# Republicans To Immediately Deregulate Banks **URL:** \ **Category:** Great Debates\ **Created:** [December 19, 2016, 9:06am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121 "2016-12-19T09:06:32Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [December 20, 2016, 1:03am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/21 "2016-12-20T01:03:53Z")
> [@ataraxy22](#): > > So given the inevitable Great Depression 2.0 coming down the pike, what should I do to Trump-proof my retirement savings? Things to invest in: Exxon Mobile Things not to invest in: Solyndra, Chinese Yuan, Mexican Peso ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [December 20, 2016, 2:12am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/22 "2016-12-20T02:12:48Z")
Great Depression 2.0 – no. A repeat of the recession of 2008 – pretty damn likely. If the regulations are lifted, then banks must practice risky business, to be competitive. It’s a race to the bottom, and the economy is the victim. (The same is true for removing environmental regulations. The result is toxic smog and dangerous chemicals in the groundwater. If only one company indulges in pollution, they have an advantage over all those who don’t. Therefore…everyone has to.) ---
**Author:** ![Isamu](https://avatars.discourse-cdn.com/v4/letter/i/7c8e57/32.png) [@Isamu](https://boards.straightdope.com/u/Isamu)\ **Post date:** [December 20, 2016, 2:27am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/23 "2016-12-20T02:27:43Z")
> [@WillFarnaby](#): > > The 2008 crisis happened after years of increased regulation and growing SEC budgets, yet “everybody” knows it was caused by deregulation. I didn’t see anyone saying that. What they were saying is that there was a lack of effective regulation. Which was and is true. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 20, 2016, 3:54am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/24 "2016-12-20T03:54:39Z")
> [@BobLibDem](#): > > The cycle continues. Elect Republicans, start a war, cut taxes, let banks crash. Elect Democrats, fix the messes. Rinse and Repeat. You forgot the step where the government saves the executives from the consequences of their mistakes and passes the costs of doing so on to the average taxpayers. ---
**Author:** ![PigArcher](https://avatars.discourse-cdn.com/v4/letter/p/bcef8e/32.png) [@PigArcher](https://boards.straightdope.com/u/PigArcher)\ **Post date:** [December 20, 2016, 4:37am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/25 "2016-12-20T04:37:11Z")
> [@WillFarnaby](#): > > No matter what happens, the next recession will be blamed on deregulation. The 2008 crisis happened after years of increased regulation and growing SEC budgets, yet “everybody” knows it was caused by deregulation. Just general “deregulation”, no specifics needed. Err, no. It was caused by the collapse of mortgage-based securities, which were never regulated in the first place. But go on keep building your strawmen, you can burn them for warmth when the world economy collapses. ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [December 20, 2016, 2:59pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/26 "2016-12-20T14:59:54Z")
> [@Trinopus](#): > > Great Depression 2.0 – no. A repeat of the recession of 2008 – pretty damn likely. > > If the regulations are lifted, then banks must practice risky business, to be competitive. It’s a race to the bottom, and the economy is the victim. > > (The same is true for removing environmental regulations. The result is toxic smog and dangerous chemicals in the groundwater. If only one company indulges in pollution, they have an advantage over all those who don’t. Therefore…everyone has to.) This concept always bothers me. Say regulations are lifted and restaurants are allowed to serve tainted meat, so one does and their prices are lowest. A competitive edge. Would people flock to that restaurant? Hell no. Would all restaurant start using rancid food to keep their prices low? ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [December 20, 2016, 3:05pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/27 "2016-12-20T15:05:50Z")
> [@Trinopus](#): > > Great Depression 2.0 – no. A repeat of the recession of 2008 – pretty damn likely. > > If the regulations are lifted, then banks must practice risky business, to be competitive. It’s a race to the bottom, and the economy is the victim. > > (The same is true for removing environmental regulations. The result is toxic smog and dangerous chemicals in the groundwater. If only one company indulges in pollution, they have an advantage over all those who don’t. Therefore…everyone has to.) This is not true, different people have different risk tolerances and thus demand different levels of risk and subsequent returns. The Treasury sells billions of dollars worth of bonds despite a very low return. In the the last recession there were plenty of banks that did not participate in the mortgage backed securities bubble. ---
