{"id":5392,"date":"2012-09-05T00:56:00","date_gmt":"2012-09-05T04:56:00","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=5392"},"modified":"2012-09-05T00:56:00","modified_gmt":"2012-09-05T04:56:00","slug":"simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2012\/09\/05\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\/","title":{"rendered":"Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com"},"content":{"rendered":"<p>The threat of too-big-to-fail banks has not diminished. The combined assets of the 6 largest US banks is bigger now than in 2008. Simon Johnson, Professor of Entrepreneurship at M.I.T. Sloan School of Management, writes:<\/p>\n<blockquote><p>A growing number of serious-minded politicians are starting to support the point made by Jon Huntsman, the former governor of Utah and a Republican presidential candidate in the recent primaries: global megabanks have become government-sponsored enterprises; their scale does not result from any kind of market process, but is rather the result of a vast state subsidy scheme.<\/p>\n<p>&#8230;..Serious people on the right and on the left are reassessing if we really need our largest banks to be so large and so highly leveraged (i.e., with so much debt relative to their equity). The arguments in favor of keeping the global megabanks and allowing them to grow are very weak or nonexistent.<\/p><\/blockquote>\n<p>The big banks will vigorously defend any attempt to break them up and they have deep pockets. It would be far more effective and politically achievable to raise reserve requirements, lifting capital ratios and reducing leverage to the point that large and small institutions alike are no longer a threat to the economy. Even if we adopt a two-tier approach, with higher ratios for institutions above a certain size.<\/p>\n<p>We need to remember that a fractional-reserve banking system is not an essential requirement of the capitalist system. All that is needed is an efficient intermediary between investors and borrowers. Equity-funded banks proved effective in funding Germany&#8217;s industrialization prior to WW1. Islamic banks today follow similar principles. Over-dependence on deposits is the primary cause of our current instability.<\/p>\n<p>via <a href=\"http:\/\/economix.blogs.nytimes.com\/2012\/08\/30\/why-are-the-big-banks-suddenly-afraid\/\">Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The threat of too-big-to-fail banks has not diminished. The combined assets of the 6 largest US banks is bigger now than in 2008. Simon Johnson, Professor of Entrepreneurship at M.I.T. Sloan School of Management, writes: A growing number of serious-minded politicians are starting to support the point made by Jon Huntsman, the former governor of &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2012\/09\/05\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,34],"tags":[357,590,1266,1452,1913,3434],"class_list":["post-5392","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","category-us-canada-countries-regions","tag-bank-leverage","tag-capital-ratios","tag-equity-funded-banks","tag-fractional-reserve-banking","tag-islamic-banks","tag-too-big-to-fail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Simon Johnson: Why Are the Big Banks Suddenly Afraid? - NYTimes.com - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Simon Johnson: Why Are the Big Banks Suddenly Afraid? - NYTimes.com - the patient investor\" \/>\n<meta property=\"og:description\" content=\"The threat of too-big-to-fail banks has not diminished. The combined assets of the 6 largest US banks is bigger now than in 2008. Simon Johnson, Professor of Entrepreneurship at M.I.T. Sloan School of Management, writes: A growing number of serious-minded politicians are starting to support the point made by Jon Huntsman, the former governor of &hellip; Continue reading &quot;Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/thepatientinvestor.com\/index.php\/2012\/09\/05\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\/\" \/>\n<meta property=\"og:site_name\" content=\"the patient investor\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/profile.php?id=61572934660810\" \/>\n<meta property=\"article:author\" content=\"https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/\" \/>\n<meta property=\"article:published_time\" content=\"2012-09-05T04:56:00+00:00\" \/>\n<meta name=\"author\" content=\"Colin Twiggs\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Colin Twiggs\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/\"},\"author\":{\"name\":\"Colin Twiggs\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#\\\/schema\\\/person\\\/d42b18d516a80149d739845749ac6454\"},\"headline\":\"Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com\",\"datePublished\":\"2012-09-05T04:56:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/\"},\"wordCount\":300,\"commentCount\":2,\"publisher\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#organization\"},\"keywords\":[\"bank leverage\",\"capital ratios\",\"equity-funded banks\",\"fractional reserve banking\",\"Islamic banks\",\"too-big-to-fail\"],\"articleSection\":[\"Banks &amp; Interest Rates\",\"US &amp; Canada\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/\",\"name\":\"Simon Johnson: Why Are the Big Banks Suddenly Afraid? - NYTimes.com - the patient investor\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\"},\"datePublished\":\"2012-09-05T04:56:00+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/09\\\/05\\\/simon-johnson-why-are-the-big-banks-suddenly-afraid-nytimes-com\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/thepatientinvestor.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Simon Johnson: Why Are the Big Banks Suddenly Afraid? &#8211; NYTimes.com\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/\",\"name\":\"The Patient Investor\",\"description\":\"Smart. 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The fractional reserve banking system is the primary cause of instability and asset bubbles in the global economy, allowing banks to create money out of thin air. Credit expansion above the rate of real GDP growth has only two possible\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7830,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/06\/01\/too-big-to-fail-qa-get-the-facts-sober-look\/","url_meta":{"origin":5392,"position":3},"title":"Too-big-to-fail Q&#038;A. Get the facts | Sober Look","author":"ColinTwiggs","date":"June 1, 2013","format":false,"excerpt":"Interesting pro-bank piece by Sober Look. I have added my comments in italics. The debate around \"too big to fail\" of the US banking system is often infused with political rhetoric and media hype. Let's go through some Q&A on the subject and discuss the facts. Q: Did large banks\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10050,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/06\/21\/financial-reform-rising-perspectives-billmoyers-com\/","url_meta":{"origin":5392,"position":4},"title":"Financial Reform Rising | Perspectives | BillMoyers.com","author":"ColinTwiggs","date":"June 21, 2014","format":false,"excerpt":"Simon Johnson describes how support for financial reforms is rising despite banks fighting tooth and nail to restrict changes to the current status quo. In the early and mid-2000s, US officials allowed large financial institutions to take on big risks \u2013 being persuaded that the people running those firms knew\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5843,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/10\/25\/we-should-go-further-unbundling-banks-andy-haldane-bank-of-england\/","url_meta":{"origin":5392,"position":5},"title":"We should go further unbundling banks &#124; Andy Haldane &#124; Bank of England","author":"Colin Twiggs","date":"October 25, 2012","format":false,"excerpt":"Andrew Haldane, BOE Director of Financial Stability, addresses the too-big-to-fail problem in a recent article and makes the point that reducing complexity would increase investor trust in the banking system and improve liquidity. .......Today, the Volcker proposals in the US, the Vickers proposals in the UK and the Liikanen proposals\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/5392","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=5392"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/5392\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=5392"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=5392"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=5392"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}