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Re: Damn right*

By: Cactus Flower in ALEA | Recommend this post (0)
Fri, 13 Jul 12 9:48 PM | 104 view(s)
Boardmark this board | The Trust Matrix 		Msg. 08998 of 54959
(This msg. is a reply to 08997 by kaleido)
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hi kaleido,

not so. tax payers are on the hook to prevent them going out of business.

that was the lesson of the recent crisis and why they are said to be too big to fail. the failure of lehmann demonstrated that there are massive systemic effects in letting a large bank go belly up. governments (and therefore taxpayers) cannot afford to let it happen.

if a bank is not exposed to the risk of failure, taking risks makes sense.

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Re: Damn right*
By: kaleido in ALEA
Fri, 13 Jul 12 8:45 PM 		Msg. 08997 of 54959

""deregulation makes sense for them because they don't bear their own downside risk. tax payers are on the hook for that.""

Well not quite.....Tax payers only pay when the bank goes out of business.

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