**Author:** ![CandidGamera](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/candidgamera/32/2878_2.png) [@CandidGamera](https://boards.straightdope.com/u/CandidGamera)\ **Post date:** [December 20, 2016, 3:23pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/28 "2016-12-20T15:23:59Z")
> [@WillFarnaby](#): > > No matter what happens, the next recession will be blamed on deregulation. The 2008 crisis happened after years of increased regulation and growing SEC budgets, yet “everybody” knows it was caused by deregulation. Just general “deregulation”, no specifics needed. Some blame the crisis on tax cuts. No causal mechanisms outlined, just “tax cuts”. > > Actual deregulation? Yes, please. Will Trump hurt the economy, yes, but this isn’t how it will happen. You’ll know it is happening when consumer prices start rising quickly. You mean a specific like the repeal of Glass-Steagall? That kind of specific? As far as I can tell everybody outside the Cato Institute points the finger at that specifically as a major contributor to the calamity. ---
**Author:** ![CandidGamera](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/candidgamera/32/2878_2.png) [@CandidGamera](https://boards.straightdope.com/u/CandidGamera)\ **Post date:** [December 20, 2016, 3:28pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/29 "2016-12-20T15:28:33Z")
> [@BwanaBob](#): > > This concept always bothers me. Say regulations are lifted and restaurants are allowed to serve tainted meat, so one does and their prices are lowest. A competitive edge. Would people flock to that restaurant? Hell no. Would all restaurant start using rancid food to keep their prices low? That’s a disingenuous example, though. But looser food regs would encourage the use of cheaper, riskier meat - not 100% rancid garbage, but you’d see a spike in foodborne illnesses. And the media would report on it, and the Republicans and restaurant industry would dither and try and direct the public’s blame elsewhere. “It’s not our fault, it’s the farmers!” “The illnesses didn’t happen because of OUR food!” And of course, inevitably… “The answer to this is still more deregulation, because it’s the government’s fault this is happening!” ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [December 20, 2016, 3:35pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/30 "2016-12-20T15:35:25Z")
> [@BwanaBob](#): > > This concept always bothers me. Say regulations are lifted and restaurants are allowed to serve tainted meat, so one does and their prices are lowest. A competitive edge. Would people flock to that restaurant? Hell no. Would all restaurant start using rancid food to keep their prices low? It’s not that a restaurant is going to rush out and get some tainted meat as soon as regulations are stripped. It’s that a restaurant is going to push the edge. Right now, if the health department came in, and saw you had meat past its expiration, they would tell you to throw it out. If it looked like you were using it anyway, they would fine you or even shut you down. Now, using meat a bit past its expiration is most likely not going to kill anyone, probably not even make anyone sick. So, the restaurant saves money, by not throwing out meat it doesn’t sell. It saves money by pushing the shelf life on its dairy products too. It starts pushing more and more aspects, saving money, and either lowering prices, or not raising prices along with competition. Yes, people will flock to this restaurant. Chances are, it won’t even kill anyone, maybe not even make anyone sick enough to really notice. Other restaurants will need to copy the model in order to stay competitive. Some may decide to be _more_ competitive in this regard. But hey, we’re going 2 weeks out past expiry, and this meat I just found in the back of the cooler is only 2 1/2 weeks out, we’ll use that. Then 3 or 4 weeks. Pretty soon, people start getting sick. People even may start dying. The situation is more complicated than you allude to in your post, but ultimately, yes, that is exactly what will happen. Same thing with bank regulations. The people will continue to push the envelope until something breaks. The reason to have regulations is to prevent people from pushing that envelope in the first place. ---
**Author:** ![CandidGamera](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/candidgamera/32/2878_2.png) [@CandidGamera](https://boards.straightdope.com/u/CandidGamera)\ **Post date:** [December 20, 2016, 3:50pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/31 "2016-12-20T15:50:36Z")
I’d also like to address one of the bullshit arguments that people sometimes seem to use against regulations. Let’s stick to the food thing - a particular item, required by law to be thrown out two weeks after opening. Inevitably, you have the wiseass who confuses anecdotes and data saying “Well, I use it three weeks after opening all the time, and I’ve never had any problem!” [Generic ‘you’ ensues] Well, one, you’re not a representative sample of the population. Secondly, you’re not doing a properly calibrated study in terms of record-keeping, storage condition logs, time intervals, et cetera. But the more fundamental problem is that we don’t set the regulated limits at the point where there’s a fifty-fifty chance of something bad happening, and you don’t seem to realize that. Maybe there’s an 80% chance the stuff is fine at three weeks, for an otherwise healthy individual, but the number we’re looking for is more like 99% for individuals who aren’t necessarily fully healthy. THAT is why the regulations are set where they are, and the fact that you can flout them and not have ill effects is not a counter-argument. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [December 20, 2016, 4:23pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/32 "2016-12-20T16:23:47Z")
