NEW YORK (Real Money) -- New rules for banking? New ones? On top of the old ones? With even more capital raised? Are you kidding me?
That's what we are hearing from the Fed: A surcharge with fatter cushions is needed to further eliminate too-big-to-fail considerations.
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And all I can say is "Would you give these banks a chance to do some loaning and stop making them fear you so much?"
We don't want to go back to the old days when banks' capital was stretched. But if we want sustained movement in this economy the big banks have to feel that they can make some mistakes and not have the book thrown at them. I think that a preponderance of the loans they are making are to people who don't really need the loans.
This kind of rule-making, while good in principle, says to the banks, "You think you are out of the woods with us, but dream on." To me that means, "Don't you dare make a loan that goes bad."
Now, it also means that the banks, once again, are terrific shorts, not longs, and that means this group, which is so important to the market, will remain hobbled. We are in a moment where, if you are diversified and you own some of this cohort, you are getting your butt kicked by the averages.
At a certain point the government has to recognize that it is playing too big a role in the business of America. Whether it be capital-raising rules or rules about how it isn't worth it to give workers more hours if you have to give them health care to rules about oil and gas that make it so we can't build pipelines except where there are existing pipelines so we need rail and, amazingly, trucks -- see the Eaglebine field where there's no way to get the stuff out right now but truck (thanks to RBN for that insight) -- the government is all over the backs of the people.
I think we all know that we would have been out of this soup if we didn't have to pay for our transgressions. But we are and we will and it is simply not the time for more rules and more capital sidelined from a subpar-growth economy confronted by challenges everywhere you look around the globe.Editor's Note: This article was originally published at 12:45 p.m. EDT on Real Money on Sept. 9.