Have you ever noticed the way banks celebrate
their kills?
This is one of dozens of Wells Fargo branches
on and around Market Street in San Francisco.
But if you look closely you can see the bones
of the institution that built the building.
I love Capitalism.
But I do not like the US banking system.These
two statements do not contradict each other.
In 2008 the too big to fail banks almost killed
us.
Everybody has their favorite explanation for
the crisis.
But nobody disputes the structural issue that
faced US regulators in the fall of 2008.
Shit went haywire, banks started failing and
we had a problem.
Banks that screw up should fail.
That’s capitalism, or how it should work
anyway.
The problem was that US and world banking
entities had gotten too big to fail.
If they failed they’d take the whole system
with them.
So they had to be saved.
The necessary measures in 2008 and 2009 made
the problem worse.
The banks got bigger.
Wells Fargo in particular made out like a
bandit, scooping up the remnants of Wachovia,
a bank that was juuust small enough to fail.
Once the crisis passed we took a look at what
we could do.
The answer Washington, DC gave us was the
Dodd Frank act.
It was supposed to help with the too big to
fail problem, but it also did about a million
other things.
In 22,000 pages of regulation, it tackled
every problem under the sun.
It certainly made the business of banking
less attractive.
I’m no expert, but I wouldn’t be surprised
if it also made a lot of other economic activity
harder as well.
One thing is not in dispute.
It made the too big to fail problem worse.
Every bank in the world now needed a couple
Wall Street lawyers to comply with all
these new regulations.
The bigger a bank was, the better it was going
to be at complying with all these new rules.
The few provisions in Dodd Frank that actually
hit big banks, like the Volcker Rule, have
been implemented slowly, and against all the road blocks that teams of lawyers can throw up.
The legislation has been great at protecting
big banks from competition.
Many smaller banks, who can’t afford Wall
Street lawyers, have given up and closed.
So Dodd Frank failed to address the main problem.
The stock markets have been surging lately,
largely on the expectation that Trump will
do away with the Dodd Frank reforms.
5 of the 30 firms that make up the Dow Jones
Industrial average are financial firms, and
they’re all surging.
This may lead to some short term economic
growth, but it’s worth taking a second look.
Dodd Frank protected too big to fail banks
throughout the Obama years.
Trump may take the leash off, and let them
go crazy.
This leaves us in the same position we were 
in the early 2000s, but worse.
The Banks are bigger, and they have less competition.
The structural problems are all still there,
and they are getting bigger.
So yeah, the dancing days are here again. The economy seems to be surging, and
San Francisco has a new tallest building going
up South of Market.
But I’m worried about the foundations.
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