BILL MOYERS ON THE BANKSTERS & MORE

Full Show: Too Big to Fail and Getting Bigger
June 13, 2014

In Washington, DC, a bipartisan effort is underway to chip away at the 2010 Dodd-Frank financial reform law, which is supposed to prevent the type of economic meltdown that brought the world to the brink in 2008.
Wall Street banks are lobbying to defang sections of the law related to derivatives — the complex financial contracts at the core of the meltdown. One deregulation bill, the “London Whale Loophole Act,” would allow American banks to skip Dodd-Frank’s trading rules on derivatives if they are traded in countries that have similar regulatory structures.
“It keeps being weakened and weakened,” economist Anat Admati, co-author of the book, The Bankers’ New Clothes, says of the Dodd-Frank legislation. “We have some tweaks. We have messy, unfocused efforts. But we haven’t really gotten to the heart of the matter and really managed to control this system effectively,” she tells Bill.
Banks are indulging in the same behaviors, such as having too much debt, that got us into serious trouble in 2008. According to Admati, “…the financial system continues to be fragile and the banks continue to live dangerously. And when you speed at 100 miles an hour, you might explode and harm other people.”
While Americans get talked into subsidizing and supporting the banking sector, Admati says, real reform is the only answer or the next meltdown could be fatal. She believes banks should be forced to use more equity funding — the unborrowed money to which shareholders and owners are entitled.
“No healthy company, unless it’s on its way to bankruptcy, maintains on a regular basis less than 30 percent equity,” Admati tells Moyers. But in banking, the amount is closer to five percent, Admati says.
“I’m not saying it’s the silver bullet and the only thing. But it’s the no-brainer thing to do.”
Producer: Gail Ablow. Segment Producer: Lena Shemel. Editor: Rob Kuhns. Outro Producer: Robert Booth. Outro Editor: Sikay Tang.
http://billmoyers.com/episode/full-show-too-big-to-fail-and-getting-bigger/