. I outlined the key components of the bill with a link to the text here. The danger behind this bill\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2217,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2217\/hr-3915-why-federally-chartered-banks-get-the-pass\/","url_meta":{"origin":4598,"position":1},"title":"HR 3915: Why Federally-Chartered Banks Get The Pass","author":"Brian Brady","date":"November 13, 2007","format":false,"excerpt":"Big banks have a HUGE advantage over mortgage brokerage firms; they have the money. Federally-chartered banks also are regulated differently than mortgage brokers; they are overseen by the Office of Thrift Supervision, a successor regulator to the Federal Home Loan Bank Board. Federally-chartered banks also subscribe to FDIC insurance which\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7446,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7446\/preferred-stock\/","url_meta":{"origin":4598,"position":2},"title":"Preferred Stock….","author":"Tom Vanderwell","date":"March 11, 2009","format":false,"excerpt":"via The Atlanta Journal-Constitution Banks","rel":"","context":"In "Dirty Laundry"","block_context":{"text":"Dirty Laundry","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/dirty-laundry\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":812,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/812\/consumer-federation-of-america-controlled-by-big-banks\/","url_meta":{"origin":4598,"position":3},"title":"Consumer Federation of America – Controlled by Big Banks?","author":"Russell Shaw","date":"December 28, 2006","format":false,"excerpt":"A somewhat remarkable report has been released by the Consumer Federation of America. I first read about it on Inman News and wondered who they were. Was this just another front group (obviously bought and paid for by big banking) like the American Homeowners Grass Roots Alliance? I also first\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7867,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7867\/california-proposes-to-regulate-realtors-alongside-pawn-shops-and-lenders-and-banksoh-my\/","url_meta":{"origin":4598,"position":4},"title":"California Proposes to Regulate REALTORS Alongside Pawn Shops, and Lenders, and Banks…Oh MY!","author":"Brian Brady","date":"April 14, 2009","format":false,"excerpt":"Assemblyman Pedro Nava sponsored a bill (CA-AB33) to reorganize our state's financial services' regulators to be under one umbrella, the newly created Department of Financial Services.\u00a0 The idea is to save a bunch of money for the State. Of course, CAR is going nuts.\u00a0 Amy Steele reports via ActiveRain.com: AB\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6858,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6858\/what-are-the-stimulus-plan-and-tarp-ii-going-to-mean-for-the-housing-and-mortgage-markets\/","url_meta":{"origin":4598,"position":5},"title":"What are the Stimulus Plan and TARP II going to mean for the housing and mortgage markets?","author":"Tom Vanderwell","date":"February 9, 2009","format":false,"excerpt":"While I could write for a LONG time about it, I'm going to limit it to what I feel are the top 6 things that I think could very well happen.\u00a0\u00a0 Keep in mind, this is being written after watching President Obama's press conference but before anything gets passed.1. The\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=4598"}],"version-history":[{"count":8,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4598\/revisions"}],"predecessor-version":[{"id":4647,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4598\/revisions\/4647"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=4598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=4598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=4598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}