President Obama is now in support of capping bank activity in order to prevent any future widespread government bail outs for the banks. The proposed plan would put restrictions on the scope of activities a bank can be involved in. In addition it would put a cap on the national market share of deposits. Some banks that became bank holding companies would need to choose which route they want to follow--either to remain a bank or to be a investment firm. All of these ideas are meant to protect the people from big banks.
I have a general question to everyone though:
Even with these caps, if the economy keeps growing wouldn't banks inevitably need to act outside the boundaries of the restrictions. Or, if the restrictions are kept in place, would there be a need for more banks arise to meet the demands of growth (and in doing so create an inefficient number of banks operating in the US)?
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