> [@CandidGamera](#): > > I’d also like to address one of the bullshit arguments that people sometimes seem to use against regulations. Let’s stick to the food thing - a particular item, required by law to be thrown out two weeks after opening. > > Inevitably, you have the wiseass who confuses anecdotes and data saying “Well, I use it three weeks after opening all the time, and I’ve never had any problem!” > > [Generic ‘you’ ensues] > > Well, one, you’re not a representative sample of the population. Secondly, you’re not doing a properly calibrated study in terms of record-keeping, storage condition logs, time intervals, et cetera. > > But the more fundamental problem is that we don’t set the regulated limits at the point where there’s a fifty-fifty chance of something bad happening, and you don’t seem to realize that. Maybe there’s an 80% chance the stuff is fine at three weeks, for an otherwise healthy individual, but the number we’re looking for is more like 99% for individuals who aren’t necessarily fully healthy. THAT is why the regulations are set where they are, and the fact that you can flout them and not have ill effects is not a counter-argument. They are also set where they are because it is known that there will be those who abuse them, so if by setting the expiry at 2 weeks, when it’s probably still good at 3, it decreases the chances that someone is still using it at 4, when it is probably not good. But, yeah, we have become so used to having a pretty safe food supply that we take it for granted. When we hear about some outbreak somewhere, we all think, “ewww, how did they let that happen?” and then we turn around and complain about regulations again. Think that our food supply was that safe before regulations? ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [December 20, 2016, 4:40pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/33 "2016-12-20T16:40:35Z")
> [@CandidGamera](#): > > You mean a specific like the repeal of Glass-Steagall? That kind of specific? As far as I can tell everybody outside the Cato Institute points the finger at that specifically as a major contributor to the calamity. The Federal Reserve isn’t part of the Cato Institute AFAIK, and the Chairman [said](https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legislation) that the activities linked to the financial crisis were not regulated or prohibited by Glass-Steagall. Regards, Shodan ---
**Author:** ![Typo\_Negative](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/typo_negative/32/484_2.png) [@Typo\_Negative](https://boards.straightdope.com/u/Typo_Negative)\ **Post date:** [December 20, 2016, 6:33pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/34 "2016-12-20T18:33:22Z")
> [@BwanaBob](#): > > This concept always bothers me. Say regulations are lifted and restaurants are allowed to serve tainted meat, so one does and their prices are lowest. A competitive edge. Would people flock to that restaurant? Hell no. Would all restaurant start using rancid food to keep their prices low? Where were you went the stock bubble burst and we were plunged in to the recession? Have you seen **[The Big Short](http://www.imdb.com/title/tt1596363/)** and **[Too Big To Fail](http://www.imdb.com/title/tt1742683/?ref_=nv_sr_1)**? [The Big Short’ star who nailed the financial crisis says this is what will happen under Trump](http://finance.yahoo.com/news/big-short-star-nailed-financial-122134772.html) Great scene in the movie where this guy and his team were in a bar, talking with two bank loan officers who were telling them about how they were writing NINJA home loans (No income, no job or assets) and writing them as fast as they could. He asked his guys “Why would they confess to this?”. One of his guys answered “They’re not confessing. They’re bragging.” ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [December 20, 2016, 7:00pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/35 "2016-12-20T19:00:03Z")
> [@CandidGamera](#): > > That’s a disingenuous example, though. But looser food regs would encourage the use of cheaper, riskier meat - not 100% rancid garbage, but you’d see a spike in foodborne illnesses. And the media would report on it, and the Republicans and restaurant industry would dither and try and direct the public’s blame elsewhere. > > “It’s not our fault, it’s the farmers!” > “The illnesses didn’t happen because of OUR food!” > > And of course, inevitably… > > “The answer to this is still more deregulation, because it’s the government’s fault this is happening!” Lets look at a real example Chipotle’s experience with tainted food seems to have cost the company at least 11 billion dollars in market value. What do you think is a better motivator to keep your food untainted, a fine from the government or the prospective of losing 11 billion dollars? Have Republicans blamed the government or tried to deregulate food preparation in response? Have the Republicans blamed the government? ---
