Tyler Durden @ Zero Hedge:
Two months ago, Fed governor Jeremy Stein caused a major stir among the very serious excel-using economists and other wannabe “scientists”-cum-voodoo witchdoctors, when he hinted that it was the Fed’s actions that were leading to “overheating” in the markets. It took quite a bit of rhetoric by other very serious people to talk down his comments and give the impression that the S&P is not about 50% overvalued. Today, Stein has managed to stick his foot in his mouth for the second time in a row, and do what virtually nobody in the status quo is capable of: tell the truth.
In a speech titled “Regulating Large Financial Institutions” Stein made something very clear: if and when a TBTF fails, and since this time is not different, and a failure is only a matter of time, depositors will lose everything, which now that Cyprus is the template, is to be expected. Not only that but Stein makes it all too clear that part of the Dodd-Frank resolution authority guidelines, a bailout is no longer an option.
Tyler Durden? The name belongs to a psychotic character from the movie FIGHT CLUB. Consider that a warning that you’re about to encounter a load of b.s.
The writer of the article, for whatever reason, is deliberately blurring the distinction between investors and depositors. Private investor is not a synonym for depositor. They’re entirely different things.
Private investors are knowingly placing their money at risk to obtain a high rate of return. One of the risks they’re knowingly taking is the possibility of losing their principle. Why should they expect to be bailed out if their investment goes bad? Does anyone walk into a gambling casino with an expectation that they’ll be insured against losses? The fact that they happen to be investing in a federally regulated financial institution rather than a company that makes automobiles or computers makes absolutely no difference.
Depositors are not putting their money at risk in the hope of a high rate of return. Presently their rate of return is abysmally low. They’ve made a choice specifically to avoid risk. Their deposits are protected against losses by the FDIC.
Any company that is too “big to fail” is clearly a danger to the economy and free market competition. After the last “too big to fail” fiasco, it indicates a clear need to stop company mergers if it will put them in that category. We can not ever again have taxpayers bail out big companies who make poor management decisions. (Much less financial institutions that scam the system with deceptive loan packaging.)
We also don’t need to be backing ridiculously high risk real estate loans like Obama wants.
HE said since this time is not different.
STEIN is telling that since the GOVERNMENT is still DEMOCRATES majority,
there will be a danger,
and he also mentioned of the COMPANIES MERGER, it might be because they are
influence in a forcible manner to fund the GOVERNMENT and his failure investment so to keep the pressure coming from the leadership ,in a low risk danger,
if they would fail it would be because of it,
the constant collection demands of the WHITE HOUSE ,
this they cannot reveal, or let it surface,
because ” since this time is not different”
in other word they are being HASSEL royaly by the gang in power,