The serial disasters in the financial sector are coinciding with a key presidential campaign. But is it too much to expect the response to them to be bipartisan, on a par with that of Congress and the Bush administration immediately after Sept. 11? Apparently it is, judging from what House Speaker Nancy Pelosi, D-Calif., had to say about the action by the White House and Federal Reserve to loan $85 billion to American International Group, including: “This is their problem. This is their solution.” Besides, if people want to point fingers, as financial consultant Bert Ely told the New York Times, “there’s plenty of blame to go around.”
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260 Comments
There is a saying something to the effect … ordinary people make ordinary mistakes but people in high positions make extraordinarily humongous far-reaching disasterous mistakes.
That’s whats taking place in the financial markets today. Kind of like the old Shark movie, “we know the shark is out there, but don’t say anything so the people don’t panic.”
For myself, I have a small insurance policy with AIG, one of the world’s largest companies, which I have had for many years. Now, of course, I will have to cancel it.
So, heads should roll as soon as possible of those at the top who allowed this situation to happen.
SEC bans short selling
http://news.yahoo.com/s/ap/20080919/ap_on_go_ot/sec_short_selling
———-
A very good move at this point, although the long term is another matter.
It’s not a very “free-market” when they ban lawful ways to buy and sell. Ponzi-scheme.
I think Captain Kirk used this tactic, when the rules of the game are against you reprogram the game….
Welcome to the USSA
typical Pelosi…play the blame game instead of trying to do something positive about it. There are lots of people responsible for this mess…and now we can add Nancy Pelosi to this list, because as the old saying goes, “if you are not part of the solution, you are part of the problem.” And she is certainly not willing to be part of the solution.
It does seem as though Bernanke and Paulson are the heart of the response team. If the measures that they are taking calm things down, then perhaps job losses will be avoided.
“Financial mess no time for partisanship”
Well of course it is. The cons and their hands off no regulation policies caused this.
And NOW I hear John McCain railing against “unbridled greed”? Hell that is the core principle of the Republican party!
Get business OUT of government. Get government IN to buisiness!
BeeJay
Posted September 19, 2008 at 8:10 am | Permalink
“Financial mess no time for partisanship”
———————————-
When a libtard says this it means-
“It’s only a matter of time before they find out it’s our fault.”
Seems as if the Democrat Ruled Congress for the last two years has sat back waiting for disaster doing nothing so they can point fingers.
This didn’ build over night. Two years ago certainly the warning signs were there.
Why didn’t Congress “save” us?
Hey John McCain?
If you REALLY want to address “unbridled greed”?
Get us back the capital gains tax. Make greed a for taxes activity.
Doesn’t everyone wonder what the true state of the economy is? Not what has been engineered and distorted — that’s successfully hidden the truth.
What new privileges can be given to business? Don’t they deserve some more special treatment? Who can the taxpayers bail out today?
While average Americans choose between eating and electricity or buying medicine…
Gov’t is gonna fix it?
Hell, gov’t in large part CAUSED the problem in the first place. And no, it was not “deregulation,” that mythical enemy spied at every turn. Just the opposite.
It was, in large part, “moral hazard” with both Fannie and Freddie.
I’ll let that simmer for a while, while many of you go off to an economics text (or web site) to figure out what the hell that means.
The fact fo the matter is in nearly every case where there is a looming mess, when one digs under the surface, somewhere, there is a gov’t policy, passed with the best of intentions, that is the cause.
So speaks GMC from the comfort of HIS Government job where he misuses taxpayer paid time to post here!
From Boortz at Real Clear Politics.
Boortz as an attorney did closings on real estate deals. He understands the mess.
snip(read the whole thing)
Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics. Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed – and now we are left to enjoy today’s headlines.
So … why aren’t you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember … there’s an election going on. One candidate is decidedly anti-capitalist. Do the math.
http://www.realclearpolitics.com/articles/2008/09/the_rest_of_the_meltdown_story.html
And here’s a video dedicated to the “Conscience” of Fannie Mae. Special note and thanks to Barack Obama, the ‘driving force’ behind Fannie Mae changes, according to the Congressional Black Caucus.
http://www.youtube.com/watch?v=usvG-s_Ssb0
Oh, I think this is JUST the time for partisanship. Spin all you want, but the repukes were in charge while this mess was created. It’s regean redux. The same thing happened after a few years of reaganomics. Oil up? Check. Financial markets in meltdown? Check. Commodity prices higher than a mad cat’s back? Check. Interest rates to rise, and even leap higher? Check. Deficit completely out of control? Check. Government secrecy and corruption? Check. Every damn thing that came out of st. ronnie raygun’s reign is happening again.
You elect cons, this is what you get.
Exactly HOW MANY times do americans have to see this play out to get it? Does every generation have to learn that trickle down, supply side fairy tales result in economic disaster?
Apparently.
Just keep doing the same things, cons and voters who enable them. Dont expect different results if you keep doing the same things that dont work. Like a friend says, if you keep doin’ whatyer doin’, yer gonna get what you got. And… I cant imagine anyone but a true believer like paulie LIKES what we got.
Keep voting in the cons, in EITHER party, and you will keep getting economic meltdown, war, crumbling infrastructure, and the end of the “ownership” society.
But hey, we’re STILL safe from gay marriage…
Nancy Pelosi has no right to start blaming partisanship, she is their leader and she is the most partisan one of all. I mean really, turning off the lights and shutting down is a perfect example. It seems that is the way these dems run business. I say it’s time to get rid of Pelosi.
Glad to see that GMC70’s theological convictions are still intact, reality to the contrary. So evidently, according to GMC70, we HAVEN’T been on a “deregulation” binge for the last twenty-eight years.
The only “moral hazard” involved here, GMC70, is that of big capital holding the levers of government, and having access to bailouts from the Treasury. That, coupled with, yes, deregulation, gives us a Friday on which Rome burns.
It really is something to watch Republicans go for state communism in such a big way, though. If Nixon could go to China, I guess it is for Republicans to make the Federal government into the largest holder of private property.
BeeJay
Posted September 19, 2008 at 8:36 am | Permalink
So speaks GMC from the comfort of HIS Government job where he misuses taxpayer paid time to post here!
——————————
BJ, you’re an idiot libtard, but that was funny, I don’t care who ya are……..
BlueJay
Posted September 19, 2008 at 8:36 am | Permalink
So speaks GMC from the comfort of HIS Government job where he misuses taxpayer paid time to post here!
—————————————————-
And yet these are the same people you wish to bestow more power upon? LOL
Fannie and Fredie were at the end of the pike, they are victims of the wild wild west of financing mortgages.
Heh. Another legacy of the eighties will be farms auctioned on the courthouse steps. This is exactly what happened in the eighties. Grain prices jumped sky high, farmers planted fence row to fence row, grain prices fell, interest rates were over twenty percent, inputs like fertilizer and machinery were sky high, banks were failing and calling in loans, and…
you know the rest.
And oil led the bust out here. As a result of decreased DEMAND, not increased supply. It has taken over twenty years to bring the oil industry back out here. Just in time to kill it again. BIG oil doesnt like the little producers out here horning in on their good thing.
But hey, we’re still safe from Jimmy Carter.
Had we followed his lead, much of this trickle down disaster could have been avoided the FIRST time. And now? We cant even avoid the same disaster the second time.
American voters. As dumb as you think…
Is their ANY con lie, trick or scheme they wont fall for? I guess not.
B.J.
“The cons and their hands off no regulation policies caused this.”
I was going to ask you to explain that statement and back it up but I know you can do neither.
I’ve seen a lot of the usual Lefties try to blame this on “de-regulation”.
I’ve not seen one of you explain what you mean. Show me what regulation that was suspended by Republicans that would have prevented this.
#
ksfarmgrrl
Posted September 19, 2008 at 8:39 am | Permalink
But hey, we’re STILL safe from gay marriage…
=============================
Damn you lesbians, your the cause of automatic lawn sprinklers going off at unexpected times!
:)
Heckler,
“Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside.”
Oh. So Acme bank had no choice but to lie to Joe Homebuyer about the terms of the loan, to conceal balloon payments, and to under-sell the risks associated with ARM’s? All because Congress told them to increase the number of racial and minority homeowners?
Sorry Heckler. Boortz’s argument doesn’t follow–at all. The fact that Congress legislated to increase minority home ownership removes none of the culpability from the mortage industry for engaging in corrupt and predatory lending practices.
Raptor,
“Blame game” is all one ever hears from Republicans when there’s responsibility to be taken. Man up, for once.
Oh, and by the way, where’s Bush?
“While average Americans choose between eating and electricity or buying medicine…”
Let me finish that for you, Linda.
While average Americans choose between eating and electricity or buying medicine…they STILL stagger to the polls to vote republican!
You just cant make this stuff up!
Reminds me of the joke about Ellis county. That voters there will vote against liquor as long as they can still stagger to the polls and pass out afterwards…
Oh. So Acme bank had no choice but to lie to Joe Homebuyer about the terms of the loan, to conceal balloon payments, and to under-sell the risks associated with ARM’s? All because Congress told them to increase the number of racial and minority homeowners?
—————————————————-
Or maybe Joe Homebuyer was too stupid or is it retarded to investigate some of the terms and ask questions about?
We bought a new home last year and the amount we qualify for I would never consider buying. I don’t see how its mine or the Governments problem that someone else isn’t smart enough to figure that out for themselves.
Heckler,
You want “deregulation?” Here are some prime examples of how deregulation helped to manufacture the current crisis.
“Deregulation and the Financial Crisis
by Robert Weissman / February 1st, 2008
It would be nice to write off the current crisis on Wall Street and global financial markets as something that only matters to the investor class.
Unfortunately, the effects are already being felt in lower-income communities around the United States. Worst-case scenarios for what spins out from the US mortgage meltdown are truly frightening — a severe world recession is a distinct possibility.
Whether such worst-case scenarios can be averted, or softened — and preventing the recurrence of similar crises in the future — depends on abandoning the laissez-faire financial regulatory regime entrenched over the last decade.
The current crisis is the predictable (and predicted) result of a massive US housing bubble, which itself can be traced in part to global economic imbalances that could have been prevented.
At least five distinct regulatory failures led to the current crisis.
Regulatory Failure Number One: Failure to Manage the US Trade Deficit
The housing bubble (as well as the surge in leveraged buyouts of publicly traded companies (”private equity”)) was fueled by cheap credit– low interest rates. One reason for the cheap credit was an influx of capital into the United States from China. China’s capital surplus was the mirror image of the US trade deficit — US corporations were sending lots of dollars to China in exchange for the cheap stuff sold to US consumers.
Regulatory Failure Number Two: Failure to Intervene to Pop the Housing Bubble
Along with an influx of capital, Federal Reserve policy kept interest rates very low. There were good reasons for the Fed Policy, but that did not mean the Fed was helpless to prevent the housing bubble. As economists Dean Baker and Mark Weisbrot of the Center for Economic and Policy Research insisted at the time, Federal Reserve Chair Alan Greenspan simply by identifying the bubble — and adjusting public perception of the future of the housing market — could have prevented or at least contained the bubble. He declined, and even denied the existence of a bubble.
Regulatory Failure Number Three: Financial Deregulation and Unchecked Financial “Innovation”
A key reason that mortgages were made available so widely and with such little review of recipients’ qualifications was a shift in which institutions hold the mortgages. Traditionally, banks made mortgages and held them. In the new era, banks and non-bank mortgage lenders made loans, but then sold the loans to others. Investment banks packaged lots of mortgage loans into “Collateralized Debt Obligations” (CDOs) and then sold them on Wall Street, with a promise of a steady stream of revenue from interest payments. These operations were pretty much unregulated. Despite the supposed sophistication of the investors involved, no one took account of how shoddy the loans were or — more fundamentally — the certainty that huge numbers would go bad if and when the housing bubble popped.
Regulatory Failure Number Four: Private Regulatory Failure
It was the job of ratings agencies (like Standard and Poor’s, and Moody’s) to assess the CDOs and give investors guidance on how risky they were. They failed totally, likely in part because they wanted to maintain good relations with the investment banks issuing the CDOs.
Regulatory Failure Number Five: No Controls Over Predatory Lenders
The toxic stew of financial deregulation and the housing bubble created the circumstances in which aggressive lenders were nearly certain to abuse vulnerable borrowers. The terms of your loan don’t matter, they effectively purred to borrowers, so long as the value of your house is going up. Lenders duped borrowers into conditions they could not possibly satisfy, making the current rash of foreclosures on subprime loans inevitable. Effective regulation of lending practices could have prevented the abusive loans, but none was to be found.
Unfortunately, the consequences of the mortgage meltdown go far beyond the foreclosure epidemic, as horrible a toll as that is taking. The entanglement of the financial sector with mortgage instruments, and the ripple effects of the housing bubble, has made lenders uncertain of who even among large corporations and financial institutions is credit worthy. The resulting credit crunch endangers the functioning of the global economy. Financial markets are guessing wildly about the prospects of banks, insurers and other financial corporations, and the plunging value of stocks poses immediate dangers to the real global economy.
Less acute, but probably more profoundly, the popping of the housing bubble is driving down home prices. US consumer demand over the last five years has been driven by consumers borrowing against the increased value of their homes; with housing values falling, that process is working in reverse. The depressed housing market is also ravaging the construction sector, a nontrivial portion of the US economy. A serious recession looms as a real possibility.
Mitigating these harms and preventing the worst now depends on active and interventionist government — a government stimulus plan, and aggressive efforts to force lenders to adjust mortgage terms and let people stay in their homes. Preventing financial panics of the kind now underway require new standards of transparency and regulation for high finance. The coming days and months will tell whether any lessons have been learned.”
[Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and director of Essential Action. Copyright © 2007 Robert Weissman Read other articles by Robert, or visit Robert's website]
http://www.dissidentvoice.org/2008/02/deregulation-and-the-financial-crisis/
KFG
“But hey, we’re still safe from Jimmy Carter.”
Jesus God, farmie, is your memory that short?
What killed the farmers was the Russian grain embargo coming at a time when they were extending themselves to meet new demand. I was there, I saw it. Just part of Carters legacy to this country.
This bushbubble has been on life support (read government welfare) for some time. And now we are surprised that the patient needs MORE life support?
let it die. Give it a decent internment. All the kings horses and all the kings men, wont bring Humpty to life again.
Maybe toby keith will write a song about how this financial mess is “courtesy of the red, white and blue” conservatives?
Nawwwwwww. He’ll be too busy counting HIS cash!
ksfarmgrrl
Posted September 19, 2008 at 8:55 am | Permalink
This bushbubble has been on life support (read government welfare) for some time. And now we are surprised that the patient needs MORE life support?
—————————————————-
Which begs the question why didn’t your Congress save us?
I thought that was what the election two years ago was gonna do?
Things were gonna be BETTER. Watch out Republicans, were coming home to roost and save the world!
At home things look alot worse to me.
“I was there, I saw it.”
I doubt very much, from that post, that you were “there” and “saw it”.
A drop in wheat prices was ONE factor, and no, I didnt agree with the Russian grain embargo. But…
What about interest rates at 21 percent? What about high input costs? What about high land prices?
There were a LOT of factors at play. ALL created by the raygun revolution. And it’s happening again. But please, feel free to keep your head in the warm sand.
Or up your ass, if it’s warmer there….
“While average Americans choose between eating and electricity or buying medicine…”
——–
Linda = Drama queen
Oh, and did I mention bank failures in the eighties as one of the main reasons farmers went broke? FDIC was the biggest hiring block for folks who graduated from college when I did. A lot of my peers had their first jobs with FDIC. And those jobs were NOT to help the farmers, but to straighten out the banking messes.
Deregulation at work. And we’re seeing it again.
Tell me heckler, do you have NO memory? Or just selective memory?
…and does anyone remember the first Black Monday? In October, 1987? During the… wait for it… REAGAN administration?
This past monday is already being dubbed Black Monday II.
And look who, once again, has been in charge. Another repuke presnit.
You guys are two for two. I hope you dont get another chance to make it three for three.
Kia, if you notice, I am ranting about CONS. And they come from both parties. I’m no fan of pelosi and reid. The MIC and big money own BOTH parties.
But this deregulation frenzy has got to stop. And you know it. You think REPUKES will stop it? Hell, they invented it and make it their mantra since 1980.
Heheheh. What color is the sky in YOUR world?
How are things out in california? Is the republican governator making things better for you?
Former Fannie Mae chief Mudd calls the Congressional Black Caucus, and Obama, “The conscience of Fannie Mae”
http://www.youtube.com/watch?v=usvG-s_Ssb0
“I don’t see how its mine or the Governments problem that someone else isn’t smart enough to figure that out for themselves.”
Agreed. So.. why are we bailing out these dumb assed bankers and mortgage people who were so stupid they thought these loans would NOT go bad?
cons. The party of corporate welfare.
You dont mind giving away taxpayer money, as long as it goes to bail out BUSINESS stupidity, not people.
Typical.
JWink
All insurance is state regulated.
There is a “seperate account” for insurance reserves, which can not be invaded or used by other branches of the company.
Also, there is a Kansas fund, that all policies pay into, that should be enough to cover any losses, if they did happen.
Repubs. went from Greed is Good, to Greed is Great. This is what happens when you put the kids in charge.
Its going to take a while to clean up and pay for their messes.
Chuckle… This meltdown wasn’t even close to 1987. Just checked the ticker and we are now over 700 points up the last two days.
I know, bad economic news is cheered by Obama and the ‘crats. It makes it easier to demagogue.
KFG
“What about interest rates at 21 percent?”
That’s what Reagan inherited from Carter. They were that high when Carter left office. Reagan had to deal with it.
“What about high land prices?”
That was the market Farmie, farmers were buying every scrap of land they could find because wheat was over $5 a bushel. They were plowing up square miles of hilly pasture land in eastern Colorado that should have never been broken. I remember a stretch along highway 36 were one outfit tore up about 10 miles of pasture along the road. Stuff you couldnt drive an empty wheat truck over let alone a full one.
Carter and his policies killed all those farmers, my neighbors. I saw the auctions, I saw my neighbors puking their lunch up wondering how they were gonna pay for that new Steiger they bought when wheat dropped to $2.50 and less.
Where was your brain in 1980 KFG?
…and make no mistake about it. We are not bailing out people here. We are bailing out big business.
WTF? They didnt know that if they loaned money on unverified income with unverified collateral and a big balloon payment and ever escalating interest rates, the loan would go bad?
Or maybe those dumbassed businesses JUST KNEW you cons would rush to their aide when the loans went bad?
Talk about moral hazard. What incentive do financial institutions have to behave responsibly when YOU intervene in the markets and insulate them from the consequenses of their actions?
The answer, since you are clearly too stupid to live, is NONE!
You want free markets? Fine. Then be prepared for the consequenses. Sans taxpayer bailout.
“You think REPUKES will stop it? Hell, they invented it and make it their mantra since 1980.”
The story told in great detail in the excellent book “The Wrecking Crew how conservatives rule” by Thomas Frank.
As long as cons have ANY hold on our government? I vote no confidence in the United States of America. I am ashamed of the nation the cons are handing my kid.
What killed the farmers was the Russian grain embargo coming at a time when they were extending themselves to meet new demand. I was there, I saw it. Just part of Carters legacy to this country.
You really think a friggin’ grain embargo cause the mass failure of family farms we saw throughout the 80’s?
William Greider, writing in 2000 (yeah, it was in the Nation–so what–refute the factual assertions, if you can):
Sector by sector, four firms control 82 percent of beefpacking, 75 percent of hogs and sheep, and half of chickens. Major supermarket chains are now concentrated regionally, though not nationally. Four firms hold 74 percent of market control in ninety-four large cities; experts anticipate a new merger wave that could swiftly increase that percentage while doubling the four firms’ overall national concentration up to 60 percent. And so on. As antitrust theory would predict, this kind of market leverage ought to give companies a pricing advantage over farmers and ranchers, and it has, according to Wisconsin law professor Peter Carstensen. The spread between prices paid for livestock and the wholesale price of meat has widened in the past few years by 52 percent for pork and 24 percent for beef, he reported.
Yet these extraordinary levels of concentration unfolded without government opposition. The consolidation quickened after Ronald Reagan’s antitrust division at the Justice Department swept away the old rules and thresholds for opposing mergers and takeovers. Reagan’s lawyers effectively gutted the theory with a narrow laissez-faire interpretation that declared bigness no longer a problem if it could not be proven, in advance, to distort consumer prices. Cheap food was consecrated as the only issue that matters to the public. The Clinton Administration, notwithstanding its activism against Microsoft, has been generally passive on big mergers of all kinds and nearly as pliant as the Reaganites were (among leading seed companies, sixty-eight acquisitions occurred between 1995 and 1998). Consumers may judge for themselves whether they have benefited at the checkout counter.
http://www.thenation.com/doc/20001120/greider/3
It’s more like acme couldn’t find enough buyers for their mortgage products, so they kept loosening and loosening the requirements. But what did acme care, they would package up the hot potatoes and send them down the pike at a tidy profit.
I was farming in 1980. And working in the local bank, with my newly minted degree in Banking and Finance. While my peers were working for FDIC and shutting down banks.
Dont lecture me heckie. That land was broken out as a result of USDA ending regulations on what could, and could not be cultivated. Interest rates shot up after usery laws were repealed. More deregulation. Yet another legacy of the raygun administration and it’s war on red tape.
Keep posting that revisionist crap heckie. You are showing all the world how dumb cons really are.
And why their failed policies should not be given a THIRD chance to fail.
Phantom
WRONG!
Fannie and Freddie actually got involved in hedging and in buy mortgages, with subsidized FED money, from their friends at Country Wide and other places.
Fannie and Freddie drifted FAR away from their original intent and charter.
Fannie and Freddie, with the help of the Congressional Black Caucus, Barnie Frank and Chris Dodd CAUSED this mess.
outlander Posted September 19, 2008 at 8:58 am
Linda = Drama queen
————
outlander,
Does categorizing another make your day more pleasant? Does it make you superior in some way?
I suspect heckie wasnt even out of high school back then, Rage. All he knows is what he learned in Sunday school and from the bitchin’ of old time farmers.
He still believes the swift boat lies, so what do we expect?
Chuckle… This meltdown wasn’t even close to 1987. Just checked the ticker and we are now over 700 points up the last two days.
Thanks for that glowing endorsement of Reaganomics.
Funny how Fannie and Freddie functioned fine until the Repubs. got things deregulated. The only reason people are pushig the fannie and freddie line is because there’s some teneous connection to Obama. What does Fannie and Freddie have to do with the mortgages made, or to the other financial firms that have been dropping like flies?
Which begs the question why didn’t your Congress save us?
While not being privy to all legislators thoughts during the whole time, I don’t find it hard to conceive of things getting a whole lot more messed up in 6 years than can possibly be cleaned up in a year and a half.
And I have come to believe that paulie really IS that stupid. I used to think he just had a kookaide hangover. But now?
He really is that stupid…
Linda: If you don’t want people to comment on your silliness, don’t post it. I tried to do it in a gentle way. How you take it, is up to you.
CF
You libs used to take lenders to court for “red-lining” or turning down loans.
Now, you libs take lenders to court for “predatory lending” —
Either way, you punish business for making decisions that GOVERNMENT and economics would dictate.
However, GOVERNMENT decided to throw economics out the window, and encourage every loan possible.
CF
“Regulatory Failure Number Three: Financial Deregulation and Unchecked Financial “Innovation” ”
This is the part I want explained CF. Unfortunatly your cut and paste doesnt really do that.
The rest of Weissmans piece has nothing to do with the evil “Republican Deregulation”.
I suspect heckie wasnt even out of high school back then, Rage.
That would be correct.
I did not serve. I was to young for Vietnam, when I was old enough I considered it, no one tried to talk me into it, my Dad talked me out of it, it wasnt “cool” at the time…etc. By Gulf War 1 I think I was pushing 30 and figured it would be over before I got out of Basic, which I wasnt sure I could make it through anyway.
http://blogs.kansas.com/weblog/2006/05/does_bush_have_/#comment-47887
If things are so rosy, outie, why are the taxpayers bailing out big business from their bad decisions? The market is UP because, once again, those anti government repukes have bailed out more failing private concerns.
Moral hazard indeed. The market drops on truth, and rises on government handouts. Nice system you cons have worked out.
How’s it gonna work when mcsame re-regulates, as he promises?
Or is he just lying too?
Big eye roll.
I don’t recall the 1987 crash losers having to be bailed out by the govt.
Countrywide was a product of deregulation, went from small time to a mortgage giant, making outlandish ads on the tube.
No credit, No money, No problem, get you piece of the American Dream today, call 1-800-yourscrewed.
Congress couldn’t save us because of the obstructionist repubs. America won’t repeat that mistake.
Heheheh. Regarding paulie’s 9:18 post…
See? He really IS that stupid!
What other lame excuses do you have in that bag of tricks?
Redlining had to do with turning down QUALIFIED borrowers. There was NOTHING in the Community Reinvestment Act that forced lenders to make bad loans. They were just encouraged by the republican history of bailing out stupid lenders.
And right on cue, you guys want to do it again.
Helping real people = bad
Helping big business and artificial people = good.
only in con world…
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
The United States Senate
May 25, 2006
Section 16
Record Text
Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16
http://finance.yahoo.com/echarts?s=^DJI#chart1:symbol=^dji;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
————–
Taking the long view, these are just blips along the road up, as this chart demonstrates. And the chart changes scale as it goes up or it would be much more dramatic.
Try again on chart.
http://finance.yahoo.com/echarts?s=^DJI#symbol=^DJI;range=my
KFG
BULL
In fact, YOU told all of us, several months ago, that this mortgage mess did not even involve low income people, but instead, involved upper class income households who bought too much house.
Perhaps, a small portion of the problem, but YOU have always been way off base on this subject.
You do not have a clue what you are talking about.
“America won’t repeat that mistake.”
You optimism is so cute, Phantom. But take a look at the polls. PT Barnum was right. There IS a sucker born every minute. They are called american voters.
ksfarmtrsh- Or maybe those dumbassed businesses JUST KNEW you cons would rush to their aide when the loans went bad?
————————————————-
Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs.
Lawmakers defended the donations and insisted that they did not influence their votes.
The mortgage giants spread their cash evenly: Democrats got 51% and Republicans 49%. Top lawmakers got top dollar.
In the House, Majority Leader Steny Hoyer, D-Md., $51,500; Speaker Nancy Pelosi, D-Calif., $47,000; and Majority Whip James Clyburn, D-S.C., $26,000
Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million.
A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.
No time for partianship……..eh?
Now remember, he’s only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry — decades in the Senate — and Chris Dodd, who is chairman of the Senate Banking Committee.
KFG
“I was farming in 1980. And working in the local bank, with my newly minted degree in Banking and Finance” ”
Then how can you possibly have forgotten what interest rates were like when Carter left office?
“While my peers were working for FDIC and shutting down banks.”
And they were shutting down banks why? Because of Reagans policies? In 1980? And I’m a dumb CON!
