Why not a constitutional amendment barring any more financial industry bailouts?

[brentspeak]

Discuss.

[Richardo]

1. Why not a hand grenade to kill a mosquito?

How's that ERA doing?

[elocs]

2. Well, that's absolutely spot-on and should put an end to this discussion. n/y

[brentspeak]

3. The point is to slam the door completely on all future financial industry bailouts

We'll see more financial crashes -- and more subsequent bailouts -- without a clear message that the financial industry is completely on their own in the event they screw up.

[Richardo]

4. 2/3rds of both Houses to pass. 38 states to ratify, Years if not decades to enact.

It's precisely the wrong solution.

[brentspeak]

5. How is a politician from either party going to justify to their constituents

that it's ok for future trillion-dollar bailouts and financial collapses to occur? "I'm voting against this amendment because I want you and your children and your grandchildren to experience what we experienced in 2007-2009 all over again. And again. And again."

Are you really comparing the near-total destruction of our economy and the payoff of trillions of dollars to the banks to an annoying mosquito? In my opinion, action on the metaphorical level of hand-grenades and howitzers and atom bombs and the whole kitchen sink are needed to put the stiff-arm to Wall St. Look at all the millions of jobless Americans who are the financial collapse's victims.

[Richardo]

7. They have to make the same argument for regulatory legislation

And that can be enacted in months.

How will you EVER get 67 senators, 292 representatives and 38 state legislatures to support such an amendment?

They couldn't even get those numbers to enact an Equal Rights Amendment. How much MORE political is financial regulation?

[brentspeak]

13. The ERA is not the financial stability of the United States

The public would not in the least be opposed to such an amendment banning bank bailouts. A good President would easily be able to whip up public support for it.

[karynnj]

23. How do you justify tying the hands of future Presidents?

There have been times where we have averted crisis because the federal government stood behind the banks. The fact of the matter is that the bailout did not cause the millions who are jobless. Had the bailout not happened and the financial system crashed, there would have been far more millions out of work as many small businesses (and some large ones) failed due to cash flow problems when they couldn't borrow money.

What we need is a strong independent regulatory body that looks after the consumer.

[brentspeak]

26. The financial system did crash

Look at all the millions out-of-work.

And that crash occurred in large part because the banks knew their casino-like activities would be guaranteed by the taxpayer.

This part should be made crystal-clear: remove the moral hazard of bailouts, and the banks will automatically reduce their risks. That doesn't mean strong regulatory laws can't also be in place, but strong regulatory laws (and we're only going to get some modest regulatory laws from Obama and Congress) alone won't do the trick.

As for the modern-day myth that there'd be "millions more out of work as many small businesses (and some large ones) failed due to cash flow problems when they couldn't borrow money": http://money.cnn.com/2009/10/20/news/banks.big.fortune/index.htm?section=money_mostpopular">the banks are not lending money.

Repeat (from another source): http://money.cnn.com/2009/10/20/news/banks.big.fortune/index.htm?section=money_mostpopular">banks are flat-out not lending to small businesses.

[karynnj]

28. The financial system did not completely crash

I also do not see how putting legislation in place that uses a fund, funded by the banks, to bail out banks makes it more likely for banks to gamble and fail. The bill is adding regulation. In fact, because failures will deplete the fund, requiring more levies on all banks, it is possible that you create a situation where it is in the interest of all banks to constrain any bank that makes a reckless move. This would put the banks in favor of the regulation needed to do this.

The fallacy in your article is that in the lead up to 2008, the banks did not have the precedent of a bailout when they were making their risky decisions. I suspect that what might have been a bigger factor is that markets and companies value short term gains more than they worry about long term losses, this rewards CEOs who take the greatest risk - as long as the bill does not come true in their tenure.

As to "not lending", read your own link. They are lending, though their deposits have risen much faster than their loans. But, your link says:

"All told, the five biggest deposit-taking banks added $852 billion in core deposits over the past year -- essentially checking and savings accounts of less than $100,000.

Over the same period, their loan portfolios rose by just $564 billion."

"just $564 billion is not "not lending". (Your two links go to the same article.)

[jmowreader]

30. No, that crash occurred because the banks were allowed to be casinos in the first place

Bailouts or no bailouts, the root cause of the crash was the removal of the Chinese wall between insurance companies, investment banks and retail banks. The lack of such a wall is one of the causes of the crash of 1929 which led to the Great Depression. The purpose of the Glass-Steagall Act was twofold: to establish the FGIC, and to eliminate banks getting into investment banking and insurance. Parts were repealed by Carter, and the Gramm-Leach-Bliley Act of 1999 repealed most of the rest. As a result, we had the Panic of 2008.

The only solution is to reinstate, in full, Glass-Steagall.

[PolNewf]

6. Constitutionaly enforce the economic policies of Herbert Hoover?

Idealism is great until it forces you to shoot yourself in the face.

[4lbs]

8. You'd have a better chance of getting a constitutional amendment banning corporations from donating

to politicians.

[awoke_in_2003]

21. side note...

love your sig line of insanity :hi:

on edit: looks like someone just gave Bachman "The Shocker"

[onenote]

9. please offer up specific language

Hard to assess this hypothetical amendment without knowing what it says and, consequently, what it might actually do (or not do).

[baldguy]

10. How about one to require coporations to operate in the public interest first.

If they can't make a profit w/o breaking the law & exploiting their employees and customers, they shouldn't make a profit.

[Perky]

11. Can you define what that means?

[baldguy]

12. I thought I did.

If they can't make a profit w/o breaking the law & exploiting their employees and customers, they shouldn't make a profit.

[onenote]

17. are you proposing that if a corporation is found to break any law they should forfeit all

of their profits, be forced to close up shop, what?

