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Too-big-to-fail banks warp the playing field : Comments
By Nicholas Gruen, published 8/2/2013Competing on a level playing field, securitisation might well dominate home lending.
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Nationalize and break up the big four?
So what remains then has to compete much more fiercely, for your and my business?
And, minus the spurious benefit of securitization?
Which really only served to allow bankers to become far less prudent than was economically healthy.
I'm all for capitalism!
But genuine capitalism is supposed to include and involve risk, rather than socialise the losses and privatise the profits.
When credit became too easy and too plentiful, it allowed the price of housing to exponentially escalate!
[The bubble which is the forerunner of the bust and serious economic downturns!]
If we were reform minded and expected to get a return for the capital outlays used by banks to secure their positions?
We would create a brand new peoples' bank.
This should be the only place the peoples' money ought to be invested in the banking sector.
A new level of competition would then ensue, that once again could halve margins, minus the govt bailouts, that propped up too big to fail banks, who used the facilities provided, to gobble up the competition!
A mistake that ought not be repeated.
As for the housing market, we need to replace margins, which have contributed to lack of affordability, with volume. The govt needs to get into the housing business, in order to produce that contractual volume.
Moreover, this very volume and returned affordability, will do far more for bank bottom lines and a virtually stalled economy, than anything else we might reasonably do?
Save investing in our own people and their better ideas!
Rhrosty.