Lehman Brothers worked closely with Al Gore, on the whole, fraudulent, “carbon credits” idea.
Lehman Brothers gave hefty contributions to liberal causes.
Lehman Brothers gave its larges political contributions to Obama, Dodd and Barney Frank.
Fannie and Freddie siphoned off MILLIONS of dollars, to pay very high salaries to Democrats who ran those organizations.
Fannie and Freddie gave HUGE political contributions to Obama, Dodd, Frank, the Congressional Black Caucus and other Democrats.
Country Wide had very high profile Democrats, in management.
Among the Senate leadership, Majority Leader Harry Reid, D-Nev., received $71,499.
Fannie and Freddie’s PACs showered nearly $792,000 on members of the House Financial Services Committee, which has jurisdiction over the mortgage titans.
KFG
“He still believes the swift boat lies”
T. Boone still hasnt had to pay out that reward for proving a Swift Boat “lie”.
KFG
Say why havent you tried to collect on T. Boones offer? Oh, that’s right. They werent lies.
No time for partianship……..eh?
Actually, those of us who have been awake the past 28 years have been more than happy to (repeatedly) point out the complicity of many Democratic pols in enacting befanged-conservative policies.
You just haven’t been paying attention.
biASSED one, who privatized fannie and freddie? When they were government entities, they were not even allowed to make contributions. Now? You see the results. Bailout, with no consequenses for bad behavior. Courtesy of the red, white and blue cons.
And you know I dont like obama. So dont even put those words in my mouth. I hate CONS. Of both parties.
And it was republican CONS who privatized fannie and freddie. Under bushco. And while the game was enabled by the cons in congress, the party went on unabated.
Now you cons want to take my taxpayer money, not just for your war of choice, but to bail out the beneficiaries of YOUR failed economic policies. Welfare for the rich = good in your world.
And I believe the voters are just dumb enough to fall for it. Again.
I actually think this whole mess is funny. All the laws and rules slanted so they could lie, cheat, and steal to their hearts’ content, and they still lost money hand over fist.
Yep, definately the elite. Glad it has no effect on me. My taxes would go up either way.
Obama is a real estate or finance expert?
http://www.youtube.com/watch?v=jOFT8jtuVpo
See? Like I said, heckie still believes the swift boaters. And pickens’ lie that he would pay a reward when the lies were proven to be lies.
And you want people like heckie to be in charge of government and the financial markets?
No wonder we need so many bailouts. The create their own “reality”. Truth be damned.
heheheheheheheh. HAHAHAHAHA. HEE HEEHEEEEEEEE.
nitwits
“Linda: If you don’t want people to comment on your silliness, don’t post it. I tried to do it in a gentle way. How you take it, is up to you.”
——
outlander, I think if what you want out of blogging is to comment on individual posters then that’s what you should do. It’s your blogging experience. You’ve gotta go with what you’ve got!
If I am your target of the day / week / longer, I can certainly handle that easily. If you spread around your comments on posters to include others, while we carry on discussing ideas, what’s happening in the world and how we think about those happenings, I’m sure everyone else will also be able to handle that easily.
Have a really great day!
Notice, when liberals say that conservatives have told “lies” it is always a very vague charge.
If they get specific, we can easily prove that liberals are not telling the truth!
KFG
“The create their own “reality””
You should know all about that.
Carry on.
“And they were shutting down banks why? Because of Reagans policies? In 1980? And I’m a dumb CON!”
Thanks for admitting you are a dumb con.
And no, the bank shutdowns didnt begin until the mid eighties. They certainly didnt begin in the Carter administration. I know. I was there.
And you? Still in high school?
“dont know much about history”…
Dumb AND a liar!
Rags- Democratic pols in enacting befanged-conservative policies.
You just haven’t been paying attention.
——————————————
Republican make vote acting lib voo doo. fanged swift inaction bank fervor.
Actually,
Savings and Loans were doomed to fail.
There was very little “criminal” involvement, in that failure. We just heard about the crimes because of all the audits that had to take place, post failure.
The deregulation of interest rates was a good idea. However, we put the S and L’s in a position of borrowing money at higher rates than what the could lend it back out.
Buggy Whip makers did not go broke because of crime.
kscarpetmuncher- And while the game was enabled by the cons in congress, the party went on unabated.
—————————————–
On April 12, 2007, U.S. Senators Chuck Hagel (R-NE), John Sununu (R-NH), Elizabeth Dole (R-NC) and Mel Martinez (R-FL) introduced S. 1100, the Federal Housing Enterprise Regulatory Reform Act of 2007. The bill is similar to the House bill with notable exceptions including that it would: (1) provide the regulator greater authority to restrict the GSEs’ portfolios; (2) require registration of the GSEs’ debt and mortgage backed securities; (3) include improved provisions to ensure that the GSEs carry out their secondary market missions; and (4) exclude establishment of an affordable housing fund..
So what, bush/repubs. wanted to privatize the gse’s for the longest time, puppet mccain tried to make it happen. End of story, no visionary there. And, who would benefit if the gse’s were broken up? Why none other than the non-bank banks, and financial speculators.
I’m not impressed by mccain’s little bill, I am impressed by the bill Americans will have to pay to clean up this deregulation fiasco.
KFG
Your the one that said they were shutting down the banks in 1980″
“I was farming in 1980. And working in the local bank, with my newly minted degree in Banking and Finance. While my peers were working for FDIC and shutting down banks.”
And you call me “Dumb AND a liar!”
#1 and #2 in the Leftist manual of debate. When losing call your opponent #1 Dumb and #2 A liar.
What did I lie about KFG?
Hey! I got it!
Abolish the Federal Reserve System and allow the government to issue money interest free.
The Federal Reserve Bank must fall, its mistakes are finally being magnified. I just hope most are smart enough to connect the dots.
Federal Housing Enterprise Regulatory Reform Act of 2007.
Last Action: Apr 12, 2007: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Chairman- Christopher Dodd (D)CT.
Thanks for nothing demorats.
Why is no one talking about the abolishment of the Federal Reserve System?
They are the root cause. I say you cut the beast head off and get back to building America’s wealth again.
Your the one that said they were shutting down the banks in 1980?
No, actually, Heckler, apparently your inability to grasp context is the culprit. Mentioning her farming past in 1980 was to refute “I was there.” The next statement did not claim that it happened in the 80s.
A paragraph break might have made it more clear, but those of us without reading comprehension issues got what she was saying (a little knowledge of what actually happened helps).
er, 1980. . .
Phanatic- I’m not impressed by mccain’s little bill.
——————————-
I know what you mean, trying to address a problem like the current finacial crisis…..
Is just dumb, mccain wasting his time like that, he should have teamed up with the One on HIS meaningful bills….
S. 1790: Communities of Color Teen Pregnancy Prevention Act of 2007
S. 1713: A bill to provide for the issuance of a commemorative postage stamp in honor of Rosa Parks.
S. 1513: Predominantly Black Institution Act of 2007
S.Con.Res. 5: A concurrent resolution honoring the life of Percy Lavon Julian, a pioneer in the field of organic chemistry and the first and only African-American chemist to be inducted into the National Academy of Sciences.
S.Con.Res. 46: A concurrent resolution supporting the goals and ideals of Sickle Cell Disease Awareness Month.
S.Res. 383: A resolution honoring and recognizing the achievements of Carl Stokes, the first African-American mayor of a major American city, in the 40th year since his election as Mayor of Cleveland, Ohio.
S.Res. 600: A resolution commemorating the 44th anniversary of the deaths of civil rights workers Andrew Goodman, James Chaney, and Michael Schwerner in Philadelphia, Mississippi, while working in the name of American democracy to register voters and secure civil rights during the summer of 1964, which has become known as “Freedom Summer”.
Now THAT is some MEANINGFUL legislation!
Bahhhhhhhh……….
Bahhhhhhhh……….
Rage
Go away. Save some quotes for another day. Three or Four years lets say.
Thanks rage. His comments are generally too stupid to warrant response. Like I said, he still believes the swift boat lies, so…
Never try to teach a pig to sing. It wastes your time and only annoys the pig.
Spin away boys. I have work to do today. Farm work, ya know?
kfg
What did I lie about?
“S. 2280. A bill to stop transactions which operate to promote fraud, risk, and under-development, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.
Mr. OBAMA. Mr. President, today, I am introducing new legislation to address a growing problem in our country, one that is robbing thousands of Americans of their dream of homeownership, and costing the mortgage industry hundreds of millions of dollars each year.
I am talking about the problem of mortgage fraud–the practice of defrauding individuals of their rightful property, and using tricks and schemes to steal from banks and other financial institutions. Mortgage fraud comes in a variety of forms, from inflated appraisals to the use of straw buyers, but the net result is the same: financial institutions lose out to the tune of approximately $1.01 billion each year, and consumers lose their savings, their good credit, and their homes.
Although the data in this area is limited, mortgage fraud is clearly on the rise. According to the FBI, mortgage fraud cases were up 25 percent last year, and 400 percent since 2002. Further, in 2004, the mortgage industry noted 12,000 cases of suspicious activity, three times the amount reported in 2001. This is due largely to the housing boom which is driving up housing prices across the country. Nearly $2.5 trillion in mortgage loans were made during 2005, and the number is only expected to rise this year.
But mortgage fraud is about more than just dollars and statistics; it’s about real people, real homes, and real lives. My hometown Chicago Tribune has featured a series of articles about mortgage fraud in Illinois, which, along with Georgia, South Carolina, Florida, Missouri, Michigan, California, Nevada, Colorado and Utah, is among the FBI’s top-ten mortgage fraud `hot spots.’
The stories highlight, for example, the plight of the good folks on May Street in Chicago, who saw a block’s worth of homes go boarded up in the span of a just few years, as swindlers
[Page: S1178] GPO’s PDF
racked up hundreds of thousands of dollars in bad loans, and left shells of houses behind. The Tribune stories highlighted the plight of 75-year-old Ruth Williams, who had to spend her personal funds to clear the title to her home after fraudsters secured $400,000 in loans on three buildings they didn’t own. And two doors down from Ms. Williams, Corey Latimer can’t sell his building or borrow against it, because a lending company hasn’t released a phony mortgage that Corey didn’t authorize.
Law enforcement, consumer groups and many in the mortgage industry are doing what they can to combat fraud, and I applaud their good work. Now, Congress needs to come to the table and do its part.
I, along with Senator Durbin and Senator Menendez, am introducing the STOP FRAUD Act today to address the critical problem of mortgage fraud. STOP FRAUD (Stopping Transactions which Operate to Promote Fraud, Risk and Under-Development) would provide the first Federal definition of mortgage fraud and authorize stiff criminal penalties against fraudulent actors. STOP FRAUD requires a wide range of mortgage professionals to report suspected fraudulent activity, and gives these same professionals safe harbor from liability when they report suspicious incidents. It also authorizes several grant programs to help State and local law enforcement fight fraud, provide the mortgage industry with updates on fraud trends, and further support the Departments of Treasury, Justice and Housing and Urban Development’s fraud-fighting efforts.
The STOP FRAUD Act will build upon the good work of the FBI, the Treasury Department, HUD, consumer groups, many in the mortgage industry, and State and local law enforcement, giving them the tools they need to stop mortgage fraud in its tracks. The cost of this bill is well worth the benefit to American taxpayers and companies, and it has been endorsed by a range of law enforcement and consumer groups. The Illinois Attorney General’s office and the Chicago Police Department have told me how valuable this bill would be to their enforcement efforts, and ACORN, the Center For Responsible Lending, the National Association of Consumer Advocates, the National Community Reinvestment Coalition, National Consumer Law Center, and U.S. PIRG said in a recent letter that this bill would “help protect consumers from fraudulent and abusive practices in the mortgage industry.”
The STOP FRAUD Act is a tough, cost-effective, and balanced way to address the serious problem of mortgage fraud in our country. I urge my colleagues to join me in this important effort.”
http://thomas.loc.gov/cgi-bin/query/F?r109:4:./temp/~r109DDcsla:e4506:
“crickets”
P.S. That was on the U.S. Senate floor, February 14, 2006.
“Why is no one talking about the abolishment of the Federal Reserve System?”
Because something that’s been around since 1913 is not likely to be the cause of a housing melt-down in 2008.
What caused the housing bubble and crash was de-regulation in 1999.
It was part of Reaganomics–Less gov’t in business, more business in gov’t.
Now Rhonda asking for “bipartisanship.” No thanks.
The cure is to destroy the Republican party as it stands now.
Then we can talk about bipartisanship.
BTW, AustrianEconomist,
Did they teach you at that non-accredited college in Alabama why this famous Austrian’s (Von Mieses or whatever) economic policies are not followed anywhere in the world, including his home country of Austria?
Heckler,
Ever heard of the Glass-Steagall Act of 1999?
“Sin Seven: Repeal of the Glass-Steagall Act. This action, in 1999, was one of two major cases when a cornerstone of New Deal regulation was explicitly repealed. (The other was the repeal of the Public Utility Holding Company Act, and if your utility rates are sky-high, you can thank Congress for that, too.) Glass-Steagall provided that if you wanted to speculate as an investment bank, good luck to you. But commercial banks were part of the banking system. They created credit. They were regulated, supervised, usually enjoyed FDIC insurance, and had access to advances from the Fed in emergencies. So commercial banks and investment banks were two different creatures that should stay out of each other’s knitting.
