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• 7/7/2010 7:38 AM Bryan wrote:
  
  This whole issue is immensely complex, and so few members of Congress really understand how economies work. I actually agree with Scott Brown, though not with his reasoning (if he has any beyond the political). This misguided legislation attempts three things: tax commercial and investment banks for $19MM, make permanent the FDIC insurance at $250,000 per account, and raise risk capital requirements by some miniscule amount. To pay for itself, the bill would take the unused portion of TARP funds (that $11MM) away from its originally legislated and approved return to the Treasury: that accounting sleight-of-hand is in itself dishonest. The depositary insurance requirement should never be made permanent as its presence induces gullibility on the part of bank depositors, and irresponsibility on the part of bank managers. Better to let the buyer/depositor beware than anticipate a tax-payer bailout or be fleeced by the very banks that were imprudent in their lending practices. But then I'm a person harsh on the U.S. banking system.
  
  As for capital requirements, U.S. banks are woefully under-reserved for loan portfolio risk. In contrast to most European banks, American (and most Asian) banks have failed to begin real implementation of the Basel Accords I and II which have been under advisement over nearly 20 years. These Accords would ensure that a minimum capital level be reserved for various business risks, an adequate level of supervisory oversight be established, and market discipline be maintained. Today one will see many commercial bankers decrying the Basel Accords as "woefully” inadequate to prevent the present financial crises. Please notice from whence the loudest cries arise: the U.S. industry which failed to contemplate any attempt to increase its own capital requirements, and was happy to lick up the honeyed drops of reduced supervision. When one does nothing, then one can hardly expect a good result. And Sen. Brown is not too off base, since the $19MM tax would most likely be borne by the users of these two industries, i.e., the depositors and the investors. Such a tax amounts really to a wealth transfer scheme of which the Democrats are worthy. Naturally Barney Frank as chair of the Financial Services Committee receives a significant amount of financial support from the very industry he oversees. So, his protests to the contrary, he has not responded to the industry excesses which have (as during the late 1980s S & L debacle under Reagan-Bush) produced the current crisis. Perhaps, with proper instruction, we might use Politician Brown yet!
  
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  1. 7/7/2010 10:40 AM Mike Mennonno wrote:
     
     OK, back up!  What was the part about licking up the honeyed drops? 
     
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     1. 7/9/2010 3:57 AM Bryan wrote:
        
        Mike, I do apologize for running at the mouth, and the U.S. banking system is so antiquated but still so lusty after all these years. So why shouldn't we see many bankers as just pigs at the troff (and the ref. is for you). And who could resist all THAT delicious honey?
        
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        1. 7/9/2010 9:15 AM Mike Mennonno wrote:
           
           No apologies necessary, Bryan!  I like your idea of dipping Scott Brown in honey and throwing him to the lesbians!  That IS what you were suggesting, right?
           
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