We'll have eliminated the means (smaller banks)...
Smaller banks wouldn't be able to sell securities they believe will go down? I didn't realize that buying low and selling at the peak required scale.
As of now, I don't see what's changed since 2008.
That's because you aren't paying attention. The I-Banks are now bank holding companies, the regulators have laid claim to several floors of their buildings and are imposing massive new programs, the banks have figured out that they need more stringent underwriting standards for homeowners and have drastically cut back on loans [1].
[1] The market for home loans is now over 90% Fannie/Freddie - strangely, the agencies haven't figured out that home loans should be reduced.
More, smaller banks means more diversity and less chance that a few of them can endanger the whole system.
As far as the I-Banks being bank holding companies now, I'm seeing more stuff under fewer roofs than there was before.. that seems less stable to me.
I don't actually have an answer for how to fix the problem, I'm just worried that we haven't had the kind of systemic change that we need. A little more auditing doesn't change anything, the banks pay a lot more than the regulatory agencies so they'll be able to capture them.
Smaller banks wouldn't be able to sell securities they believe will go down? I didn't realize that buying low and selling at the peak required scale.
As of now, I don't see what's changed since 2008.
That's because you aren't paying attention. The I-Banks are now bank holding companies, the regulators have laid claim to several floors of their buildings and are imposing massive new programs, the banks have figured out that they need more stringent underwriting standards for homeowners and have drastically cut back on loans [1].
[1] The market for home loans is now over 90% Fannie/Freddie - strangely, the agencies haven't figured out that home loans should be reduced.