But beginning in the 1980s, regulators who didn’t believe in regulation either allowed explicit waivers of some aspects of Glass-Steagall or looked the other way as commercial banks and investment banks became more alike. By 1999, when Citigroup had jumped the gun and assembled a supermarket that included a commercial bank, investment bank, stock brokerage, and insurance company, Glass Steagall was so hollowed out that it was effectively dead. The coup de grace was its official repeal, in the Gramm-Leach-Bliley Act. That’s Gramm as in former Sen. Phil Gramm, a deregulation zealot and top adviser to John McCain. ”
And then there’s the more general erosion of regulatory standards within the Securities markets.
“Sin Six: Failing to Regulate Hedge Funds and Private Equity. When Roosevelt’s New Deal acted to rein in the abuses in financial markets, it regulated the major players — commercial banks, investment banks, stock brokers, holding companies, and stock exchanges. But two of the biggest purveyors of risk today — hedge funds and private-equity firms — simply did not exist. Today, private-equity firms and hedge funds do most of the things banks and investment banks do. They basically create credit by making markets in exotic securities. They buy and sell firms. They speculate in financial markets with borrowed money, taking much bigger risks than regulated banks. According to House Banking Committee Chair Barney Frank, more than half the credit created in recent years has been created by essentially unregulated institutions. The people in charge of the government — conservative Republicans — took the view that these new-wave financial players offered transactions between consenting adults who needed no special consumer protection. But they were oblivious to the risks to the larger system.”
http://www.prospect.org/cs/articles?article=seven_deadly_sins_of_deregulation_and_three_necessary_reforms
I repeat: the problem is not too much regulation, but too little. Obvious to anyone without theological convictions to the contrary.
Great post, Rage.
I’m guessing that Bush vetoed Obama’s “stop mortgage fraud” act.
Swindlers are Bush’s “base.”
Here’s a long excerpt from Obama’s speech to the Wall Street crows at Cooper’s Union in March.
“I think all of us here today would acknowledge that we’ve lost that sense of shared prosperity.
This loss has not happened by accident. It’s because of decisions made in boardrooms, on trading floors and in Washington. Under Republican and Democratic Administrations, we failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practices. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.
Nor is this trend new. The concentrations of economic power – and the failures of our political system to protect the American economy from its worst excesses – have been a staple of our past, most famously in the 1920s, when with success we ended up plunging the country into the Great Depression. That is when government stepped in to create a series of regulatory structures – from the FDIC to the Glass-Steagall Act – to serve as a corrective to protect the American people and American business.
Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions began pushing for changes to this regulatory structure. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we’ve excused and even embraced an ethic of greed, corner cutting and inside dealing that has always threatened the long-term stability of our economic system. Too often, we’ve lost that common stake in each other’s prosperity.
Let me be clear: the American economy does not stand still, and neither should the rules that govern it. The evolution of industries often warrants regulatory reform – to foster competition, lower prices, or replace outdated oversight structures. Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading. There were good arguments for changing the rules of the road in the 1990s. Our economy was undergoing a fundamental shift, carried along by the swift currents of technological change and globalization. For the sake of our common prosperity, we needed to adapt to keep markets competitive and fair.
Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one – aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.
Deregulation of the telecommunications sector, for example, fostered competition but also contributed to massive over-investment. Partial deregulation of the electricity sector enabled market manipulation. Companies like Enron and WorldCom took advantage of the new regulatory environment to push the envelope, pump up earnings, disguise losses and otherwise engage in accounting fraud to make their profits look better – a practice that led investors to question the balance sheet of all companies, and severely damaged public trust in capital markets. This was not the invisible hand at work. Instead, it was the hand of industry lobbyists tilting the playing field in Washington, an accounting industry that had developed powerful conflicts of interest, and a financial sector that fueled over-investment.
A decade later, we have deregulated the financial services sector, and we face another crisis. A regulatory structure set up for banks in the 1930s needed to change because the nature of business has changed. But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.
Since then, we have overseen 21st century innovation – including the aggressive introduction of new and complex financial instruments like hedge funds and non-bank financial companies – with outdated 20th century regulatory tools. New conflicts of interest recalled the worst excesses of the past – like the outrageous news that we learned just yesterday of KPMG allowing a lender to report profits instead of losses, so that both parties could make a quick buck. Not surprisingly, the regulatory environment failed to keep pace. When subprime mortgage lending took a reckless and unsustainable turn, a patchwork of regulators were unable or unwilling to protect the American people.
The policies of the Bush Administration threw the economy further out of balance. Tax cuts without end for the wealthiest Americans. A trillion dollar war in Iraq that didn’t need to be fought, paid for with deficit spending and borrowing from foreign creditors like China. A complete disdain for pay-as-you-go budgeting – coupled with a generally scornful attitude towards oversight and enforcement – allowed far too many to put short-term gain ahead of long term consequences. The American economy was bound to suffer a painful correction, and policymakers found themselves with fewer resources to deal with the consequences.
Today, those consequences are clear. I see them in every corner of our great country, as families face foreclosure and rising costs. I seem them in towns across America, where a credit crisis threatens the ability of students to get loans, and states can’t finance infrastructure projects. I see them here in Manhattan, where one of our biggest investment banks had to be bailed out, and the Fed opened its discount window to a host of new institutions with unprecedented implications we have yet to appreciate. When all is said and done, losses will be in the many hundreds of billions. What was bad for Main Street was bad for Wall Street. Pain trickled up.
That is why the principle that I spoke about at NASDAQ is even more urgently true today: in our 21st century economy, there is no dividing line between Main Street and Wall Street. The decisions made in New York’s high-rises have consequences for Americans across the country. And whether those Americans can make their house payments; whether they keep their jobs; or spend confidently without falling into debt – that has consequences for the entire market. The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns. This thinking is wrong for the financial sector and it’s wrong for our country.
I do not believe that government should stand in the way of innovation, or turn back the clock to an older era of regulation. But I do believe that government has a role to play in advancing our common prosperity: by providing stable macroeconomic and financial conditions for sustained growth; by demanding transparency; and by ensuring fair competition in the marketplace.
Our history should give us confidence that we don’t have to choose between an oppressive government-run economy and a chaotic and unforgiving capitalism. It tells us we can emerge from great economic upheavals stronger, not weaker. But we can do so only if we restore confidence in our markets. Only if we rebuild trust between investors and lenders. And only if we renew that common interest between Wall Street and Main Street that is the key to our success.
Now, as most experts agree, our economy is in a recession. To renew our economy – and to ensure that we are not doomed to repeat a cycle of bubble and bust again and again – we need to address not only the immediate crisis in the housing market; we also need to create a 21st century regulatory framework, and pursue a bold opportunity agenda for the American people.
Most urgently, we must confront the housing crisis.
After months of inaction, the President spoke here in New York and warned against doing too much. His main proposal – extending tax cuts for the wealthiest Americans – is completely divorced from the reality that people are facing around the country. John McCain recently announced his own plan, and it amounts to little more than watching this crisis happen. While this is consistent with Senator McCain’s determination to run for George Bush’s third term, it won’t help families who are suffering, and it won’t help lift our economy out of recession.
Over two million households are at risk of foreclosure and millions more have seen their home values plunge. Many Americans are walking away from their homes, which hurts property values for entire neighborhoods and aggravates the credit crisis. To stabilize the housing market and help bring the foreclosure crisis to an end, I have sponsored Senator Chris Dodd’s legislation creating a new FHA Housing Security Program, which will provide meaningful incentives for lenders to buy or refinance existing mortgages. This will allow Americans facing foreclosure to keep their homes at rates they can afford.
Senator McCain argues that government should do nothing to protect borrowers and lenders who’ve made bad decisions, or taken on excessive risk. On this point, I agree. But the Dodd-Frank package is not a bailout for lenders or investors who gambled recklessly, as they will take losses. It is not a windfall for borrowers, as they will have to share any capital gain. Instead, it offers a responsible and fair way to help bring an end to the foreclosure crisis. It asks both sides to sacrifice, while preventing a long-term collapse that could have enormous ramifications for the most responsible lenders and borrowers, as well as the American people as a whole. That is what Senator McCain ignores.
For homeowners who were victims of fraud, I’ve also proposed a $10 billion Foreclosure Prevention Fund that would help them sell a home that is beyond their means, or modify their loan to avoid foreclosure or bankruptcy. It’s also time to amend our bankruptcy laws, so families aren’t forced to stick to the terms of a home loan that was predatory or unfair.
To prevent fraud in the future, I’ve proposed tough new penalties on fraudulent lenders, and a Home Score system that will allow consumers to find out more about mortgage offers and whether they’ll be able to make payments. To help low- and middle-income families, I’ve proposed a 10 percent mortgage interest tax credit that will allow homeowners who don’t itemize their taxes to access incentives for home ownership. And to expand home ownership, we must do more to help communities turn abandoned properties into affordable housing.
The government can’t do this alone, nor should it. As I said last September, lenders must get ahead of the curve rather than just reacting to crisis. They should actively look at all borrowers, offer workouts, and reduce the principal on mortgages in trouble. Not only can this prevent the larger losses associated with foreclosure and resale, but it can reduce the extent of government intervention and taxpayer exposure.
Beyond dealing with the immediate housing crisis, it is time for the federal government to revamp the regulatory framework dealing with our financial markets.
Our capital markets have helped us build the strongest economy in the world. They are a source of competitive advantage for our country. But they cannot succeed without the public’s trust. The details of regulatory reform should be developed through sound analysis and public debate. But there are several core principles for reform that I will pursue as President.
First, if you can borrow from the government, you should be subject to government oversight and supervision. Secretary Paulson admitted this in his remarks yesterday. The Federal Reserve should have basic supervisory authority over any institution to which it may make credit available as a lender of last resort. When the Fed steps in, it is providing lenders an insurance policy underwritten by the American taxpayer. In return, taxpayers have every right to expect that these institutions are not taking excessive risks. The nature of regulation should depend on the degree and extent of the Fed’s exposure. But at the very least, these new regulations should include liquidity and capital requirements.
Second, there needs to be general reform of the requirements to which all regulated financial institutions are subjected. Capital requirements should be strengthened, particularly for complex financial instruments like some of the mortgage securities that led to our current crisis. We must develop and rigorously manage liquidity risk. We must investigate rating agencies and potential conflicts of interest with the people they are rating. And transparency requirements must demand full disclosure by financial institutions to shareholders and counterparties.
As we reform our regulatory system at home, we must work with international arrangements like the Basel Committee on Banking Supervision, the International Accounting Standards Board, and the Financial Stability Forum to address the same problems abroad. The goal must be ensuring that financial institutions around the world are subject to similar rules of the road – both to make the system stable, and to keep our financial institutions competitive.
Third, we need to streamline a framework of overlapping and competing regulatory agencies. Reshuffling bureaucracies should not be an end in itself. But the large, complex institutions that dominate the financial landscape do not fit into categories created decades ago. Different institutions compete in multiple markets – our regulatory system should not pretend otherwise. A streamlined system will provide better oversight, and be less costly for regulated institutions.
Fourth, we need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don’t originate from banks. This regulatory framework has failed to protect homeowners, and it is now clear that it made no sense for our financial system. When it comes to protecting the American people, it should make no difference what kind of institution they are dealing with.
Fifth, we must remain vigilant and crack down on trading activity that crosses the line to market manipulation. Reports have circulated in recent days that some traders may have intentionally spread rumors that Bear Stearns was in financial distress while making market bets against the company. The SEC should investigate and punish this kind of market manipulation, and report its conclusions to Congress.
Sixth, we need a process that identifies systemic risks to the financial system. Too often, we deal with threats to the financial system that weren’t anticipated by regulators. That’s why we should create a financial market oversight commission, which would meet regularly and provide advice to the President, Congress, and regulators on the state of our financial markets and the risks that face them. These expert views could help anticipate risks before they erupt into a crisis.
These six principles should guide the legal reforms needed to establish a 21st century regulatory system. But the change we need goes beyond laws and regulation – we need a shift in the cultures of our financial institutions and our regulatory agencies.”
http://thinkonthesethings.wordpress.com/2008/03/27/video-barack-obama-speech-on-economic-issues-at-cooper-union-march-2008/
Heh, “crows” should have been “crowd,” but I like it better that way! ;)
“The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed – and now we are left to enjoy today’s headlines.”
Wow. Another “stab in the back” myth spun out as fact.
Trouble is, there is no evidence for it. How did “the politicians” (meaning a Republican President, a Republican House, and a Republican Senate for most of 2001-2006) force banks to make bad loans?
This might make sense if there were any evidence for it, which there isn’t.
*****
As for GMC self-aggrandizing use of the term “moral hazard,” dude, I don’t have to look it up. It’s exactly what the repeal of Glass-Steagall by McCain advisor and bank lobbyist Phil Gramm not only allowed by rewarded–passing the risks on to somebody else while keeping the profits for oneself.
Merging investment banks with saving neighborhood commercial banks allowed the speculators to loan themselves FDIC money among all kinds of other unregulated “securitizing” of blocs of mortgages.
Creating “moral hazard” is exactly what the Neo-CON crony-capitalism is all about.
You forgot this line Rage,
Obama: “I am ‘agin’ the Fannie Mae corruption, but I was ‘fer’ it first. It’s why I took bribes, er… lobbyist donations to make sure it doesn’t happen again without me benefiting from it first.”
http://politicalticker.blogs.cnn.com/2008/09/19/fact-check-did-obama-profit-from-fannie-and-freddie/#more-19364
A little something on receipts of contributions from the employees, et al, of Freddie Mac and Fannie Mae. Note that when directors, officers and lobbyists are included, Sen. McCain and his campaign didn’t exactly suffer.
Didn’t think you folks would understand “moral hazard.” Ignorance remains bliss.
