# What would be the downside of splitting up the big banks? **URL:** \ **Category:** Great Debates\ **Created:** [January 17, 2013, 10:26pm UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555 "2013-01-17T22:26:30Z")\ **Posts on this page:** 5\ **Page:** 2
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [January 24, 2013, 8:11am UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555/21 "2013-01-24T08:11:19Z")
> [@Damuri\_Ajashi](#): > > TANSTAAFL doesn’t always apply to all situations but it almost always applies to pricing of financial instruments. They are either increasing their risk or reducing their returns. The markets are too efficient to allow higher returns without increase in risk. These guys are just saying that they now have so many different types of risk that they offset each other. > > They are either lying or stupid. My guess is that the bankers are lying and the pension managers are by and large stupid. > > I never had a problem with subprime mortgages, it was the non CRA subprimes that were the problem. I don’t think they’re stupid at all. I think they’re just trying to sell their clients a new load of bullshit they can make money off. It’s just the same shit repeated endlessly. ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [January 24, 2013, 8:13am UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555/22 "2013-01-24T08:13:05Z")
> [@Elixson](#): > > You had your chance to not just “split-up” some big banks but to sweep the remains of some of them into the dustbin in 2008 and it was missed when both parties propped them up. Their assets and liabilities could have been divided and sold to other banks as is already done with small banks. > > The idea that Glass-Steagall is a solution to anything makes no sense in a system wherein big business and the state are so closely entwined. The lack of Glass-Steagall (or bank regulation in general) did not cause the panic of 2008. state credit inflating the housing market did. What do you mean by “state credit”? The fact that the Fed kept interest rates artificially low during the 2000s to help fuel the housing boom? ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [January 25, 2013, 2:17pm UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555/23 "2013-01-25T14:17:47Z")
> [@Damuri\_Ajashi](#): > > The markets are too efficient to allow higher returns without increase in risk. These guys are just saying that they now have so many different types of risk that they offset each other. > > They are either lying or stupid. My guess is that the bankers are lying and the pension managers are by and large stupid. How do we know how efficient a market is?? Is there some way to measure it? It seems to me that over the last five years we learned that it was entirely possible for **sellers** of very risky mortgage-based derivatives to make tons of money and get others to assume risk by exploiting asymmetries of information in the market. The market was believed to be efficient, but it in fact was not. You’re likely right that the pension managers are foolish, but I think they’re likely to get taken to the cleaners by some bankers, similarly to the dynamic in the last crisis. Some bankers, like those at Countrywide, lost out too, but many banks made a surprising amount of money from the crisis. But more importantly, I don’t think an argument that relies on knowing or assuming how efficient a market is will hold water. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [January 25, 2013, 2:57pm UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555/24 "2013-01-25T14:57:45Z")
More ATM fees since there’d be less chance of one with your “brand” near where you happened to be. ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [January 25, 2013, 3:14pm UTC](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555/25 "2013-01-25T15:14:50Z")
It’s also possible that increased competition will increase the number of banks that are willing to pay or waive ATM fees you incur. USAA bank does this, but I don’t know of any others at the moment. [Previous page](https://boards.straightdope.com/t/what-would-be-the-downside-of-splitting-up-the-big-banks/647555.md?page=1)