A BANKER A DAY KEEPS THE DEPRESSION AWAY!

In 2008 the global economy crashed and we nearly got sucked into a second Great Depression. This was due in large part to the sub prime mortgage crisis  created by banks lending massive amounts of money to people they knew couldn't possibly pay them back. They blew up the global economy by securitizing that same bad debt into mortgage backed securities which they sold all over the World as AAA grade derivatives. By using credit default swaps, many of these banks  bet  that the derivatives they sold would fail. To be able to securitize mortgages they created an organization call "MERS" which was supposed to keep track of who owns all of these securitized mortgages but in fact destroyed the paper trail for millions of mortgages and has shaken the very foundations of real estate law in the United States. MERS had the added benefit to the Banks of avoiding paying millions in title transfer fees which are owed to local municipalities when the ownership of a property is transferred.

These same banks got a 800 billion dollar bailout in 2008-9 and trillions in nearly zero interest loans from the Federal Reserve to keep the entire financial system from collapsing but they continue to pay massive bonuses and to gamble in the derivatives markets. Now we've found out that many of the largest banks were manipulating the LIBOR which is used to set most of the interest rates in the World but if that wasn't enough one of the world's largest banks, British based HSBC has just agreed to pay a 1.9 billion dollar fine for money laundering. 

My fear is that as long as the big banks are allowed to continue to conduct business as usual we are in danger of having a repeat of 2008. The Dodd Frank Act was a good first step but major restructuring of the big banks maybe necessary. The next big bank that gets in trouble I think should be taken through bankruptcy and broken up. I'd also like to see the an updated version of the old Glass Seagall Act passed by Congress to separate commercial banking from investment banking. So what do you think? Is the Volcker Rule going to be strong enough? Have we adequately dealt with derivatives? Is Congress going to just ignore the problem until it blows up again?