It should rather be welcome back Wall Street to its appropriate way of functioning.
By Daniel at 21 January, 2010, 10:37 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Commercial banks have access to liquidity through the Fed window at practically zero rate. Liquidity that as per the mission of commercial banks under the capitalism theory should be used to generate credit for the american consumer in the form of businesses or individuals loans.
This is the objective of a commercial bank, and when it does not work in such way the liquidity benefits stay at the banks income statement, they are not transferred to the public.
Any creative product created to generate market liquidity can be sold through different financial vehicles such as hedge funds, mutual funds, private equity funds, and many others.
But, by performing both functions within the commercial banks, the bank is giving with one hand while taking out with the other, is like being judge and defendant at the same time. Kind of a HUGE conflict of interest there isn’t it?
Well thank God for Paul Volcker who has the guts to fight for what is right without any personal agenda. He already has the fame anf fortune. He is over 80 years old. Nothing to gain here.
The big banks as JP Morgan, Bank of America, citi and Wells Fargo already have the structured foundation (Deposits-Credit Portfolio-commission fees products) to get profits through the commercial banking operations. By eliminating the Goldman sachs model (High risk-casino style gambling profit) from the competition these banks would focus on what they have and will get back to perform as estable and solid banks.
- asarmiento423
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.