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by bilbo0s
6461 days ago
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Accounting fraud is exactly what will make this whole thing degenerate into a transfer of wealth. Think about it, they can cook the capital ratios so that not only the bonds, but now even those CDS's that they have are worth X, when they would fetch Y at market. This gives them more liquidity, yes. But it is an illusion. Those CDS's are still as precarious as they were before, so are the now revalued bonds that they carry. Nothing changes, except the balance book. Add to this a guaranteed market for these assets, the taxpayer and surely you must see the potential for fraudulent profit taking in this scenario. Early indications that a bank needs to be looked at comes to the FDIC because people with more than $100000 start moving excess money to different banks. FDIC starts to look at them, and that is where the lowest form of all quants comes in. The "shorter". They get wind. I don't know how, but you and I both know it always happens, and the bank's stock starts a death spiral. Putting more pressure on their capital ratios, which have to factor in cheap stock now. Also, in fractional reserve banking, the fees charged by the FDIC to the banks SHOULD depend on the amount that the FDIC is insuring accounts for. There is NOTHING in the bill about raising fees. I'm sure we can all imagine that fees will probably not be raised, as the idea is to help with liquidity, not hinder it. So right there the banks just got something for nothing in terms of insurance. Helping their financial position appear safer. Maybe we are talking about two different things. Could you please explain why you believe this does not help the banks to appear financially healthy longer? If you consider $150 billion a 'drop in the bucket' then salud! I think $150 billion here, $150 billion there, and pretty soon you are talking about real money. Consider the possibility that you believe it to be a small amount because you agree with this bill. What if we gave $150 billion to fund welfare? How about we give $150 billion to fund the salaries of H1B workers? Or we blow $150 billion on 2 toilets for stealth bombers? Is it still a drop in the bucket? |
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