He knew what was coming. He and Bernanke just expected the Fed's balance sheet to last a bit longer. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
Because they have significant cash assets they can afford to go on a buying spree after prices stabilise.
Is there a downside here? (Not counting PR loss of face, which only really matters if it's translated into policy.)
The will need to go on a buying spree for regional depository banks. At least the suggestion is that MS will merge with a large traditional bank but that GS will acquire some small ones. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
viz.
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
Does Dodd's plan eliminated that "right"? I dunno. What I do know is the "crisis" amounts to controlled demolition by FRB "core banks" and "primary dealers."
the OCC supervises the five largest bank derivatives dealers in the United States.
See this article on industry consolidation following the S&L RE scam. Regional banks and remaing S&Ls are now being seized by FDIC, predictably, slowly and steadily. Diversity is the key to economic and political evolution.
You will not get that story on Krugman's blog. But it might get a mention in one of his many, many books. I wouldn't know though. Diversity is the key to economic and political evolution.
