Investment banking isn’t risky. What’s dangerous is creating stand-alone firms that can’t diversify.
The 1999 repeal of Glass-Steagall was unfairly blamed in the aftermath of the 2008 financial crisis. Some people—apparently Mr. Cohn among them—mistakenly believe that investment banking is so risky that it should be once again kept separate from commercial banking. The truth is exactly the opposite: Traditional investment banking entails very little risk. The danger is stand-alone investment banks that are not diversified enough to survive a shock.
Mistakes, He’s Made a Few Too Many
Crisis will inevitably strike, so America needs stability and strength. Will Trump be ready?
2008 and the years just after (the crash and the weak recovery) had changed everything in America, and that the country was going to choose, in coming decades, one of two paths—a moderate populism or socialism—and that the former was vastly to be preferred, for reasons of the nation’s health.
.. Undergirding my thinking is the sense that a big bad day is coming—that we have too many enemies, and some of them have the talent to hurt us, and one or more inevitably will.
.. our country is stressed to the point of fracture culturally, economically, politically, spiritually. We find it hard to hold together on a peaceful day, never mind a violent one.
.. The priority is stabilizing and strengthening what we have, and encouraging wherever possible an atmosphere of peacefulness and respect.
.. This Thursday he may have launched a Republican civil war: The Freedom Caucus had better “get on the team, & fast. We must fight them, & the Dems, in 2018!” That will help promote harmony.
.. Mr. Trump revealed that he has no deep knowledge of who his base is, who his people are. I’ve never seen that in politics. But Mr. Trump’s supporters didn’t like the bill. If they had wanted a Republican president who deals only with the right, to produce a rightist bill, they would have chosen Ted Cruz.
.. I had worked in a White House. I had personally observed its deeper realities and requirements. Their sense of how a White House works came from news shows and reading, and also from TV shows such as “House of Cards” and “Scandal.” Those are dark, cynical shows that more or less suggest anyone can be president.
..
Crisis reveals the character, the essential nature of a White House. Seventy days in, that is my worry.
Larry Summers: The disturbing way banks are still ducking punishment for driving the financial crisis
The settlements have two components. The first was a fine payable to the government. The second was labeled “consumer relief.” Since consumer relief was added to the fine, I naively assumed it represented payments by banks to consumers or additional relief from obligations for distressed borrowers. In fact, rather than these sums cited by the banks and DOJ, it seems that zero is a better estimate of the cost to banks of providing “consumer relief.”
.. I’d imagine other major banks with mortgage portfolios got consumer relief credit for carrying through on principal reductions that they would have found necessary wholly apart from the DOJ’s intervention.
.. the wrongdoing in question involves lack of financial integrity, clarity and transparency in reporting the settlement should have been a preeminent value. I wish this had been the case.
Opinion: Steve Bannon’s father made 3 basic investing mistakes that are so avoidable
Diversify, don’t panic and don’t watch too much TV, says Howard Gold
..“Everything since then has come from there,” Steve Bannon said. “All of it.”
Steve Bannon’s philosophy of economic nationalism holds that global elites have, well, screwed hard-working Americans like his father. That’s why real Americans need to “take their country back” and enact policies like strict border controls, massive deportation of illegal immigrants, huge infrastructure projects to restore blue-collar jobs, big defense spending to “rebuild” the military, and protective tariffs on imports of goods from “predatory” countries like Mexico and China. He also believes the Judeo-Christian West is at war with ascendant Islam.
That dark world view full of conspiracy theories apparently stemmed from his father’s big loss in the shares of a TV and wireless provider.
1. He put all his money in company stock.
2. He sold in a panic near the bottom.
3. He watched too much TV, especially Jim Cramer.
.. During times of panic, I stop looking at my statements and turn off the TV (though I still read MarketWatch!) And I find stock picker Cramer’s ideas useless at best for the vast majority of investors.
.. This is why older, conservative investors like Marty Bannon, who are more susceptible to euphoria and panic, should be in short-dated target funds or old-fashioned growth and income funds, both of which provide income and diversification. Even professional investors don’t know when to sell stocks.
.. Still, like his son, the elder Bannon knows who was at fault for his loss. “”The government created this problem,’” he told The Journal. “’The elites, they got bailed out.’”
Yes they did. But rather than blame the government for losing money in an inherently risky stock market, investors should learn from the many mistakes of Marty Bannon—and not repeat them.