Boom Bust Season 1 Episode 37 Yves Smith: Banks Are Still Getting Away With a Lot

Yves Smith, financial expert and author of the influential blog Naked Capitalism, takes an in-depth look at the current state of the banking industry in the 37th episode of Boom Bust season 1. Despite reforms put in place after the 2008 financial crisis, Smith argues that banks are still getting away with a lot.

Smith begins by examining the issue of bank fines, which have reached record levels in recent years. While the fines may seem like tough penalties for bad behavior, Smith contends that they are actually just a cost of doing business for the banks. Because the fines are often a fraction of the profits that the banks earn from their illegal activities, there is little incentive for them to change their behavior.

Smith also delves into the issue of bank regulation, which she argues is still woefully inadequate. Although reforms such as Dodd-Frank have been put in place to rein in the excesses of the banking industry, Smith contends that these reforms have been watered down and loopholes have been introduced that allow banks to continue their risky behavior.

Furthermore, Smith points out that there are still many systemic risks in the banking industry that have not been adequately addressed. For example, the too-big-to-fail problem has not been solved, which means that taxpayers are still on the hook for bank bailouts in the event of another financial crisis.

In addition to these systemic risks, Smith also looks at specific issues in the banking industry, such as the manipulation of LIBOR and other benchmark interest rates. She argues that the banks responsible for these manipulations have not been held fully accountable for their actions, and that the lack of consequences sends a signal to other banks that such behavior is acceptable.

Smith concludes by calling for more radical changes to the banking industry, such as breaking up the big banks and introducing a financial transaction tax. While these may seem like drastic measures, Smith argues that they are necessary to prevent another financial crisis and to hold the banks accountable for their actions.

Overall, Yves Smith's analysis of the banking industry in this episode of Boom Bust season 1 is both comprehensive and insightful. She makes a compelling case that the current regulations and penalties are not enough to rein in the excesses of the banking industry, and that more drastic measures are needed to protect the financial system and the taxpayers who support it.