absolutideas

Does the corruption, greed, and malfeasance which pervaded the banks gone away? .. LOL

The original sin of our current downfall can be traced back to the mid-20th century when politicians broke the fundamental financial disciplines guaranteed by gold-linked currencies. More recently, politicians “encouraged” banks into “social lending” for low-income housing, which led to the sub-prime problem. Also it was politicians, like Bush-Greenspan, who injected vast amounts of liquidity into the world economy, creating the largest asset boom in history.

However, the banks compounded these errors with their gleeful irresponsibility. They lobbied Congress to abolish the Glass-Steagall Act of 1933, which was designed to prevent a re-run of the financial fiasco of the Great Depression. The consolidation enabled by the repeal of Glass-Steagall created banking behemoths that had the political protection of being “too big to fail”.

Driven by greed, many banks financed their increasingly large long-term property loans with short-term funds. Unsatisfied even with those high returns, they heavily invested in so-called real estate “securities”, to which risk was never properly assigned. To make even further gains, banks became “players” in the vast, virtual and unregulated derivatives market.

read full article by John Browne here

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