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The pres-elect's first controversial move

robocop (actually)

Well-Known Member
Premium Member
My Dad says I should not get worked up over things that don't affect me and that he and I don't understand enough to know this although I haven't asked my genius actuary brother...

but I am curious to see what people will say about this. Donald Trump wants to take away stress tests to banks as his first controversial announcement since he got elected. Is this good or bad? What are the pros and cons? What do you think? If any of you really know about this I would love to hear from you and again I am happy and give full support to Trump.
 

Twilight Hue

Twilight, not bright nor dark, good nor bad.
I figure a businessman would know better than a lawyer if it's true.

It seems once in office as our President, he would likely situate himself and plan a course of action from there.
 

Laika

Well-Known Member
Premium Member
My Dad says I should not get worked up over things that don't affect me and that he and I don't understand enough to know this although I haven't asked my genius actuary brother...

but I am curious to see what people will say about this. Donald Trump wants to take away stress tests to banks as his first controversial announcement since he got elected. Is this good or bad? What are the pros and cons? What do you think? If any of you really know about this I would love to hear from you and again I am happy and give full support to Trump.

At a wild guess, its bad as it means banks are more vulnerable to financial shocks. But I think "stress tests" are a form of auditing and checking to see if the books add up. I'm not 100% sure.

The problem is that one (responsible) bank can handle its own problems- but it can't deal with problems that affect all banks, such as stock market crashes. At a minimum Regulation is necessary to reduce the uncertianity both for banks and their customers for things they cannot control as individuals so they don't lose their money and the currency is stable and people have "confidence" in using it. This is not counting the risks that banks that decide to "go nuts" and do stupid things with other people's money given the sheer size of the assets they hold.

In the UK, banks legally have to keep about 10% of their assests in cash (it may have been lowered to 5% recently). This is to stop a "run on the bank", so that there is enough cash on hand to deal with day to day business. It stabilises the financial system more because everyone knows they can withdraw their money and that it is safe.

After 2008, the UK government protects bank accounts up to the value of £50,000. This means that "small" accounts are protected from financial shocks or if the bank has to closed down, etc. No system is perhaps and the collapse of Northern Rock bank was one of the first bank runs for decades and was taken into private ownership. In the 19th century, before central banks were created and regulations were introduced, runs on the bank (people trying to withdraw their cash from the bank when they lost confidence in it) were very common. Of course- they can't do it all at once, so in a very free market- they just go bust, whereas nowdays Northern Rock was taken into public ownership.

northern-rock_999576c.jpg
 

Shadow Wolf

Certified People sTabber
Definitely not a good thing given the lack of accountability that tanked them in the first place. We definitely don't need them running Enron schemes.
 

Sunstone

De Diablo Del Fora
Premium Member
I suspect Trump's "controversial moves" are going to start coming fast and furious.
 
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