**Author:** ![Airbeck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/airbeck/32/6574_2.png) [@Airbeck](https://boards.straightdope.com/u/Airbeck)\ **Post date:** [December 20, 2016, 7:08pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/36 "2016-12-20T19:08:24Z")
> [@puddleglum](#): > > Lets look at a real example Chipotle’s experience with tainted food seems to have cost the company at least 11 billion dollars in market value. What do you think is a better motivator to keep your food untainted, a fine from the government or the prospective of losing 11 billion dollars? Have Republicans blamed the government or tried to deregulate food preparation in response? Have the Republicans blamed the government? Actually all we really have to do is look to the past. What did food manufacturers do before there were health and safety regulations? What would be different if the regulations were removed now. Are companies just more virtuous now than they were back then? More trustworthy? ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [December 20, 2016, 7:26pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/37 "2016-12-20T19:26:56Z")
> [@BwanaBob](#): > > This concept always bothers me. Say regulations are lifted and restaurants are allowed to serve tainted meat, so one does and their prices are lowest. A competitive edge. Would people flock to that restaurant? Hell no. Would all restaurant start using rancid food to keep their prices low? Well, no… But suppose they could serve cheap, lower quality meat. Not tainted, just not very good. Once you grind it all up for hamburgers, who would know? In that case, yes, companies would almost be forced to do this, to keep their prices as low as the other guys. And there’s history here. Look at the great age of pollution. These guys did dump toxic chemicals right into the rivers. This isn’t any hypothetical fantasy: this is real history. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [December 20, 2016, 8:34pm UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/38 "2016-12-20T20:34:45Z")
> [@puddleglum](#): > > Lets look at a real example Chipotle’s experience with tainted food seems to have cost the company at least 11 billion dollars in market value. What do you think is a better motivator to keep your food untainted, a fine from the government or the prospective of losing 11 billion dollars? Have Republicans blamed the government or tried to deregulate food preparation in response? Have the Republicans blamed the government? And how exactly did we trace down the source of contamination from Chipotle’s mistake? Were it not for the health department and regulations watching the industry, a bunch of people would have gotten sick, and no one would have known why. Without a govt agency collating that data, no one would have ever known what caused the outbreak. The ongoing outbreak, actually, as without some sort of govt regulation, there would be nothing to track down the offending employees, and it would just keep going on. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [December 21, 2016, 12:01am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/39 "2016-12-21T00:01:43Z")
> [@CandidGamera](#): > > You mean a specific like the repeal of Glass-Steagall? That kind of specific? As far as I can tell everybody outside the Cato Institute points the finger at that specifically as a major contributor to the calamity. Glass-Steagall was irrelevant. The only reason it is even brought up the is because statists looked back and saw that was the only bit of deregulation that was even tangentially related to the crisis. > [@PigArcher](#): > > Err, no. It was caused by the collapse of mortgage-based securities, which were never regulated in the first place. But go on keep building your strawmen, you can burn them for warmth when the world economy collapses. Talk this one out with your buddy above. I guess you believe the securities should have remained over-valued until the end of days? Statists will never look to root causes. The government intervention into the housing market was an unassailable good. > [@Isamu](#): > > I didn’t see anyone saying that. What they were saying is that there was a lack of effective regulation. Which was and is true. There will never be enough effective government regulation to prevent banking crises. Also, see your buddy two stories up. > [@Bryan\_Ekers](#): > > I’m not sure if you missed my point or if I’m missing yours. Idk, maybe. The caricature is that it is simply dogmatic faith that guides free marketeers when it is observation of root causes and examination of second and third order consequences that drive their conclusions. Statists will be satisfied in knowing that the direct consequence of their action makes them happy. > [@Doubticus](#): > > It’s not a radical notion. > > [George W. Bush - 25 People to Blame for the Financial Crisis - TIME](http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877320,00.html) No, it’s a wrong one. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [December 21, 2016, 12:17am UTC](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121/40 "2016-12-21T00:17:08Z")
> [@WillFarnaby](#): > > The caricature is that it is simply dogmatic faith that guides free marketeers when it is observation of root causes and examination of second and third order consequences that drive their conclusions. I get that’s how free-marketers see themselves and how they want to be seen by others, but I’m unclear on the basis for such a favourable assessment. Of course, it hinges on what definition of “free markets” is in play. If it means _no_ regulation, then not only is the assessment overly favourable, but downright fantastical. [Previous page](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121.md?page=1) [Next page](https://boards.straightdope.com/t/republicans-to-immediately-deregulate-banks/775121.md?page=3)