Business

No One to Stop it.
by Milota Sidorova

The financial meltdown on Wall Street may be a year old issue, but it’s anything but healthy situation to call today. Five biggest American banks after the generous governmental $250 billion “gift” perform highly risking actions, like betting big on bonds, commodities and exotic financial product, instead of keeping enough cash. According analysts it is far from healthy investment, anyway the numbers say so – Fourth quarter of 2008 saw almost the end of risky assets in Goldman’s Sachs, but in six month later risky trading revenue come up 50 percent of total revenue – nearly to the point before the crisis. JP Morgan shows off the similari! ties. More over the government didn’t take much action to control the giants – there have been no greater changes in rules for their behavior. All proposals to monitor or control the financial system or the companies’ policies have been slowed by inner negotiations and lobbying groups. To be honest, who with a common sense was expecting a wonder? Instead of lowering the risk, the banks have become greater – naturally increasing their potential in both directions. When Lehman Brothers failed, Merrill Lynch extended Bank of America, Bear Stearns became the part of JP Morgan and 41 percent of total number of home loans originally backed by Fannie Mae and Freddie Mac are in the responsibility of Bank of America and Wells Fargo. Simply, the market was tidied up – something that was expected with good feelings. The strongest will survive and the place will be emptied for the new incomers. However, this is not the issue right now. The competition has! decreased, since there was no one to rival governmental fed b! anks. An d they are, once again performing risky game. Five of them including — Goldman, JPMorgan, Wells Fargo, Citigroup and Bank of America did well in second-quarter referring the yield of $13 billion – something of double yield in the second-quarter 2008 and about two thirds more than two years ago. The numbers are climbing higher than before the crisis. Getting bigger means also to get greater political attention – banks, although they are doing at free will, seem to be sure they will be backed by the government in case of another potential meltdown. They are bearing too much risk on their shoulders. And for this time, there’s no effective way to put the things right way – or to make them behave in rational manners, stop them from lending the cash among each other, paying extra bonuses to their employees etc... We only get, what we sow.

related story (sgx15355): http://news.yahoo.com/s/ap/20090913/ap_on_re_us/us_meltdown_...

by Milota Sidorova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.

posted by Blog TechSource @ 2:15 PM