“Moral hazard means that people with insurance may take greater risks than they would do without it because they know they are protected, so the insurer may get more claims than it bargained for.”
http://www.economist.com/research/Economics/alphabetic.cfm?letter=M
In other words, persons who are acting with other people’s money – where others take much if not all the risk – are less careful with their actions. We are always less careful when we’re playing with the house’s money (this, of course, is why, all other things being equal, gov’t will always be less efficient; it’s not their money). Except that you and I, here, were the house.
In this case, the “insurer” was the implicit backing of the US gov’t, and its policy of encouraging loans for a number of reasons – encouraging loans to the poor and minorities, boosting the home-building sector of the economy, to name a couple. The result was the belief that they were playing with other people’s money.
Unfortunately, the current actions to nationalize FAN/FRED will exacerbate this tendancy; it makes the implicit backing of the US Gov’t explicit, and makes it clear that key financial institutions are indeed playing on house money.
Add to that the tendancy of many to borrow more than the collateral would support (and the willingness of lenders to go along, offering “zero down” and loans for over 100% of value), expecting the rise in home values to cover their overreach. Homeowners were upside down on their loans from day one, but it was OK, for both buyers and lenders, as long as housing values continued to rise. But the bubble, eventually, had to burst. And since much of the system was backed by FAN/FRED, and FAN/FRED was playing with an implicit (now explicit) “insurer,” up and down the line, more risks were taken than prudence would dictate.
Moral hazard at work.
This is the result. Gov’t F-ed it up, gov’t, it appears, will have to fix it.
CraponAmerikkka
Posted September 19, 2008 at 10:27 am | Permalink
Great post, Rage.
I’m guessing that Bush vetoed Obama’s “stop mortgage fraud” act.
————————————–
Bush has vetoed 11 or 12 bills in 7 years, I doubt he vetoed that one….
Spends like a drunken libtard…..
Biass–
You bring nothing to the table except ankle biting.
If I don’t answer you in the future, it means I’m not reading you.
Outlander–
Your chart shows that the stock market historically goes up.
However, it’d be nice if you didn’t have to buy a stock in 1963 to see a real profit.
The last ten years have been pretty flat.
GMC70,
And Gov’t F-ed it up…how?
By abdicating its regulatory responsiblities, that’s how.
THAT was the trigger for the “moral hazard” by which the financial markets were allowed to play fast and loose with the knowledge that they’d be bailed out.
Without Gov’t to restrain them, did anybody think they would restrain themselves? Get a grip, GMC70; the invisible hand is a fiction. Markets don’t typically act in their own best interest; it’s not in their nature.
biased1, you are correct; the bill was never vetoed, as it never passed. Looks like it died in committee.
http://www.govtrack.us/congress/bill.xpd?bill=s109-2280
That “definition” of “moral hazard” you gave is more like an example, GMC.
Here’s a better definition.
Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.
From Wikipedia
This is exactly what repeal of regulation and no enforcement of regulation rewarded.
*****
As for the new CON myth that not only blames the victims of foreclosure and personal bankruptcy but also blames “the coloreds” (who it is tacitly implied “can’t handle money”) at the same time, do you have any evidence that “the government” pressured lending institution to hand out free money?
Not only do you not have any evidence, there’s another big flaw: why did the housing speculative bubble and crash happen within such a narrow time frame?
If your and Heckler’s “do-gooders stabbed-us-in-the-back” meme is right, this should have happened under Clinton or even Reagan-Bush.
So, now, after the enduring the most partisan regime in a long time, Rhonda wants bipartisanship. Fine. Here are McCain’s and Obama’s competing plans, from a few days ago, in their own words. Go read:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/18/AR2008091801718.html
http://blogs.suntimes.com/sweet/2008/09/obama_calls_on_federal_reserve.html
“Markets don’t typically act in their own best interest; it’s not in their nature.”
Exactly right, CF2K.
Investors and speculators act in what they perceive as their own best interests, but that rarely matches the best interests of the larger market or, even less, society in general.
One example, it’s not in the best interests of KG & E to switch from coal to solar and wind, even though the mercury pollution given off by coal that poisons children would be eliminated.
The shareholders as a group don’t care about pollution–they just want as much profit as possible, consequences be damned.
Actually, CF, players in markets generally act exactly in their own best interests. That may not be in other’s best interests, of course.
And the “invisible hand” works just fine; but we haven’t had anything approaching a truly free market for decades. And part of that free market is that failures fail. The highly regulated, centralized and controlled economy that Obama appears to advocate has historically been even more a failure. All economies are mixtures of the two; ours has historically been where private entities, acting in their own interests, have made decisions. Within limits, that works. Replacing private decision-making with gov’t decision-making will make the economy less productive, less efficient, and frankly gov’t more corrupt. When gov’t is making decisions that directly effect private actors to the tune of billions of dollars, you damn right that business will do all it can to influence those gov’t decisions.
No one here is arguing for laissez-faire unrestricted capitalism. That does not exist; it’s a theoretical ideal, not reality. And it has downsides that real societies are not willing to accept.
But gov’t regulation will be what it always is – captured by the very institutions it is intended to regulate. In part, that’s what has happened here.
Bottom line: I have little faith in the Federal Gov’ts ability to find it’s ass with both hands and a flashlight. And the unintended consequences, as usual, will eat up any intended benefits. You assume gov’t will work for the general good; I operate under no such illusion.
http://bigpicture.typepad.com/
I am having a hard time keeping up with all of the bailouts and special facilities created for dealing with this crisis. Am I missing any?
– Bear Stearns
– Economic Stimulus progam
– Housing Bailout Program
– Fannie & Freddie
– AIG
– No Short selling rules
– Fed liquidity programs (Term Lending facility, Term Auction facility)
– Money Market fund insurance program
– Special Loans for GM & Ford
– New RTC type program
If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists. Indeed, judging by the actions of the conservatives in power, and not the empty rhetoric that comes out of think tanks, the conservative movement has effectively turned the United States into a massive Socialist state, an appendage of Communist Russia, China and Venezuala.
GMC claims without evidence, And the “invisible hand” works just fine.
Would you say that we had more or less invisible hand in 1929 right before the Great Depression than we had in the decades of no depression?
Posted a few days ago, in case you missed it.
Let’s get back to where the problems originated.
” Regarding safety and soundness of the banking system, less than half of subprime loans have been originated by federally regulated banking institutions. To date, the deterioration in housing credit has been focused on the relatively narrow market for subprime, adjustable-rate mortgages, which represent fewer than one out of ten outstanding mortgages. Borrower performance deterioration in the subprime market has been concentrated in loans made very recently, especially those originated in late 2005 and 2006, and problems in those loans started to become apparent in the data during the latter half of 2006.
http://www.federalreserve.gov/newsevents/testimony/cole20070322a.htm
Note the time frame given, someone was asleep at the wheel.
“The highly regulated, centralized and controlled economy that Obama appears to advocate has historically been even more a failure.”
Compare the highly regulated, centralized and controlled economies of England and Old Europe with ours.
Which has a higher standard of living? Longer life expectancy? Stronger currency?
I don’t advocate an economy as tightly controlled as Europe’s. But in view of their economic succees, it’s hard to hold the view that regulation is always bad.
Good post, AMoose.
The de-regulating free marketeers were forced to prop up their “too big to fail” experiment by buying the companies that they refused to regulate.
Socialism indeed. Good word for it.
Exactly, Phantom.
The CONs want to explain this as that “people got greedy” as if they weren’t just as greedy in 1996 as they were in 2006.
What changed was not the level of greed. What changed was the system that allowed people to act on that greed.
Asleep at that wheel while everyone cheered.
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”.
-Chuck Prince Ex-CEO of Citigroup, July 2007
http://globaleconomicanalysis.blogspot.com/2007/11/music-stops-for-chuck-prince.html
Prince accurately summed up the mentality of the liquidity fueled Guilded Age in the Financial Industry of the 21st Century.
Sorry, the “Gilded Age”…
This is all very interesting.
I’ve seen the Liberals say things like “stick to the investor class.”
So obviously Liberals aren’t hurt in the stock market crisis right?
Or do you somehow believe that when the “rich” are hurting (losing money, on things such as taxes) that it somehow trickles down and effects you?
Seems contrary to all the political beliefs I have read.
Republicans handed over the punch bowl to the industry, they spiked it, got drunk, and we all have to pay for the hangover.
Compare the highly regulated, centralized and controlled economies of England and Old Europe with ours.
Even with it’s ups and downs, I’ll take ours over theirs, thanks. Our economy consistently outperforms theirs.
Mr_Kia
Posted September 19, 2008 at 8:25 am | Permalink
Seems as if the Democrat Ruled Congress for the last two years has sat back waiting for disaster doing nothing so they can point fingers.
This didn’ build over night. Two years ago certainly the warning signs were there.
Why didn’t Congress “save” us?
Mr. Kia – this Democrat Ruled Congress has a simple majority and the Republicans have been blocking everything that even makes it out of committees.
Seems to me the question should be ‘where were the Republican Ruled White House, Congress and Senate for 6 years when all this finanicial crisis was building?’
Privatized Profits and Socialized Debt. Pure and simple. Any proponents of deregulation are to blame for this crisis. The bottom has not yet been reached. My children would like to thank Mr. Bush for the debt he allowed on his watch. My grandchildren would like to thank Phill Gramm and his lovely wife for their legislation repealing the Glass Stengal Act. If Americans are stupid enough to allow the looting of the treasury to continue that the republicans not only allow but encouraged then they reap what they sow.
CapnAmerica
Posted September 19, 2008 at 10:23 am | Permalink
What caused the housing bubble and crash was de-regulation in 1999.
It was part of Reaganomics–Less gov’t in business, more business in gov’t.
Now Rhonda asking for “bipartisanship.” No thanks.
The cure is to destroy the Republican party as it stands now.
Then we can talk about bipartisanship
__
I agree with destroying the current GOP politics of making money at all costs, even our own best interests. But I know several Republicans who hate the current GOP party. The true Republicans are people that want less government and fiscal responsibilty. These are the people that need to wrestle the power away from these so-called Conservatives who see nothing wrong with desecrating all the old financial institutions for their 30 pieces of silver.
This is a battle for heart of the GOP party and if the true patriots do not win, then we will see more of this unchecked greed, but it will even get worse.
Capn A. What GMC says about the invisible hand is correct. Adam Smith’s invisible hand was a concept that still holds.
What happened in 1929 was too quick of a change from agricultural to Industrial economies to scale. Today, we have changed quickley (some would argue too quickly) from an industrial economy to a predominately consumer/information economy. The consumer is tapped out.
Nonetheless, the invisible hand works. Just as it did with Oil prices. They went back down without drilling or a gas tax holiday.
Obama’s Fannie Mae ‘Connection’
“Obama has no background in economics. Who advises him? The Post says it’s Franklin Raines, for “advice on mortgage and housing policy.” Shocking. Under Raines, Fannie Mae committed “extensive financial fraud.” Raines made millions. Fannie Mae collapsed. Taxpayers? Stuck with the bill.”
–McCain video release, September 18, 2008.
The Pinocchio Test
The McCain campaign is clearly exaggerating wildly in attempting to depict Franklin Raines as a close adviser to Obama on “housing and mortgage policy.” If we are to believe Raines, he did have a couple of telephone conversations with someone in the Obama campaign. But that hardly makes him an adviser to the candidate himself–and certainly not in the way depicted in the McCain video release.
more at:
http://voices.washingtonpost.com/fact-checker/2008/09/obamas_fannie_mae_connection.html
Nobody inside the beltway dreamed that a crisis was happening until at most about 9 months ago. Those in power most recently have the greatest burden of responsibility of actually trying to do something.
If you expect Congress to save you from a financial down turn, and the down turn became evident recently, The current Congress carries as much blame for this crisis as any other.
Of course we know that the Democratic Congress acheived success in 2006 by misleading the public into believing that they had a plan to end the Iraq war.
Misleading the public about their plan to heal the economy is their next trick.
CraponAmeriKKKa- Now Rhonda asking for “bipartisanship.” No thanks.
The cure is to destroy the Republican party as it stands now.
————————————–
The only problem for you now is, the One and his campaign is ass deep in this mess, and so are the speaker and the majority leader…..
That is the ONLY reason for the call for “bipartisanship”
Maybe the demorats should have “vetted” the One.
Surely they had to KNOW that two former CEOs of fannie and freddie run his campaign and advise him…..
While we the taxpayer pay, his campaign buddies made 10s of $millions…..
Bahhhhhh…….
Bahhhhhh…….
Capitalism takes a back seat to communism, or how the Bush administration plans to buy the election:
Treasury Secretary Hank Paulson proposed today, September 19, a scheme by which the government would relieve financial institutions of toxic mortgage assets. The stock market zoomed late Thursday and today. The scheme would cost taxpayers up to a trillion dollars. And it would kill any idea of free market capitalism. The government would also ban investors from betting that financial stocks will go down. This is a hoax. Paulson is trying to run up the stock market before the election. After that, the government will admit it doesn’t have the money to pull off this scam, and drop it.
http://www.sandiegoreader.com/weblogs/financial-crime-politics/2008/sep/19/paulsons-socialistic-plan-bail-out-wall-street-ele/
CapnAmerica
Posted September 19, 2008 at 10:23 am | Permalink
“Why is no one talking about the abolishment of the Federal Reserve System?”
Because something that’s been around since 1913 is not likely to be the cause of a housing melt-down in 2008.
What caused the housing bubble and crash was de-regulation in 1999.
It was part of Reaganomics–Less gov’t in business, more business in gov’t.
Now Rhonda asking for “bipartisanship.” No thanks.
The cure is to destroy the Republican party as it stands now.
Then we can talk about bipartisanship.
_________________________________________________
You haven’t the foggiest what you are talking about.
