Tags: Morici | big | banks | regulate

Morici: Big Banks Are ‘Too Big to Effectively Regulate’

Monday, 12 Nov 2012 08:01 AM

By Peter Moses

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President Barack Obama needs to rein in big banks, lower healthcare costs, take on the enormous trade deficit and compromise on domestic energy if he wants to have a successful second term and not be stuck in the morass that marked the past four years, Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland, told Fox Business Network.

Regarding the fast-approaching fiscal cliff, Morici believes a compromise will be made, but “the question is do we have a bad deal,” he said in response to New York Times columnist Paul Krugman, who wrote that the country should go over the fiscal cliff.

“Let's not make a deal,” Krugman wrote. Obama must stick to his guns and demand tax increases on the wealthy, which Republicans, who control the House, adamantly oppose, argued Krugman, a Nobel Prize winning economist.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

“In order to really tackle the deficit long term, we’re going to have to do something about entitlements,” Morici said.

“The president says he’s willing to compromise. Well now we’ll see. Is he willing to raise the retirement age? Is he willing to look at serious changes in Medicare and in his healthcare program?”

But there are also other headwinds for the U.S. economy.

“We didn't deal with the fundamental issues that caused the crisis, that caused us to get into so much trouble,” he explained.

“The real solution in the banks is not all of this excessive regulation, but to bust up the big banks. The fact is not only are they too big to fail, but because they're too big to fail, they're too big to effectively regulate. That's why there's no lending and they continue trading. You know with their profits down, bonuses will be up again for CEOs.”

Morici noted that the big banks, including Citigroup and JPMorgan Chase, need to start making loans in bigger numbers and should act responsibly, given how much bailout money the industry received.

The big banks “have abused the American economic system and they’re almost behaving like pirates right now stuffing their pockets,” Morici told Fox Business Network.

“It’s high time that we take a hard look as to whether banks, which are much like public utilities because we guarantee their solvency in the end, are behaving in a responsible way.”

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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