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Firemorfox t1_iui337z wrote

The fuck do ya mean, "over regulation"?

Are you living in a different country than the US, perhaps?


Ashamed-Confection44 t1_iuielul wrote

Look, I'm a lot older than you. Big business has convinced you that regulation is meant to protect the little guy. It's not. It's meant to put the little guy out of business. Have you ever known an individual that fully owned a bank? I've known several. In the 70's and 80's their were little banks all over the country owned by individuals. The additional regulation of the 90's put them out of business and the big banks bought them up. Find a 90 year old retired banker and they'll explain to you how the system really works


Firemorfox t1_iuih1eo wrote

My point was that there was an explicit lack of regulation for larger institutions especially banks and investment firms.

I understand now that by “over-regulation”, you meant the paperwork, fine print, and laws that drag down smaller companies. I had thought you referred to “over-regulation” that is applied to banks and larger institutions, which is why I disagreed with you.

I think it’s clear we both agree that generally US business regulation as it stands is under-regulated for the rich and over-regulated for the poor.


Ashamed-Confection44 t1_iuii5ik wrote

The Fiat system must have ups and downs. It will have bankruptcies and failures. It has too. that's just the way it works.

Over the years, the small banks were choked out with regulation. Now, everything that is left is "too big to fail". The economy and banks are not in trouble due to a lack of regulation (there is definitely a lack of enforcement in some cases). They are in trouble because we've reached a point where there is too much debt in the system and not enough capital to pay it off.

With any debt failure, it is wiped off the books and eases demand on the dollar. If a thousand small banks across the country were to fail you might not even notice it where you live. If Credit Suisse fails, oh you'll notice it.


animalinstinct10m t1_iuiodn6 wrote

Both of you are saying the same thing. Age has a little to do with it but more general business dynamics.

People tend to forget banks are businesses too. Just like big box retailers displaced small businesses, so did larger banks.

"Over regulation" was a symptom of over leverage in the system at large. Not the government purposely using it as a tool to disadvantage smaller banks. It was a negative externality.

There was the S&L crisis before the financial crisis and with each subsequent crisis, there is a regulatory effort to prevent the next crisis.

There are many other hurdles for global money center banks, investment banks, etc. including Basel.

Public companies in general had to deal with SOX after 2000 and the dot com bust.

In the end, it comes down to economies of scale and operating leverage. The regulations help to limit the degree of financial leverage generally and does impose significant administrative burdens on smaller institutions but those dynamics broadly apply in various regulatory incarnations across industries.