Putting this all Reaganomics shows your lack of how money or credit works.
Do you know anything about fractional reserve banking? DO you know anything about sound money as opposed to FIAT currency?
If you did, you be in 100% agreement with me. The Fed and Gov’t are in bed together with big business.
If you take away the fed, you take away gov’t power. You hurt immoral businesses.
It is hurting you and not in your best interest and yet you have no idea. You are losing money right now and you don’t even know it.
Come back for more lessons if you want to grow your mind.
Thats the party line eh Biased? No regard for Phill Gramm and his responsibility in this? The “One” had nothing or little to do about the current status of the financial markets. The wheels were in motion on this long ago. The mortgages were not written in the last 2 yrs. The full burden of this lays at the feet of the republican controlled government over the last 8 yrs. To spin it in any other way is lunacy. Please stop trying.
Lindastinks55- The McCain campaign is clearly exaggerating wildly in attempting to depict Franklin Raines as a close adviser to Obama on “housing and mortgage policy.” If we are to believe Raines, he did have a couple of telephone conversations with someone in the Obama campaign.
————————————————-
How do you think the last of the “telephone conversations” went……..
HAHAHAHAHAHAHAH!!!!!!!!!
uh….er….I…uh…….thats uh……
DON’T CALL HERE AGAIN….I DON’T KNOW YOU!!!!
Bahhhhhhhhh……..
Bahhhhhhhhh……..
assdeep and rising…..
Libs
Obama is running against McCain.
Obama is far more at fault, for this mortgage mess, than McCain.
McCain actually tried to fix the mortgage problem, more than once, before almost anyone else realized how serious it was.
Linda
Mudd, the guy who took over, after Raines, called Obama “the conscience” of Fannie Mae!
CapnAmerica
Posted September 19, 2008 at 10:25 am | Permalink
BTW, AustrianEconomist,
Did they teach you at that non-accredited college in Alabama why this famous Austrian’s (Von Mieses or whatever) economic policies are not followed anywhere in the world, including his home country of Austria?
__________________________________________________
Greed and not looking out for individuals is my best guess.
Mises is for the people and not for the leviathan state.
You support communism if you support Obama. USSR fell because socialism is unsustainable. You cannot take from those who produce and give to those who do not.
Those who produce will stop or leave.
Franklin
Posted September 19, 2008 at 12:05 pm | Permalink
Libs
Obama is running against McCain.
Obama is far more at fault, for this mortgage mess, than McCain.
McCain actually tried to fix the mortgage problem, more than once, before almost anyone else realized how serious it was.
_________________________________________________
Nobody tried to abolish the fed or return to a sound currency.
That’s the truth.
Raines sent a email to McCain saying simply that he was not Obama’s advisor.
Obama sent a copy of that email to the AP as “proof”.
That should settle it. :)
Franklin. That’s nice.
Austrian: Right on. A bit oversimplified. But given this forum, Understandable.
However, for this country to remove the Fed, we will need to remove the mother necessity of that invention: That being this country’s pivot to “policeman of the world”
That is why Ron Paul didn’t advocate removal of the Fed without advocating a non-intervention strategy of foreign affairs. My view is that we are about 12 years past the point of no return on that.
Same person that sponsored the Ones “hollywod fundraiser” is now seeting up the reception in New York for Mahmoud Ahmadinejad………..
(that is the “president” of iran for all you libtards out there)
You can’t make this stuff up!!!
Bahhhhhhhh………
Bahhhhhhhh………
the mainstream is going to HAVE to address this guys associations sooner or later aren’t they?
Are they too “invested?”
More and more it seems, the ONLY thing that separates the One from a common thug is his Harvard education….
assdeep and risin’
The Fed will be abolished about the same time we go to a Flat tax. It will take a real crisis to achieve either. However, my bet is the “crisis” will lead to even more governmental control. It already is.
Our government controls the value of our money AND collects Taxes on our income. Abuses of power. Freedom without economic freedom is not true freedom.
Yeah, nice recitation of the propaganda they taught you, AusEcon.
But why don’t they follow Mises in Austria?
Mwitless74- The “One” had nothing or little to do about the current status of the financial markets.
———————–
Too busy running a campaign I imagine, or maybe a little too worried about a rosa parks stamp.
Baahhhhhhhh….
Baaaaahhhhhh…
Austrian
Work with reality.
The Fed will not ever be abolished.
Deal with the hand you are delt, and quit being childish.
I imagine that the Ones extensive background in community organizing has fully prepared him face this housing and financial crises…..
Bahhhhhhh…….
Baaahhhhhhh…….
Do you know anything about fractional reserve banking? DO you know anything about sound money as opposed to FIAT currency?
Why, yes, I do, AusEcon.
Tell me, in this worldwide crash where paper money is worthless, who’s going to want gold? Or silver for that matter?
These precious metals that you people lust after are only precious because a prosperous society makes them so . . .
There’s nothing inherently valuable about anything without a trade society that values it.
Obama was Rezco’s attorney.
Rezco went to prison.
http://en.wikipedia.org/wiki/Ludwig_von_Mises
GMC70,
“Actually, CF, players in markets generally act exactly in their own best interests.”
Oh, really, GMC70? Market panics and bank runs are in the “best interests” of shareholders and account holders, then? I don’t think I’d even concede that they act in line with their own “perceived” best interest. Of the many theologies being spun here today, I’d say that Rational Choice Theory would be near among the first on the chopping block.
“The highly regulated, centralized and controlled economy that Obama appears to advocate has historically been even more a failure. All economies are mixtures of the two; ours has historically been where private entities, acting in their own interests, have made decisions. Within limits, that works.”
I reject the premise that Barack Obama endorses anything like what you characterize. I do, of course, agree with your concession that “within limits, that works”–particularly because the meltdown and Federal step-in that we’re currently seeing is precisely the outcome of a thirty-something year initiative aimed at removing precisely those limits.
You’re right that I associate government with the general good, but you’re wrong to say that I ASSUME this. I don’t. Governments are of the People and have to be monitored and kept in line. But at least they CAN BE made accountable, a fact to which your Reagan-era “Big Government” phobia has blinded you. Big Capital, as “private” property, cannot. They answer only to the Big Fish. But when Big Capital melts down because of its inability to control itself, as it has in this case, we small fry pick up the losses.
“Our economy consistently outperforms theirs.”
Yeah. And their standard of living consistently outperforms ours.
#
CapnAmerica
Posted September 19, 2008 at 12:25 pm | Permalink
Do you know anything about fractional reserve banking? DO you know anything about sound money as opposed to FIAT currency?
Why, yes, I do, AusEcon.
Tell me, in this worldwide crash where paper money is worthless, who’s going to want gold? Or silver for that matter?
These precious metals that you people lust after are only precious because a prosperous society makes them so . . .
There’s nothing inherently valuable about anything without a trade society that values it.
————————-
I see the Crapn is doing Breathairian buttocks breathing exercising today. Exploiting his prowess towards amplification of ill wind and saw-toothing rhetoric.
“You cannot take from those who produce and give to those who do not.”
We do it all the time. Bush seized acres of valuable property by eminent domain and sold his share of the Texas Rangers for 25 times what he bought it for and ended up netting some 14 million bucks.
We’re doing the same thing, stealing a little bit from everybody in Wichita to build an arena that will benefit a very few.
You can’t eat gold.
“More and more it seems, the ONLY thing that separates the One from a common thug is his Harvard education…”
More and more it seems the ONLY thing that separates bi-assed One from a member of the Ku Klux Klan is…well, not much, actually.
Capn. Understand that Austrian is speaking of sound economic theory. But economic theory is seldom (if ever) in line with political realities.
His economics is perfect (Just like pure communism and pure capitalism are perfect in theory)
It’s just that neither can be used in political reality.
It goes back to “are you better off now?”
Franklin,
Keating was McCain’s patron: Keating went to prison.
#
Rage
Posted September 19, 2008 at 12:30 pm | Permalink
You can’t eat gold.
=====================
Yes you can.
http://www.yelp.com/biz_photos/fTeiio1L2ZBIRdlzjdjAeg?select=mNnQnjcQ6KpAiFC4OXDhYw
McCain did nothing criminal in the Keating 5 situation.
McCain was the “sacrificial lamb” in that case.
The Senate was controlled by Democrats.
The other 4 “members” of the “Keating 5″ were Democrats.
Politically, McCain was included only to make the Democrats look better.
“After a lengthy investigation, the Senate Ethics Committee determined in 1991 that Alan Cranston, Dennis DeConcini, and Donald Riegle had substantially and improperly interfered with the FHLBB in its investigation of Lincoln Savings. Senators John Glenn and John McCain were cleared of having acted improperly but were criticized for having exercised “poor judgment”.
http://en.wikipedia.org/wiki/Keating_Five
I thought he was arm flailing Regular.
Oh I did miss the charm of our social conservative types:
1. Hank (when all else fails, call them a nitwit)
2. Franklin (the expert at everything, including how Karl Rove thinks)
3. Regular (and the arm flailing)
The lesson I draw from this crisis is deregulation is no match for greed and illegal behavior in the world of real estate and financial transactions.
#
LLTVET
Posted September 19, 2008 at 12:38 pm | Permalink
I thought he was arm flailing Regular.
Oh I did miss the charm of our social conservative types:
1. Hank (when all else fails, call them a nitwit)
2. Franklin (the expert at everything, including how Karl Rove thinks)
3. Regular (and the arm flailing)
————————-
No, the Crapn’s arms are too short for flailing as the bottom of his hands only come to his waistline. It’s more like wild flapping.
LLVET–
It’s funny how the CONs always refer to Adam Smith as their authority.
While Adam Smith did not like the market deforming effects of what are now called subsides (then called “bounties”), he stated unequivocally that business interests must be kept from colluding to hurt competition.
This is exactly what de-regulation allowed.
There’s gonna be a lot more hate in the world when the “Greater Depression” hits. Unless you folks could grasp the idea that the Fed is not a governmental organization but is, in fact, private. These private folks are scooping up real wealth (our homes and more importantly the land beneath them) by faking us out with monopoly money.They know that we’re all so dumb that we can’t figure it out.
But this country is like the Titanic going down and the wealthy elites are loading up (half full except for their booty) on the life boats all while telling us to “go have a drink, relax on these lounge chairs…everything’s fine”.
Unless and until the Fed is told that “this debt is now null and void, we’re taking our country back”, we’ll forever be our worst enemies and go down in flames.
Not lookin’ too good today eh libbys?
Sorry about your week, it started out soooo good, with the new poll numbers out. Sarah Palin only getting a C+ from the libbys on her interview, all this “Bush doctorine” nonsense….
You have the Demorat speaker of the house that has a mojority in the house and senate that has “crossed the isle” on legislation exactly zero(0) times in her 11 years calling for “bipartisanship.”
And now the One (aka harvard thug) being tied to all this housing and finacial collapse with all his shady associations (rezko, ayres, raines, wright on and on and on) ….
well, have a good weekend.
(but hey libtards, at least you have saturday night live to look forward to eh? maybe they can slam palin so hard it’ll make the “bad man go away” and you can get some sleep….)
bahhhhhhhh…..
bahhhhhhhh…..
Capn. All industry eventually evolve into oligopoly. It’s inevitable. Hence competition will never remain in any given industry.
If you are considering me a CON. I’m sure that Franklin and Regular will find that amusing. But in Economic matters, I am a capitalist.
Now to your arguement. If regulation is to keep competition, then it will also interfere with the natural course of an industry from pure competition to monopolistic competition to oligopoly. In short, one must not interfere with competition as it exists nor to keep it’s existence. When the industry turns to oligopoly, then the “invisible hand” takes over and creates new industries.
Pleefer
Posted September 19, 2008 at 12:46 pm | Permalink
There’s gonna be a lot more hate in the world when the “Greater Depression” hits.
————————-
Oh my! It’s a good thing I saved up all those garden seeds.
PAUL ROSELL WHO LIES SERIALLY,
“McCain and Keating had become personal friends following their initial contacts in 1981,[10] and McCain was the closest socially to Keating of the five senators.[21] Like DeConcini, McCain considered Keating a constituent as he lived in Arizona.[18] Between 1982 and 1987, McCain had received $112,000 in political contributions from Keating and his associates.[22] In addition, McCain’s wife Cindy McCain and her father Jim Hensley had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating’s expense, sometimes aboard Keating’s jet. Three of the trips were made during vacations to Keating’s opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, when he learned that Keating was in trouble over Lincoln.”
http://en.wikipedia.org/wiki/Keating_Five
Oh, by the way: Barack Obama has not been found to have done anything criminal. Unlike John McCain, he was never the object of any investigation regarding influence-peddling for a man who defrauded taxpayers on a MASSIVE scale.
Prove he did, or shut your worthless, empty, blustering, lying-ass Repuke mouth.
But you all are still relentless with the thinking that it’s a left/right thing. Go ahead and keep your heads in the sand, at you own peril.
Regular, I wish I knew who you were, so’s I could laugh at you in the next couple of years.
The Community Redevelopment programs, pretty much, got rid of down payment requirements.
It was LIBERAL members of Congress who got rid of restrictions and rules meant to prove “ability to pay”.
Mccain’s all over the map, yesterday he said he opposed AIG bailout, today he for the industry wide bail out.
His campaign is being compared to Bob Dole’s.!
Bi-Assed One,
No surprise that someone as stupid as you are is delusional as well.
But if you want to claim Repuke victory for a week in which John McCain said “the fundamentals of the American economy are strong” and thought the Prime Minister of Spain wasn’t leading a country that’s part of NATO, and in which your shiny object of a VP candidate was repudiated by the sanity wing of your own party, and in which Barack Obama reclaimed his lead in the polls over a lying, early-onset Republican front-runner, then be my guest.
