Comments on: Clearing up Miller-Moore http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Pengar Guiden http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9390 Mon, 30 Nov 2009 20:12:43 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9390 Why do you suggest that Federal Home Loans Banks are strangers to underwriting? To get funds advanced to them, members of Home Loan banks must meet strict collateral, credit and capital requirements. Remember, it’s a system of cooperatives and member banks are continually monitored by their Home Loan bank for sound business practices and asset quality. The Home Loan banks are very careful underwriters when they lend to members … precisely because they’re not lending “taxpayer funds” as you inferred. They lend money which they themselves borrow on the capital markets … and do so with the intent to repay …. and a record of doing so. The Home Loan banks must maintain the confidence of those investors who buy their bonds, and they do that by following conservative underwriting standards. That reliance on investors, not public dollars,is the underpinning of a system that keeps liquidity flowing to communities.

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By: Doc Merlin http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9123 Wed, 25 Nov 2009 10:37:50 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9123 “The Federal Reserve also has power – they loan money to banks every day. If you’re going to loan money to somebody, you should have a good idea of what they are going to do with that money.”This would be true if the fed was a for profit institution or somehow limited in its ability to make money. It doesn’t have to worry about ever being insolvent as it can print sans collateral, thus it doesn’t ever worry about risk. This is why you saw them shoveling money at the worst institutions instead of restricting it from the worst during the run up to the crisis.

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By: Don the libertarian Democrat http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9108 Tue, 24 Nov 2009 22:12:35 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9108 Ending Panics and Liquidations are two separate problems. The only way that Liquidations help end panics is in the govt getting involved and, basically, guaranteeing everything. Now, seeing that, people want to have Liquidations cost less for the govt, so different kinds of losses to investors are being proposed.There are two problems:1) The solution is still based on govt guarantees.2) Investors will demand stronger guarantees, whatever the govt wants.In other words, we’ll be better off, but still operating under the same system, and still vulnerable to the same risks, only less so. For a while, at least.What you need is a way to end the panic w/o govt guarantees being the obvious and necessary stopgap. All that I see that can possibly do this is Limited Banking.

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By: jck http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9105 Tue, 24 Nov 2009 19:53:43 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9105 for repos, the lender of cash will compensate by taking for a bigger haircut for collateral cover (i.e. he will lend 100 cash where it would have lent 125 pre-amendment), and will make sure that repo documents fill the standard of a “perfected security interest” as per the amendment.”perfected security interest” means that he is in full control of the collateral and couldn’t care less about the bair-miller-moore amendment, since he doesn’t depend on the receiver to get his cash back in case of trouble. the only thing that changes is higher funding cost for the borrower.

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By: Uncle Billy Cunctator http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9104 Tue, 24 Nov 2009 19:21:09 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9104 I’ll let you and Yves Smith hash it out:http://www.nakedcapitalism.com/2009/ 11/scare-mongering-over-fed-oversight-bi ll.html#comment-67763

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By: onthetimes http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9103 Tue, 24 Nov 2009 18:15:47 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9103 The system is already complex enough, and while this change may have some positive benefits, it will undoubtedly have unintended consequences. Also, it doesn’t really do anything to prevent problems from happening, it mainly addresses what happens after banks die. It does impact the incentives of investors, but as was proven throughout this past decade, investors don’t always know what they are doing, especially when the people taking the risks (fund managers) aren’t actually the same people as the ones whose money is being risked.The FDIC has the power to regulate banks already – they are an insurance company. Insurance companies can prevent lots of risky behavior – they do it all the time – so the FDIC should make sure that its clients aren’t recklessly lending out the deposits they are insuring. They should make sure their client banks are maintaining enough capital to cover losses. If they do this, none of the other regulations are necessary.The Federal Reserve also has power – they loan money to banks every day. If you’re going to loan money to somebody, you should have a good idea of what they are going to do with that money. If there’s any piece of legislation that needs to be passed, it’s a law that says the Fed has to pay attention to the loans they make, and not hand it out like water at a triathalon.

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By: Ginger Yellow http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/comment-page-1/#comment-9102 Tue, 24 Nov 2009 17:58:08 +0000 http://blogs.reuters.com/felix-salmon/2009/11/24/clearing-up-miller-moore/#comment-9102 No creditor is going to assume the FDIC won’t use it’s discretion to the full. They’re going to assume the worst. The whole point about secured lending to financial institutions is that you worry about the collateral, not the borrower or what the FDIC might do in an insolvency. There may be good reasons to go ahead with this idea, but if they think creditors won’t treat it like a 20% haircut they’re crazy. Which presumably means that they’ll just ask for more collateral – precisely the problem in the first place. Surely a limitation on encumbrance would make more sense.

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