The Fed's profit each year (it earned over $100 billion in 2015 thanks to QE) is remitted to the US Treasury - i.e. the taxpayers!There's no irony in it at all.
As for the idea of breaking up the large banks, am I the only person who appreciates the IRONY of this? The reason J.P. Morgan and Bank of America et alia bulked up in the first place is because they were stiff-armed by the US government (more specifically, by Hank Paulson and Ben Bernanke) to buy failing institutions back in 2008! And now the same government wants to bust them up?
No good deed goes unpunished!
And how in the fuck can any self-respecting Libertarian favor letting the federal government step in anytime it feels like it and arbitrarily tell any successful business or financial institution it is too big to fail and therefore must be broken up? That's way too much power!
The IRONY of all this astonishes me! Originally Posted by lustylad
Your right to swing your arm in the air ends where my nose begins. So your freedom is limited by actions causing harm to me. Every libertarian agrees with that.
The big investment banks (i.e., Goldman Sachs, Wells Fargo) aren't real persons like you and me - they are creatures of the law, in particular, corporate law. They got that big because mergers and acquisitions approved by government MADE them that big. And, of course, they use their HUGE financial resources to bribe both parties to leave them alone and all them to reap huge profits. They even draft legislation on behalf of legislators to make it even easier for them to introduce bills.
But they have made themselves so big that if they fail they cause massive harm to the economy, including ME. I don't have to sit idly by while they swing their arm and hope they don't hit me in the nose. And some point, enormous financial institutions become a threat to everyone's financials well-being. And it is NOT because they are a natural monopoly (like Microsoft used to be) that came into being because everybody wanted what they were selling.
If a $100 billion big bank is broken up into ten $10 billion small banks, every shareholder gets stock in the new banks of equal value. No one loses money, so there is no "taking" that violates the takings clause of the Constitution. If you don't want stock in one or more of the smaller companies, you can always sell it and get your money back.
But the smaller banks now compete with each other rather than cooperate with each other to rig the system. If the top 5-6 biggest investment banks are broken up into 40, 50 or 60 smaller ones it will be far harder for them to come to any kind of sweetheart arrangements with Congress and among themselves.
They compete, their profit margins are thinner so they have less cash to throw around at Congress. And the cost of their services is lowered, so consumers gain. And if 2, 3, 4 or 5 of them fail, there are still 40-50 left to provide financial services.
We all gain by the removal of a common thread.
A financial oligarchy is a threat to my liberty, too. Not just big government. Because they usually go hand-in-hand in reducing people's freedom and threatening their financial well-being.
And the big banks were not exactly strong-armed (not "stiff armed") into buying the assets of the failing banks. First, the liquidity crisis was threatening to take THEM down, too. They wanted the government to provide a safety net for them also. The government let them buy the assets on the cheap and underwrote their risk. The government also printed money willy nilly and handed it over to the banks. You may recall that the big criticism of the banks in the early days of the financial crisis was that the banks took all of the government money and kept it as a hedge on their own positions rather than loan it out (the way the government expected) in order to get the economy jump-started fast. Yet another reason why the recovery has been so slow.
If you want to start reducing the power of government, you have to start by reducing the power of the government's handmaidens. Although some may reasonably say it is government that is the handmaiden of the banks.
