What you're talking about basically is about lack of government control over banking practices.
Remember, in this country, all the banks are private institutions (i.e. property of wealthy capitalists).
No, I'm talking about central banks like the Federal Reserve.
I realize that you are. But the Federal Reserve bank can only operate within the framework provided by law.
I wouldn't question that. But a company's worth is not the amount of cash it has. The worth of anything
is the price someone would be expected to pay for it at a given time. For a company, that worth probably
is the present value of all its assets: cash, properties, merchandise, expectations of further profits,
etc. And that still all depends on the stock market -- the owners of many companies have lost millions,
if not billions, overnight when it happens that no one wants to own them. I have a game that I had my
students play in which they got to invest in a company, and depending on who they were looking to for
advice, the day came when the value of the stock plummeted and the shareholders lost everything and the
bank collapsed. And the money hadn't disappeared -- it ended up all in the hands of two kids who knew
most about how to manage their investments.
You're right, but it's not because of the Federal Reserve bank. It's because the legislators (who are
frequently wealthy, AND beholden to even wealthier lobbyists) enact legislation that promotes the
(capitalist) interests of the wealthiest supporters -- among them, bankers. This is largely through
tax incentives, tax loopholes, etc. etc. that ends up meaning that such wildly rich companies as
Amazon end up paying no taxes at all -- Trump among them apparently.
Also, banks in this country are all privately owned. By coincidence they also fail -- as they did
a decade ago. But before they fail, the private interests can legitimately siphon fortunes out of
the corporation so they make money off the company's failure. (Trump has bragged about this a number
of times). They have been allowed to give mortgages to people who cannot repay them, and then they
can foreclose on the property and sell it for more than they originally financed the property for.
There can be laws to prevent this greedy exploitation of the capitalist principles, but they keep
eroding the regulations without most people realizing it, until another crisis occurs. Americans
have come to expect that the government will bail out the big banks when they fail -- at the expense
of the average taxpayers.
They don't. I've been saying that for 30 years.
In Canada, banks don't fail. They are all charter banks, and the law requires that they maintain
enough assets to cover all liabilities. The market economy is great, but somewhere along the line
there have to be protections from the greed of capitalist interests. It was one of the reasons
for the fall of the Roman Empire. Slaves and paupers are death to healthy economies -- no matter
who lives in the ivory towers.