And how do you define "exploiting their employees and customers" (I'm not suggesting its okay to do so, I'm just trying to figure out what a constitutional amendment that prevented such behavior would actually do.

[baldguy]

18. That sounds about right.

Criminals shouldn't be able to profit from their crimes. Actual persons can be thrown in prison & have any unlawful assets seized. Corporate persons can have their assets seized too, but we can't put them in prison. What we can do is take control away from the owners & officers who allowed the crimes to be committed & assign new owners with a better grasp of the concept of social responsibility.

[onenote]

20. any sense of proportionality

or does any crime = stripping corporation of profits, which of course harms shareholders and employees as well as executives

And who picks the new owners? or does the government end up running lots of companies?

[quakerboy]

24. Putting in my vote for proportionality

Since corporations are now legally people. And since corporations are, according to their supporters, merely groups of people, and thus due the rights, they should collectively have the responsibility as well.

So... If a corporation steals. or kills. or whatever the wrong may be, they should be legally responsible for their actions, and given sentence like any other person. And that sentence, should it involve jail time or criminal record, or whatever, should be equally divided up among those responsible, just as any profits would be. Ceo's get a stake in it, based just the same way their compensation is. Owners as well.

What one does with 1/8th, or 1/10000th of a felony on their record, I do not know. But it should be there for the public record. That might begin to motivate people to pay attention.

[JamesDean]

14. Amend NO MORE Bailouts!

We finally agree.
Amen. Brother.

[jmowreader]

15. That's not the financial industry amendment you need

You'll fuck everyone who has money in the financial institution, without really hurting the people who caused the need for the bailout.

Implement three commonsense reforms::

1. The financial industry has three broad segments: consumer banking (checking accounts, savings accounts and loans of all kinds), investment banking (stocks, bonds, etc.) and insurance. Require any financial house to specialize in one of the three. Right now I can walk into a Wachovia branch (that's where my money is, what there is of it) and do all three kinds of finance. I can also find "A Wells Fargo Company" under the logo, and soon the Wachovia name will be no more. The second thing is directly related to the first. Most people call this "reinstating Glass-Steagall."

2. Ban naked Collateralized Debt Obligations, Credit Default Swaps and any other naked transaction that will never require either counterparty to hold the underlying security. I like selling naked put options. A put option calls for me the seller to purchase from you the buyer w number of shares of x security for y price on or before x expiration date. If the stock price stays above the strike price this never gets executed. If the stock price goes below it, the contract gets exercised, the seller pays for the stock and the buyer uses those funds to buy it for delivery. Naked CDS are different: if LeftyMom buys a Mortgage-Backed Security and purchases a Credit Default Swap to cover her ass in case it turns out the thing is full of McMansion loans from Toledo, she then gets to sit there and watch as flvegan, me, Rabrrr, SwampRat, Parche, Chuggo, and the guy who started Hooters all buy CDS against LeftyMom's MBS. And then when LM's MBS collapses because it actually contains the mortgages on thirty-five houses made with Chinese drywall, the bank is only nine times as screwed as it otherwise would have been.

3. Forbid ever deregulating the financial services industry again.

[ShadowLiberal]

16. They'll call it something else, like how congress gives themselves COLAs now

It's easy to get around an amendment written like that, congress has done it to the amendment that says they can't collect pay raises since their last election until after they get reelected. They now give themselves COLAs, meaning Cost-Of-Living-Adjustments, which isn't spelled out as being banned in the constitution. I believe the supreme court ruled years ago that COLAs for congress violated the constitution, but they can think of other ways around it that'll work for a while.

Besides, the constitution says the government has the power to COIN money, NOT print money, but you don't see the Federal government planning to turn all our paper money into coins to follow the constitution. Also if you read the constitution strictly I think the federal department of Education is also unconstitutional because education is to be handled by the states (at least that's what one of my teachers mentioned, I never bothered to look it up because I trust they're right).

[skepticscott]

19. Why is a Constitutional amendment even needed?

What is there in the Constitution that has to be amended in order to remedy the problem?

[karynnj]

22. Lousy idea - it would tie the hands of the government in the future

Why? First of all getting a constitutional amendment for anything is extremely difficult.

Also, it would be extremely short sided. If this were done and the government wanted to respond to banks failing to prevent a disaster - they couldn't.

[quakerboy]

25. 3 reasons

1) Practicality. You really think you could get that passed? Half or more of our representation is clearly corporate owned, and would not approve any attack on any corporate power. Even if that were not true, a proportion are republicans, bound by blood oaths to never ever approve anything a Democrat would.

2) a bludgeon to solve a cracked egg? this is a delicate situation, and at presented, your solution is a hammer. Useful for pounding nails to build a frame, less useful for spackle work or paint to finish the wall later. Why limit your tool box to "hammer"?

3) Say your parents told you you could only have a party for one event or holiday this year. Would you choose your birthday, or Christmas? Or, would you choose the 37th day of school? Even if neither of the other reasons were true, with so so many choice topics, this one is what you would pick as the banner political event of our age? A constitutional amendment is a big deal, they don't happen often. If one had the pull to pass a constitutional amendment, why would one waste it on this? Corporate money in politics. Voting rights. Equal representation. Human rights. The fed and the basis of our monetary system. War, our place in world peace. These are topics potentially worthy of an amendment. Not one symptom of a broken and corrupt sub industry.

[niceypoo]

27. Better yet

Make a law that says, 'bailed out = broken up, no exceptions'.

[dionysus]

29. because great depressions are awesome. this time brent, you really leaped over the shark.

:rofl:

[BlueIris]

31. Sounds good to me.

Won't happen in a bazillion years, but it would be nice.