>"We're going to keep going from crisis to crisis because banks can't say no, and the government(s) deems them too big to fail."
Once upon time there were three categories of banks:
retail, commercial and investment. Retail banks were known as 3-6-3s. They gave 3 percent interest on deposits, lent money out 6 percent and were on the golf course by 3:00PM.
The banks held the loans on their books and had to properly manage their risk portfolio or else go out of business and be out of job. This worked really well for retail banks, they made decent profits and ran a tight ship. Since banking deregulation, risk has been transferred to the tax payer and banks have come to expect outsized returns as the new normal. When regulation tightens in one area in response to a crisis they develop another exotic "product" to exploit some other loophole in order to reach those outsize returns. Its akin to patching a car radiator rather than fixing it. The same tired refrain sold by these folks is always "the market will regulate itself." The US basically has a system of "privatize the profits but socialize risks."
I was struck by this sentence from the article:
"Some local governments that embraced the loans as a way to bring clean energy to the masses didn’t anticipate the messy consequences."
I think "really"? Given the recent history - 2008, unintended consequences didn't enter into your discussions or calculations? More likely is that folks were in the pockets of those with a vested business interest in establishing such program. I have little doubt that lobbyists at least in part helped write legislation that enabled these programs.
Once upon time there were three categories of banks: retail, commercial and investment. Retail banks were known as 3-6-3s. They gave 3 percent interest on deposits, lent money out 6 percent and were on the golf course by 3:00PM.
https://en.wikipedia.org/wiki/3-6-3_Rule
The banks held the loans on their books and had to properly manage their risk portfolio or else go out of business and be out of job. This worked really well for retail banks, they made decent profits and ran a tight ship. Since banking deregulation, risk has been transferred to the tax payer and banks have come to expect outsized returns as the new normal. When regulation tightens in one area in response to a crisis they develop another exotic "product" to exploit some other loophole in order to reach those outsize returns. Its akin to patching a car radiator rather than fixing it. The same tired refrain sold by these folks is always "the market will regulate itself." The US basically has a system of "privatize the profits but socialize risks."
I was struck by this sentence from the article:
"Some local governments that embraced the loans as a way to bring clean energy to the masses didn’t anticipate the messy consequences."
I think "really"? Given the recent history - 2008, unintended consequences didn't enter into your discussions or calculations? More likely is that folks were in the pockets of those with a vested business interest in establishing such program. I have little doubt that lobbyists at least in part helped write legislation that enabled these programs.