dChan
Anonymous ID: 7e8ef4 April 17, 2019, 11:32 a.m. No.6212647   🗄️.is đź”—kun

The Bankers & The Price We Pay: The Economic Cost Of Repealing Glass-Steagall

(Robert Rubin Slid right into a cush Job at Citibank, as it was then known, shortly after this taken away.)

 

Begin article

When one bets on a sporting event the facilitator of the bet, referred to as a bookie, charges the winner of the bet the vigorish. The vigorish, commonly known as the vig, is a fixed percentage of the bet that serves as compensation to the bookie for providing numerous betting options (liquidity) and the financial surety of collecting on winning bets.

The fees, or vig, they charge can be thought of as a tax on capital transactions and thus a tax on the economy.

Regulation is a form of interventionism representing a direct or indirect tax on the economy. More often than not, regulations are sand in the gears of the economic engine with few redeemable benefits and a multitude of unintended consequences. However, sometimes regulation is well worth its cost as it provides benefits that outweigh the economic tax and the burden put on others.

The Glass-Steagall Act of 1933 was one such example. While the act narrowed the lines of business in which banks could participate, it protected the banks and, more importantly, the nation’s populace from economic depression. Many factors have weighed heavily on the economy in recent years, and in our opinion, the repeal of Glass-Steagall is one of them. Its repeal in 1999 provides a clear breakpoint in the history of financial institutions and the activities this regulation once restricted.

Removing the Handcuffs

Interest rates on traditional loans to individuals and businesses are typically offered at a spread to the institution’s cost of borrowing, thus ensuring compensation for the financial institution providing the loan.

The Glass-Steagall Act of 1933 was enacted to combat over-reaching banking activities that led to financial instabilities and fueled the Great Depression. The act’s primary purpose was to prevent another banking collapse like the one that was crippling banks and leaving depositors penniless at the time.

From 1933 until its repeal in 1999, banks taking deposits were prohibited from trading and underwriting in non-government and non-investment grade securities.

The act did not prevent financial crises from occurring, but it certainly prevented a crisis anywhere near the magnitude of the Great Depression.

In 1999, Congress passed the Gramm-Leach-Bliley Act (also comically known as the Financial Services Modernization Act of 1999) which repealed Glass-Steagall. The repeal, heavily lobbied for by the banking sector, was promoted to the public as a means to unleash bankers’ ability to provide more capital and liquidity to spur economic activity. Less than ten years after the Gramm-Leach-Bliley Act was signed, financial institutions imploded to a degree not seen since the Great Depression. Without the lifeline of massive tax-payer funded bailouts, unprecedented monetary policy, and questionable accounting standards changes, the financial carnage from the crisis of 2008 might have equaled or even surpassed that of the Great Depression.

Many experts warned at the time that the repeal of Glass-Steagall was another instance of greedy bankers looking for a way to pad the bank’s bottom lines and their paychecks with little consideration for the financial stability of their institutions or the potential economic consequences. '''

The bankers won the battle and, as expected, profits in the financial industry soared almost immediately.'''

Cap #2 plots quarterly annualized financial corporate profits from 1948 to current. The data is separated by color to highlight the periods before and after the repeal of Glass-Steagall. Additionally, the red dotted regression trend line, showing trend profit growth pre-repeal, serves as a useful gauge to estimate the financial benefit to the banks of repealing Glass-Steagall.

(and this was the ONLY reason they did it-they were at the end of the road as far as manufacturing profits-this allowed that to go on in a big way)

Summary

The removal of Glass-Steagall has resulted in a large shift of capital from those that consume and innovate to the financial intermediaries or the economic bookies.

For the other 99% of the working class, there may be some resentment to the fact that they were not only left behind but that they subsidized the policies fueling the wealth of the top 1%.

edited for space

rest of this at link

https://www.zerohedge.com/news/2019-04-17/bankers-vig-price-we-pay-economic-cost-repealing-glass-steagall

 

See also REG NMS via the SEC that deregulated trading activity-this done several year's after Glass-Steagall and made trading so opaque. Yesterday's drop on Algo trading covered this too.

BTW the GS act put in at the same time as Banking Act of 1933-no coincidences here

Anonymous ID: 7e8ef4 April 17, 2019, 12:13 p.m. No.6213021   🗄️.is đź”—kun   >>3025 >>3055 >>3066

EU parliament votes to fine internet firms for not removing extremist content quickly

 

STRASBROUG (Reuters) - The European parliament voted on Wednesday to fine firms like Facebook, Google and Twitter up to 4 percent of their turnover if they persistently fail to remove extremist content within one hour of being asked to do so by authorities.

The measures have been brought into sharper focus since the live streaming on one of Facebook’s platforms of a lone gunman killing 50 people at two New Zealand mosques in March.

 

The parliament voted 308 to 204 with 70 abstentions to back the proposal to tackle the misuse of internet hosting services for “terrorist purposes” .

 

“Companies that systematically and persistently fail to abide by the law may be sanctioned with up to 4 percent of their global turnover,” it said.

 

A new European Parliament, to be elected on May 23-26, will finalize the text of the law in negotiations with the European Commission and representatives of EU governments, a process likely to take many months.

“There is clearly a problem with terrorist material circulating unchecked on the internet for too long,” said Daniel Dalton, the parliament’s rapporteur for the proposal.

“This propaganda can be linked to actual terrorist incidents and national authorities must be able to act decisively. Any new legislation must be practical and proportionate if we are to safeguard free speech,” he said.

“It …absolutely cannot lead to a general monitoring of content by the back door.”

EU officials moved to regulate because they believe internet companies are not doing enough under voluntary measures, even though the first hour is the most vital to stemming the viral spread of online content.

Facebook said it removed 1.5 million videos containing footage of the New Zealand attack in the first 24 hours after the shootings.

Worries the new rules are lacking and could be misused have been expressed by three U.N. special rapporteurs for human rights and by the EU’s own rights watchdog.

Companies rely on a mix of automated tools and human moderators to spot and delete extremist content. However, when illegal content is taken down from one platform, it often crops up on another, straining authorities’ ability to police the web.

In response to industry concerns that smaller platforms do not have the same resources to comply as speedily with tougher EU rules, lawmakers said authorities should take into account the size and revenue of companies concerned.

Draft measures call on the bloc’s national governments to put in place the tools to identify extremist content and an appeals procedure. The one-hour rule would apply from the point of notification by national authorities.

Brussels has been at the forefront of a push by regulators worldwide to force tech companies to take greater responsibility for content on their sites.

https://www.reuters.com/article/us-eu-parliament-extremist-content/eu-parliament-votes-to-fine-internet-firms-for-not-removing-extremist-content-quickly-idUSKCN1RT2CF?il=0