Government Regulations Help Big Banks

JP Morgan, one of the largest, if not the largest, Banks in the world is now going to be allowed to do a “stock buy back” plan. The federal government, when it gave money to private banks to keep them from collapsing, the federal government also bought stock in those private banks. JP Morgan was one of those private banks that had some of their stock bought from the private bank. Now JP Morgan was given the okay to buy back their stocks from the federal government.

Here is a video on that story from NBR (Nightly Business Report):

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Now I want people to try to remember back to 2008 and 2009. Around these times, some of the largest private banks in the world and which operated in a global market, happened to hit into a financial crisis. There were some bad investments that the banks took on or were holding, which no rational actor would have chosen. The federal government wanted to prevent a “financial meltdown” from happening and gave tax payer money to those private banks to keep them from collapsing. At the same time the federal government took stock on those companies. The private banks, once they got through the “financial meltdown” would be allowed to buy back the stock options in the bank that the federal government owned.

Some people were made about the banks and wanted to institute regulations to keep these “too big to fail” banks that helped to cause the financial meltdown. Laws were passed and executive orders were given, and banks had more restrictions placed on activities they cannot do. People were very angry at the big private banks and wanted these big banks to fail. But something interesting appears to be happening with wanting the private banks to pay that helped to cause this situation, by institution “more” regulations on these private banks that helped to bring about the financial storm.

The person being interviewed in this story happens to bring up something very interesting. These private banks did not want Barack Obama or Elizabeth Warren to be elected. They did not want them to be elected because of these “regulations”. But what happened because of these “regulations”? They helped to expand the market power, or how much of the piece of the pie they have, and kicked out some of their competition. These regulations helped “small” private banks go under. But this “big” banks that helped to cause the financial problem can afford these regulations and they can obtain more market power since they have one less potential rival for your money. So “small business”, as “small banks”, are not being helped with the regulations. Instead, these regulations allow for there to be less competition between these “too big to fail” private banks.

How about that? You try to hurt someone and it only makes them stronger. Are they Goku?

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Fractional Reserve Banking, & Economic Boom and Busts

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