The Federal Reserve and the FDIC declared Wednesday that five of the country's biggest banks flunked a key test of whether they could be unwound safely in a financial crisis. In other words, the banks that were too big to fail, are still too big to fail. Dodd-Frank has done nothing so far to prevent the taxpayers from being left on the hook for another massive bail-out even bigger than the last one.
Warren directed her sharpest words at an unnamed set of people who have recently downplayed the role of big banks in the financial crisis and questioned the value of breaking up big banks — an apparent reference to the Nobel Prize-winning Krugman.
“There’s been a lot of revisionist history floating around lately that the Too Big to Fail banks weren’t really responsible for the financial crisis,” Warren said. That talk isn’t new. Wall Street lobbyists have tried to deflect blame for years. But the claim is absolutely untrue.”
“There would have been no crisis without these giant banks,” Warren continued. “They encouraged reckless mortgage lending both by gobbling up an endless stream of mortgages to securitize and by funding the slimy subprime lenders who peddled their miserable products to millions of American families. The giant banks spread that risk throughout the financial system by misleading investors about the quality of the mortgages in the securities they were offering.”
Melanie Fine cuts through the Shadow Bank BS,
All of the activities classified by regulators as shadow banking are core activities of large banking organizations, both directly and through affiliated entities. It is anomalous to call them “shadow” activities since they occur in the supervisory headlights of banking regulators. The shadow banking system could not exist without banks and their affiliates. Banks are instrumental in the securitization of assets, which forms the backbone of the shadow banking system. They have been the primary sponsors, issuers, and guarantors of mortgage-backed securities and asset-backed commercial paper for years. Large banks command the repo market as borrowers, lenders, dealers, and custodian banks. They are leaders in securities lending activities... snip ...
To the extent shadow banking has any meaning, regulated banks and their affiliates are an integral part of it.
- Melanie L. Fein, former Senior Counsel to the Board of Governors of the Federal Reserve System
Follow the money. The shadow banking system could not exist without regulated banks. These too big to fail banks are essential players in the securitization of assets, which is a key enabling component of the shadow banking system. When you deal with a problem you must go to the root causes. All of the noise about Shadow Banking is to cover the fact that the Wall Street Mafia does not want the big banks broken up. They do not want the regulated big banks banned from funding and securitizing their fraudulent, reckless behavior.
Any wonder why Hillary has the full support of Wall Street and Sanders has their contempt and hatred?
“I ask you to judge me by the enemies I have made.”
— Franklin Delano Roosevelt