IMF: Banks should be taxed to pay for future bailouts

Discussion in 'Politics, Religion, Social Issues' started by Lord Blackadder, Apr 20, 2010.

  1. Lord Blackadder macrumors G5

    Lord Blackadder

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    #1
    The IMF has recommened that two taxes be applied to banks and other financial institutions to fund future rescue packages in the next instance of large-scale financial meltdown.

    There's no way this is going to be implemented without a huge fight, if indeed it is ever implemented. But the idea is an interesting one. At first glance it sounds like a good idea to me anyway...
     
  2. mactastic macrumors 68040

    mactastic

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    #2
    Fraught with problems. Personally I'd rather see legislation banning banks from becoming "too big to fail", then letting them fail and letting the shareholders and investors take the loss. Might provide an incentive for some internal oversight.

    Then regulate the ratings agencies relationship with their clients.
     
  3. Lord Blackadder thread starter macrumors G5

    Lord Blackadder

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    #3
    That sounds reasonable - although, deciding how big "too big" is would be a vexed question...
     
  4. mactastic macrumors 68040

    mactastic

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    #4
    You would have to start, at least in this country, by re-instituting the Glass-Steagal requirement that investment banks and insurance companies cannot mingle. That and making the ratings agencies accountable would change thing dramatically. If you can't both manufacture and insure investment vehicles that you can't purchase any rating you wish for it, things become more transparent for the investor.
     
  5. rhsgolfer33 macrumors 6502a

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    I think the tax to pay for future bailouts is kind of silly. We should try to reduce some of the bank risk taking, rather than saying, "ok, **** up some more, you'll be covered."

    Here's some of the things I'd like to see:

    - Limit what securities banks can invest in. For instance, only highly rated securities (AAA, AA, A; depends on equity or debt and the rating agency). Its not perfect, but it would reduce risk.

    - Tighten restrictions on mortgage lending. For instance, require a 10% down payment on all loans; it makes little sense to loan at 100% asset value.

    - Eliminate or severely restrict adjustable rate mortgages.

    - Require increased disclosure on financial statements about what a bank is invested in.

    - Require banks to maintain a higher minimum amount of capital in comparison to investment assets

    - Increase fees or tax securities ratings; this will discourage banks from offering a large number of mortgage backed securities, effectively making banks hold onto those mortgages themselves. Banks shouldn't be able to make crappy loans and then bundle them into a security to wash their hands of what happens regarding those mortgages. Mortgage backed securities aren't in and of themselves the problem, the crappy mortgages bundled in many of them are.


    I don't think reinstating Glass Steagall is the answer; I think there may be better ways out there to force banks to reduce risk taking while still allowing them to raise needed capital through some investment activities that the original Glass Steagall act doesn't allow.
     
  6. Lord Blackadder thread starter macrumors G5

    Lord Blackadder

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    #6
    I agree with some of what you're saying, but I'd like to see Glass Steagall back in force. I don't think it was too restrictive, and it would have gone a long way to lessen or even prevent the kind of financial meltdown we just experienced.
     
  7. mcrain macrumors 68000

    mcrain

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    #8
    The financial reform proposed by the Democrats and passed out of committee without Republican support has a tax on banks to fund future bailouts.

    (Check out the thread on financial reform and the recent "talking points" that the Republicans are using).
     
  8. Shivetya macrumors 65816

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    #9
    No they should not, put them under if they fail.

    I am sick and tired of bailing out these companies that deserved to fail. In the US your money in a insured bank is covered. All we are doing is keeping the same failed leadership in place with the same failed policies.


    Here's your do over, compliment of the tax payers.


    Besides, any fee imposed on the bank gets paid for by its customers.
     
  9. danpass macrumors 68020

    danpass

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    #10
    Don't bother.

    I deleted my post because its not worth the aggravation with the majority of this forum. They think more gov and more tax is a solution. :rolleyes:

    I broke my rule of sticking to the tech forums and this bounced back up this morning lol


    unsubscribe
     
  10. mactastic macrumors 68040

    mactastic

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    #11
    LOL... If only all unhinged conservatives quit this easily...
     
  11. flopticalcube macrumors G4

    flopticalcube

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    #12
    This is a tax being paid by the banks, not the general taxpayer. Insurance of a sort.
     
  12. paddy macrumors 6502a

    paddy

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    #13
    Banks need heavy, heavy regulation. Only countries that got out relatively unscathed from this thing were countries with strong financial regulatory systems. The ratings agencies should be hung out to dry.

    Boring banking is better banking, it's been out of control for the past 25 years.
     
  13. Lord Blackadder thread starter macrumors G5

    Lord Blackadder

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    #14
    I support the notion of higher taxes in exchange for some benefit to me, or to society as a whole. If the banks are taxed, and raise their fees somewhat as a result, but are less likely to fail, then that benefits me.

    As far as the "Too big to fail" problem is conerned, the solution is to make banks smaller rather then letting them fail. This is not a pure capitalist state (show me one country that is?), and we can't afford to operate on unrestrained capitalist principles.
     
  14. mcrain macrumors 68000

    mcrain

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    #15
    So, the Republicans should be made to pay for their evil bank bailout! Wait a second. Huh? The Republican president proposed the bank bailout, and now the Democrats want to fix the status quo (bank bailouts), and you want to opppose that? WTF?

    More government? More tax? Status quo is government bailouts, and you're opposed to less bailouts? Enjoy your drug addled time reading fox-news.

    It is a shame that the unhinged conservatives took over the republican party. I used to have respect for the right and the Republican conservatives that stood against the Tip O'Niel (sp?) liberals. They were able to discuss things like adults and find a middle ground.

    Where did that go? Who are these whiney, cry-baby republicans? Tea party my *Ss. They are a bunch of "my-way-or-the-highway" stubborn jerks who should have no part in national politics.

    As the great and almight John Stewart once said, "Go F yourselves."
     
  15. mactastic macrumors 68040

    mactastic

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    #16
    Indeed it is a great shame; and I'll provide an alternate Stewart quote:
    "Republicans, you've confused 'tyranny' with 'losing'."
     

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