CF2KKK-
Bahhhhhhhhh………
bahhhhhhhhhh……..
the One….
the One……..
Maybe Sidney will put Keating in charge of fixing the financial markets. After all, he IS experienced in the field!
CF
Take a breath.
You are way too reckless, once again, with the charge that I “lied” — you are ridiculous.
Where did you EVER show that anything I said was not true?
A DEMOCRAT Senate found 3 Democrat Senators had done far worse than McCain.
CF2KKK-
Keep “stumpin’” for the One there skippy….
(maybe you’ll get a stamp………..)
hahahahaha…..libtards are soooooooo smart.
Our fundamentals ARE strong.
Inflation has been much higher, in the past.
Unemployment has been much higher, in the past.
Productivity is still rising.
Our problem is TOXIC DEBT encouraged by liberal corruption in Washington.
thank you franklin.
well put
CF2KKK-
I heard the community organizers answer to the finacial crisis this morning….
“Fire everyone in Washington.”
real mature…..
That dog don’t hunt anymore. The debt is bi-partisan. Everyone knows that now.
CapnAmerica
Posted September 19, 2008 at 12:29 pm | Permalink
“You cannot take from those who produce and give to those who do not.”
We do it all the time. Bush seized acres of valuable property by eminent domain and sold his share of the Texas Rangers for 25 times what he bought it for and ended up netting some 14 million bucks.
We’re doing the same thing, stealing a little bit from everybody in Wichita to build an arena that will benefit a very few.
_______________________________________________
Of course you can do it. I was pointing out that it is unsustainable.
You guys talking bad about Gold as the asset are missing the point. Any asset that backs a dollar is better than no asset.
I’d even go for a basket of commodities, like food, oil, and gold backing the dollar. Anything is better than nothing.
You are truly missing the forrest for the trees.
LL
Several Republicans have tried to warn us about the mortgage problem.
Barney Frank, a Democrat, stood in the way.
Chris Dodd, a Democrat, stood in the way.
This is a DEMOCRAT scandal, with a few Republicans involved, as bit players.
President George W. Bush tried, repeatedly, to do something. Democrats stopped him.
John McCain tried to do something. Democrats stopped him.
Alright Franklin, I’m piqued. Show me the documents that all of these politicians did everything you say. The documents, the transcripts, not some opinion piece in whatever news you zone out to. Show me. Show me that it’s a left/right thing. Show me how much more evil one side is from the other, show me a difference in them.
Franklin
Posted September 19, 2008 at 1:09 pm | Permalink
Our fundamentals ARE strong.
Inflation has been much higher, in the past.
Unemployment has been much higher, in the past.
Productivity is still rising.
Our problem is TOXIC DEBT encouraged by liberal corruption in Washington.
________________________________________________
False.
We are less productive as a nation than we were in the late 70’s.
We are nothing but consumers. We do not create wealth, we consume from those who create real wealth.
We are not the engine driving the world economy, we are the caboose. Other countries generate ral production and America consumes that production.
Measure GDP in canadian dollars. It is negative.
That dog don’t hunt anymore. The debt is bi-partisan. Everyone knows that now.
Only partially true. Whatever one might think of Democratic fiscal policies, it’s a simple historical fact that when conservatives have controlled the White House and at least one house of Congress, the debt has ballooned.
One can certainly point to some Democratic “sacred cow” programs along the way, but the simple fact is that borrowing money to reduce taxes (and thus buy votes) has been a deliberate part of the conservative agenda going back to Reagan.
Franklin: Your sounding very flighty right now. Are you discussing the national debt or the housing crisis? The debt existed long before the housing crisis.
Now your so called “TOXIC DEBT” is bi partisan. Both parties created it. The democrats have a small argument with Clinton. But I know he inherited a good thing.
The mortgage problem is another thing entirely. Can we stick to one subject if you want to argue with me?
latest gallup poll obamanator 48 mcnut 45
mcnutt 44
Franklin
Posted September 19, 2008 at 1:17 pm | Permalink
LL
Several Republicans have tried to warn us about the mortgage problem.
Barney Frank, a Democrat, stood in the way.
Chris Dodd, a Democrat, stood in the way.
This is a DEMOCRAT scandal, with a few Republicans involved, as bit players.
President George W. Bush tried, repeatedly, to do something. Democrats stopped him.
John McCain tried to do something. Democrats stopped him.
_________________________________________________
They were only bi-partisan in the destruction of this country.
Everything else is just a technicality that is irrelevant.
Quit looking at this from a left vs right perspective.
It is big government vs small government that you should be looking at.
P.S. I’m going to bow out now, and let the Libertarians argue with the conservatives. Give ‘em hell, guys! :)
This thread is, primarily, about the mortgage problem and not the national debt, in general.
DEMOCRAT policy dictated our mortgage policy.
When the Chair of Fannie Mae calls the Congressional Black Caucus the “conscience of Fannie Mae” —
I need go no further to make my point.
Is Pelosi related to Michael Jackson? They look strikingly alike.
Austrian
I will look at whatever I want.
I work in the real world.
You do not.
I understand what the thread is about Franklin. What seems inegmatic is your “toxic debt”
Nevermind. I will drop it.
Franklin
Posted September 19, 2008 at 1:31 pm | Permalink
Austrian
I will look at whatever I want.
I work in the real world.
You do not.
________________________________________________
So you advocate keeping the evil in power.
I have no problem with that. Don’t take offense. You can do whatever you want. The world needs close minded people who do not listen to any other ideas.
It’s how we got to where we are today.
Keep living in the real world and allowing it to crumble. I’ll be there to pick you up when this fantasy they have brainwashed you with comes crashing down.
How can anyone support an economic theory that advocates deficit spending?
It is a simple law of nature that you cannot spend more than you have.
Any candidate not talking about eliminating the debt completely is not worth anyones time.
More spending is going to destroy your currency. You will have nothing to show because you have been fooled into believing that the dollar is not really just a piece of paper with no value.
You cannot have freedom without sound currency. The two do not go together.
AusEcon ignores one small problem with his theory–the past 60 years of history.
Every industrialized country in the world has completely ignored Mises–they all have fiat money for example and they all engage in deficit spending–and none of them have sunk into the abyss the Mises crew stews and fumes about.
“I’ll be there to pick you up when this fantasy they have brainwashed you with comes crashing down.”
Yeah.
I read “Atlas Shrugged” too.
When I was 16.
Then I grew up.
CNN Report-
The economic crisis has given Obama and his running mate, Sen. Joe Biden, the opportunity to go on the offensive.
(from the SAME article)
Obama spoke after meeting with his economic advisers…..
Obama on Friday also backed administration…..
Obama’s statement came after Treasury Secretary Henry Paulson……
After meeting with his economic advisors,…..
Obama said he would not present his plan until the Treasury and Federal Reserve have presented theirs……
Obama spoke after Republican presidential candidate Sen. John McCain……
He has a strange way of going on the “offensive”
Bahhhhhhhhhhh………..
Bahhhhhhhhhhhh……….
CapnAmerica
Posted September 19, 2008 at 1:50 pm | Permalink
AusEcon ignores one small problem with his theory–the past 60 years of history.
Every industrialized country in the world has completely ignored Mises–they all have fiat money for example and they all engage in deficit spending–and none of them have sunk into the abyss the Mises crew stews and fumes about.
________________________________________________
Of course not. Instead of letting the crash happen, they socialize the debt and have producers pay for it.
You can thank the central bankers for spreading the idea of fiat to other countries. It promotes fast growth, but it also misallocates capital and causes booms and busts. I like to call these transfers of wealth.
Eventually, the central bank own everything. Did you not read the Thomas Jefferson quotes yesterday?
“If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”—Thomas Jefferson, The Debate Over The Recharter of the Bank Bill, (1809)
Let that sink in Capn. They loan out paper money created out of thin air at interest. Since credit is easy when the interest rates are low, people misallocate that new capital and lose it all.
“After the dust settles and everything pans out, I’ll tell you my plan.”-Obama
State by state electorate count
McCain 270
the One 268
CapnAmerica
Posted September 19, 2008 at 1:51 pm | Permalink
“I’ll be there to pick you up when this fantasy they have brainwashed you with comes crashing down.”
Yeah.
I read “Atlas Shrugged” too.
When I was 16.
Then I grew up.
_______________________________________________
What is your solution?
Please share with me your answer to the problem.
Quit slinging mud. If you are not part of the solution, you are part of the problem.
“AusEcon ignores one small problem with his theory–the past 60 years of history.
Every industrialized country in the world has completely ignored Mises–they all have fiat money for example and they all engage in deficit spending–and none of them have sunk into the abyss the Mises crew stews and fumes about”.
Not yet anyway. Give it a couple of years.
The country does not know these names well enough, yet:
Tony Rezco
William Ayers
The more the country gets to know Rezco and Ayers, the lower Obama’s numbers will sink.
What cracks me up is the delusion some people have that time began the moment they were born.
And inferring that 60 years a lot of time…just silly.
Bill Ayers, if he weren’t a damned commie, I’d agree with the Weathermen’s tactics. He nor his group killed anyone, just a few bricks.
Franklin claims, “The Community Redevelopment programs, pretty much, got rid of down payment requirements.
It was LIBERAL members of Congress who got rid of restrictions and rules meant to prove ‘ability to pay’.”
Wow. That would be a strong indictment of gov’t involvement leading to the subprime housing bubble and crash . . . if it were true.
Do you have a link?
Because I’m having a hard time believing
1. that liberals could have done much of anything given the CON domination of Congress and the Presidency when this debacle was gestating (2001-2006) and
2. that lending institutions would be “forced” to take on much riskier loans without federal guarantees. You’re saying that “poor widdle companies” like Merril Lynch and Bear Stearns and Washington Mutual were all “forced” to write bad loans, and there was nothing they could do about it.
I just don’t believe that.
Financial firms are among the most powerful of special interests. It doesn’t make good nonsense.
What makes a lot more sense is that these powerful special interests have finally freed themselves of gov’t oversight, with the result we see . . .
CapnAmerica
Posted September 19, 2008 at 1:50 pm | Permalink
AusEcon ignores one small problem with his theory–the past 60 years of history.
Every industrialized country in the world has completely ignored Mises–they all have fiat money for example and they all engage in deficit spending–and none of them have sunk into the abyss the Mises crew stews and fumes about.
_______________________________________________
Oh, by the way. When they do “sink into the abyss”…..One World Government
AusEcon asks, “What is your solution?”
I already gave my solution several times upthread–a return to the REAL regulation of the financial industry that has served us so well since the depression.
I already gave my solution several times upthread–a return to the REAL regulation of the financial industry that has served us so well since the depression.
========
Wow! Now that is a specific plan!!!! You expect others to be detailed, while you take the most vague path?
We are a free country. You cannot regulate a free market.
Unless….do you suppose that we have a centrally planned economy and we are not really a free country?
Sounds like we have a bigger issue here. We claim to be a free country, but yet we have a centrally planned economy. Seems a bit odd to me.
Look, if a business fails and makes bad business choices, you have to let them suffer. The same can be said of the customers. If they make a bad decision, they must suffer the consequences.
This is not rocket science. We don’t need protection from big bad corporations. We can take care of ourselves. Unless you like having a nanny state? Are you incapable of learning about a house loan and its consequences?
Get rid of the Fed, get rid of the IRS. Let us, The People, coin our money. There’s a start. Stop using our national credit card to pay off credit cards. If not, well pretty soon, America won’t be able to get the credit for a good fart. Then what?
Could it be that the Community Reinvestment Act had nothing to do with the current “crisis”?
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
Some points made in the link: banks and thrifts are the only institutions covered by CRA. At least half the subprime mortgages were made by financial institutions not subject to CRA. The default rate on loans made by covered institutions under CRA is lower than on the subprimes in general. And, the main motive behind the subprime mortgage boom was one of profit, not politics.
It is my thought that the “crisis” isn’t really one involving subprime mortgages as subprime mortgages. Rather, it flows from the securitization of these products. Had these “toxic mortgages” never been packaged and sold as securities, there would not have been the need to create the exotic derivatives, the counter-party agreements (which, in and of themselves were designed to remove or at least reduce the “moral risk” commented on earlier). I’ll freely admit that I don’t really understand how all these products were to work; but, if indeed there were agreements akin to “insurance” that called for replacing collateral represented by mortgages in default with other collateral, which is what I understand to have been one of the issues at Lehman, et al, it seems the investors in these derivative products were playing both sides against the middle; enjoy a higher return if the mortgage collateral did not default; and a reduced return, perhaps a reduction in loss risk, if the mortgages went into default and were replaced wih more sound collateral.
Had there been no ability to package the mortgages and sell the same, or to use the packages as collateral for securities, when the defaults began, the mortgage lender would have foreclosed, and disposed of the collateral, suffering its loss, without risk to the greater credit markets. I would also suggest that taking some losses would have resulted in many fewer subprime mortgage loans being made.
Franklin, I’ve done a quick read of the CRA, and some of the regulations propounded thereunder. I’ve not found where the CRA required the covered lenders to make loans to those who were not creditworthy. I did see that lending policy had to apply across the area from which deposits were received, the banks and thrifts not being able to redline areas of this market area based solely on the geographic location of the borrower. Perhaps you could provide me a cite to the appropriate part of the CFRs that supports your argument. Thanks in advance.
Are you incapable of learning about a house loan and its consequences?
No, I’m not.
