US Bank Regulator Warns of Crisis Risk From Fintech Proliferation (reuters.com) 23
The rise of fintech services and digital banking could spur financial risks and potentially a crisis over the long term, Michael Hsu, Acting Comptroller of the Currency, a major U.S. bank regulator, warned on Wednesday. From a report: "I believe fintechs and big techs are having a large impact and warrant much more of our attention," Hsu told a New York conference, noting the encroachment of fintech companies into the traditional financial sector, including via partnerships with banks, was creating more complexity and "de-integration" across the banking sector. "My strong sense is that this process, left to its own devices, is likely to accelerate and expand until there is a severe problem, or even a crisis," Hsu said. Banks and tech firms, in an effort to provide a seamless customer experience, are teaming up in ways that make it more difficult for regulators to distinguish between where the bank stops and where the tech firm starts, said Hsu. And with fintech valuations falling as financing costs rise, bank partnerships with fintechs are increasing, he said.
Re:Shadow banking. (Score:4, Informative)
Dear godlbug: you're full of it. We were on the gold standard in the mid-1870's, when we had a financial crisis. We were on the gold standard when the Great Depression hit.
Never read the story of the Midas touch, have you.?
Re:Shadow banking. (Score:5, Informative)
So if we agree the gold standard doesnt prevent recessionsany better than fiat it's a wash. What other advantages does it give?
It certainly doesn't help recover from recessions faster. The 2008 recession was around 18 months. .The 1873 recessions laster 65 months, height of the gold standard. Another 38 month recession from 1882 to 1885. The Great Depression lasted 43 months.
One of the primary reasons to move off a gold standard was to give the banks and government tools to actually recover faster, whereas with gold you have to deal with people hoarding it, you can't control the exchange rates (which were not stable) and it doesnt really help inflation either.
Also gold is no longer this material of tradition but an important industrial commoddity. There are industries, especially electronics, that need a stable supply of it. To have governments around the world start holding reserves for no tangible reason than tradition is weird and harmful. Also in this day why gold at all? Why not palladium? Aluminum?
Would the Dutch gain more economic power today owning a gold mine or ASML?
Re: (Score:2)
So if we agree the gold standard doesn't prevent recessions any better than fiat it's a wash. What other advantages does it give? ...
One of the primary reasons to move off a gold standard was to give the banks and government tools to actually recover faster, whereas with gold you have to deal with people hoarding it, you can't control the exchange rates
So the advantage some of the goldbugs would say it offers is that it limits those very tools banks and governments have. Those 'tools' all amount to picking winners and losers. Basically those monetary tools mean that having positioned yourself correctly counts for nothing if the wrong people stand to lose or its politically inconvenient you get screwed and they get a bailout. Its the opposite of social mobility, and it rewards the wrong sorts of risk taking.
Re:Shadow banking. (Score:5, Informative)
Sure, they can say that but history does not bear that conclusion out. If under the gold standard we still had recessions, pretty often and pretty brutal.
We still had bank runs, still had recessions that were longer and deeper than in modern times, really still had all the same problems you listed out. It's almost like the currency or banking system isn't really at the core of those issues and the gold standard is a convienent but ultimately empty "fix everything" theory with no real basis.
I would also say their core assumption that there was ever an era where the government didn't pick winners and losers ever existed. That has always happened the the losers, justified or not, are always going to complain about it.
Re: (Score:2)
We were on the gold standard in the mid-1870's, when we had a financial crisis.
You haven't heard of the greenback then.
We were on the gold standard when the Great Depression hit.
Sort of, but not really,
So the "No true gold standard" standard? You sound a bit like a libertarian (but not a true Libertarian, of course). At any rate, for those who wish to understand how the gold standard made the 1870s worse: https://en.wikipedia.org/wiki/... [wikipedia.org]
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No one has real currency left. Ever since the US ditched the gold standard it's all bullshit, in every country. Fiat currency means faith currency, and faith is just belief in bullshit. A Confidence game. Literally a con game.
How much macroeconomic have you actually had? The gold standard worked well for all the centuries when every country's economy was zero sum. If one person gained money, it always had to happen at the expense of someone else. Gold worked as currency in those days because every culture recognized its value, it was unforgeable and easily assayed, and the supply increased by only a tiny fraction each year with new mining. For these reasons, an ounce of gold traded for the same amount of wheat in the 17th centur
I've been saying this for a while now (Score:5, Insightful)
The people doing the gambling are never punished. They're the Elite, too well connected to punish. Instead of pretending we're gonna punish them for hurting us this time we need to stop them from hurting us in the first place. That's how regulation works.
The hard part is that regulation does work. So when you do it the problem goes away, and since the problem's gone it's tempting to do away with the regulation because the problem that the regulation solved isn't happening anymore. This is circular reasoning and silly as hell, but voters fall for it.
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"imagine the 2008 market crash but instead of houses the securities are backed by pictures of monkeys. The resulting crash would make the Great Depression look like the .com boom."
While a crash in NFTs might do real damage, and crater more thoroughly than housing did in 2008, it's not going to be like the 2008 housing boom just because there's not nearly as much money tied up in it. The NFT market is literally one thousand times smaller than the housing market, and that's after it's meteoric growth in the
You need more imagination (Score:3)
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I actually made a mistake in calculating the relative size of the markets. The housing market is about 50,000 times the size of the NFT market. It's about 5000 times the size of the crypto market. Yes, it's all sitting on nothing but air, whereas most of the housing market has at least *somthing* backing it, which why I said it might crater harder. But it's just too damn small to make much of a bang.
Re: (Score:1)
> imagine the 2008 market crash but instead of houses the securities are backed by pictures of monkeys.
Tulips, ET cartridges, sock puppets, houses, Game Stop, monkeys, same difference: a fad is a fad.
Re:I've been saying this for a while now (Score:5, Insightful)
We did stop it in the 30s.
Strict regulations were put into place... And then forgot why we put those regulations into place.
Then we clamored to have the regulations removed so we could make money faster... With the predictable results.
sigh
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It's very similar to how people think Y2K was never an issue, because nothing bad happens.
And just don't know/ignore/are utterly ignorant of, the billions and billions of dollars spent on actually trying to make sure nothing bad happened.
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Now ordinary citizens can crash the (Score:3)
...system just like Wall Street moguls did.
Regulators (Score:2)
Financial industry regulators definitely assess some subsets of Technology Service Providers today. The examinations are fairly comprehensive. Are Fintech companies not getting included in that oversight?
What we need is... (Score:1)