But consider this Pew Trust Study http://www.cnn.com/2006/EDUCATION/01/20/literacy.college.students.ap/index.html –
50 percent of GRADUATES from four year colleges and 75 percent of graduates for two year colleges lack the literacy to understand complex, real-life tasks such as understanding credit card offers.
That number would be much higher, we can assume, for non-college grads.
People should be protected against unconscionable scams.
Besides, when you have massive numbers of people walking away from their mortgages (like 7000 a day as it is now), it becomes society’s problem, not just an individual or a bank’s problem.
CapnAmerica
Posted September 19, 2008 at 2:31 pm | Permalink
Are you incapable of learning about a house loan and its consequences?
No, I’m not.
But consider this Pew Trust Study http://www.cnn.com/2006/EDUCATION/01/20/literacy.college.students.ap/index.html –
50 percent of GRADUATES from four year colleges and 75 percent of graduates for two year colleges lack the literacy to understand complex, real-life tasks such as understanding credit card offers.
That number would be much higher, we can assume, for non-college grads.
People should be protected against unconscionable scams.
_______________________________________________
That sounds like an education problem.
Try again
CapnAmerica
Posted September 19, 2008 at 2:32 pm | Permalink
Besides, when you have massive numbers of people walking away from their mortgages (like 7000 a day as it is now), it becomes society’s problem, not just an individual or a bank’s problem.
_________________________________________________
Those people will get a mortgage and house they can afford. They will not go homeless.
Sounds like someone who saved their money could buy them on the cheap and sell them at a small profit with a fair mortgage.
That’s my entrepreneur side talking though.
Hilarious,
Libturd yahoo head lines today:
Poll: Obama tops McCain as football watchin buddy.
Poll: People prefer Obama over Mcain to teach.
Clinton recruiting backers for Obama.
Obama backs “broad authority” on credit.
McCain defends retirement accounts amid stock dive.
McCain says we should Stop Govenment bailouts.
Here is a couple of headlines they’re burying…
Dow up over 700 pts. in last two days.
Bailout will be costly Democrats say.
Latest state by state count-
McCain 270
the One 268
Tolle–
You just earned your pay for the week!
This article is a gem.
And what you say is very true–not only you but really no one can understand all the ramifications of how these mortgages were bought and sold and securitized and hedged etc.
It’s too complicated to be knowable.
That’s why the gov’t needs to keep this kind of risk contained with regulation.
According to a 60 Mins segment I watched a couple of months ago, some of these foreclosed houses nobody can even find the mortgage for. Nobody is sure who owns them or how to find out who owns them.
The mortgage is just a number in some huge portfolio in Norway or something.
CapnAmerica
Posted September 19, 2008 at 2:43 pm | Permalink
According to a 60 Mins segment I watched a couple of months ago, some of these foreclosed houses nobody can even find the mortgage for. Nobody is sure who owns them or how to find out who owns them.
The mortgage is just a number in some huge portfolio in Norway or something.
________________________________________________
If the gov’t owned the mortgages and borrowed money against them, I wouldn’t doubt that to be true.
China owns most of the securities if I had to guess.
From the article cited in Tolle’s link:
In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?
The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation’s Ellen Seidman (and by Harvard’s Joint Center), that activity “largely came to an end by 2001.” In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law’s toughest standards. Yet sub-prime lending continued, and even intensified — at the very time when activity under CRA had slowed and the law had weakened.
So far the U.S. taxpayer, in six months, has been committed to $29 billion for the Bear Stearns sale to JP Morgan Chase, $200 billion for the Fannie Mae and Freddie Mac investment banks buyout and now another $85 billion for AIG. That’s some serious dough.
But the RepubliCONs thought $35 billion for 10 years of health care for poor American children was “too expensive.”
I’m reminded of Harry Truman when he said:
“How many times to you have to be hit in the head before you notice who’s hitting you?”
#
Austrian_Economist
Posted September 19, 2008 at 2:48 pm | Permalink
China owns most of the securities if I had to guess.
————————————————————
It seems to me that China owns a substantial block of Freddie Mac and Fannie Mae securities from various reports. I’ve a feeling that most of those securities are held by others, not the Chinese, admitting that I don’t really know one way or the others.
The “Fairness Doctorine”
Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear.
Harry S Truman, August 8, 1950
I believe that banking institutions are more dangerous to our liberties than standing armies.
Thomas Jefferson.
Although Truman was another who felt compelled to start unneccesary wars, I have to agree with him.
The Fairness Doctrine is garbage. Most of these bills have good sounding names, but are really measures to repress the people.
The Patriot act is another example.
http://www.gallup.com/home.aspx
Obama up one to 49 percent.
McSame stays the same at 44 percent.
The Federal Reserve System must be abolished. I have a feeling it will be, but what will America decide to replace it with.
It will be a critical fork in America’s road when that day comes. I hope that it is nothing.
“Here’s what I think,” Obama said. “In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other way crowd in Washington who has led us down this disastrous path. Don’t just get rid of one guy. Get rid of this administration. Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who’s going to fight for you.”
Pleefer
Don’t you get tired of being wrong all the time?
The Weather Underground WAS responsible for killing people.
William Ayers, the terrorist, is a friend and former boss of Obama!
http://www.cnn.com/2008/POLITICS/06/10/electoral.map/index.html
Obama 233
McCain 189
(Tossup 116)
av Franklin can give you no more than ‘I hear Kudlow say it’. It is Krudlow’s opinion, and therefore a conservative talking point.
If it were a problem caused by CRA, majority of foreclosed properties would be in ’slum’ areas instead of across the spectrum.
Franklin, report back to your masters, ‘Ayers line won’t get any traction.’
Believe at last I read Florida had moved head to head, after this week, I suspect they’ll be leaning Obama.
I swear, lately it feels like kicking a one armed man’s butt on these threads!
Franklin–
I’ll take that, “you were right, CapnA, there’s zero evidence that The Community ReInvestment Act had anything to do with bankruptcies of huge lending institution” now . . .
Franklin: I am assuming that you have the position that (contrary to the thread) this IS the time for partisanship.
Can you at least PRETEND to be non-partisan about issues? You don’t want to address issues. You just want to convince everyone that the NEOCONS were right. It’s starting to sound very tired.
Actually…
http://www.fivethirtyeight.com/
Electoral Projection
Obama 303.1
McCain 234.9
Maybe America doesn’t want Mr “the fundamentals are strong” and Ms “I can see Russia from my house” running the country after all.
I think mcbush meant to say “The Fundamentalist are strong” and just got tripped up.
No time for partisanship, America’s going down on the sinking Republican ship. Never fear, Cap’n Bush and his merry crew, know just what they have to do. Spend now, spend fast, this current crisis can not last! We’ll never live to repay it, so there’s no reason to delay it.
Obama Laments Debt, But Promises Billions for Anti-Poverty Program
by FOXNews.com
Friday, September 19, 2008
Barack Obama speaks to reporters following a meeting with his top economic advisers Friday.
By Bill Sammon
Barack Obama, who lamented Friday that “we have not managed our federal budget with any kind of discipline,” is nonetheless promising to spend $50 billion on a United Nations anti-poverty program that critics say will drive up American debt.
“The short-term weakness in the capital market is a reflection of long-term problems that we have in our economy,” Obama told reporters in Florida. “We have been loading up enormous amounts of debt.”
Yet Obama and his running mate, Joe Biden, have pledged tens of billions in new spending on a U.N. program that promises cash to poor countries. The program is one of eight sweeping “Millennium Development Goals” the U.N. adopted in 2000.
“Obama and Biden will embrace the Millennium Development Goal of cutting extreme poverty around the world in half by 2015, and they will double our foreign assistance to $50 billion to achieve that goal,” the candidates vow in their campaign platform.
Johns Hopkins professor Steve Hanke said such spending would merely drive up American debt, while doing almost nothing for the world’s poor.
“It goes down a bureaucratic rat-hole, lining the pockets of people who are connected to the power structure,” said Hanke, a senior fellow at the Cato Institute. “It’s basically a system to redistribute income from middle class people in the United States to rich people in poor countries. It never reaches those people who are living on a dollar a day.”
Hanke said such expenditures are especially unwise in the wake of significant expansions of government and spending during President Bush’s tenure.
“We’ve been spending like drunken sailors and making obligations into the future like drunken sailors,” he said. “We’re on an unsustainable path in terms of the fiscal situation in the United States because of massive spending growth and commitments.”
Obama said he wants to curtain at least one of those costly commitments.
“We have spent well over half a trillion dollars — soon to be a trillion dollars — on a war in Iraq, despite the fact that Iraqis are now running surpluses,” the Illinois senator said Friday. “We’re still spending $10 billion a month there.”
But in December, Obama also sponsored the Global Poverty Act which, if passed, would require the president to commit to cutting global poverty in half by 2015. Critics say that would cost American taxpayers $845 billion.
Susan Rice, one of Obama’s top foreign policy advisers, says the U.S. should give 0.7 percent of its Gross Domestic Product to developing nations.
Bill Sammon is Washington deputy managing editor for FOX News Channel.
Compensation figures for [Obama's] legislative staff reveal that Obama pays women just 83 cents for every dollar his men make.
A watchdog group called LegiStorm posts online the salaries for Capitol Hill staffers.
Based on these calculations, Obama’s 28 male staffers divided among themselves total payroll expenditures of $1,523,120. Thus, Obama’s average male employee earned $54,397.
Obama’s 30 female employees split $1,354,580 among themselves, or $45,152, on average.
Among Obama’s five be e was a woman. Among his top 20, seven were women.
Again, on average, Obama’s female staffers earn just 83 cents for every dollar his male staffers make. This figure certainly exceeds the 77-cent threshold that Obama’s campaign website condemns. However, 83 cents do not equal $1. In spite of this 17-cent gap between Obama’s rhetoric and reality, he chose to chide GOP presidential contender John McCain on this issue.
Obama responded Aug. 31 to Alaska Gov. Sarah Palin’s Republican vice-presidential nomination. Palin “seems like a very engaging person,” Obama told voters in Toledo , Ohio . “But I’ve got to say, she’s opposed — like John McCain is — to equal pay for equal work. That doesn’t make much sense to me.”
McCain’s 17 male staffers split $916,914, thus averaging $53,936. His 25 female employees divided $1,396,958 and averaged $55,878.
On average, according to these data, women in John McCain’s office make $1.04 for every dollar a man makes. In fact, al l, a typical female staffer could earn 21 cents more per dollar paid to her male counterpart — while adding $10,726 to her annual income — by leaving Barack Obama’s office and going to work for John McCain.
Among [McCain's] top-five best-compensated staffers, three are women. Of his 20-highest-salaried employees, 13 are women.
In short, these statistics suggest that John McCain is more than fair with his female employees, while Barack Obama — at the expense of the women who work for him — quietly perpetuates the very same pay-equity divide that he loudly denounces.
http://seattlepi.nwsource.com/opinion/378772_murdockonline12.html
Boxlock,
Are you going to post facts re whether the whether the men and women were doing equal work?
‘Obama’s alleged pay gap’
http://www.legistorm.com/blog/obama-s-alleged-pay-gap.html
“We were not, however, the source for the analysis that led to conclusion about equal pay. That analysis was solely done by Murdock. We do not take a position either for or against Murdock’s analysis. We will simply note that there has been some debate about the validity of his claims because he did not include consideration of whether the men and women were doing equal work. Whether this criticism was valid is also something we do not take a position on.”
Boxlock,
Your copy/paste mangled “Among Obama’s five best-paid advisors, only one was a woman”
And Murdock’s own analysis suggests why the pay ratios are different.
It’s equal pay for equal work, NOT equal pay for unequal work.
http://seattlepi.nwsource.com/opinion/378772_murdockonline12.html
“Why this disparity? One reason may be the under-representation of women in Obama’s highest-compensated ranks. Among Obama’s five best-paid advisors, only one was a woman. Among his top 20, seven were women.
…
One explanation could be that women compose a majority of McCain’s highest-paid aides. Among his top-five best-compensated staffers, three are women. Of his 20-highest-salaried employees, 13 are women. The Republican presidential nominee relies on women — much more than men — for advice at the highest, and thus, best-paid levels.”
————-
http://www.sourcewatch.org/index.php?title=Deroy_Murdock
The fact remains Obama is either paying the men more than the women for equal work, or he is placing men in the positions of higher work importance and thus higher pay.
“Why this disparity? One reason may be the under-representation of women in Obama’s highest-compensated ranks. Among Obama’s five best-paid advisors, only one was a woman. Among his top 20, seven were women.”
McCain doesn’t do that.
“One explanation could be that women compose a majority of McCain’s highest-paid aides. Among his top-five best-compensated staffers, three are women. Of his 20-highest-salaried employees, 13 are women. The Republican presidential nominee relies on women — much more than men — for advice at the highest, and thus, best-paid levels.”
DimLibs are such hypocrites is what it boils down to.
McCain either pays his women staffers better than Obama our of fairness or has the confidence to place them in important positions in his campaign, that pay higher salaries.
McCain is more female gender friendly and/or has more confidence in them than Obama.
The Alpha Dogs Bark
By GAIL COLLINS
Published: September 19, 2008
These times are so perilous that George W. Bush emerged from his burrow on Friday to reassure the American people about the financial crisis.
Looking either grim or overmedicated, Bush spoke for several minutes — 1,260 words worth of reassurance. That was a far more ambitious effort than the day before, when, as Politico’s Roger Simon noted, our president devoted 100 fewer words to his public utterances on the collapsing economy than he did to toasting the president of Ghana at dinner.
Behind the-first-president-with-an-M.B.A.-and-a-lot-of-good-it-did-us stood the Fed chairman, Ben Bernanke, who appears to be actually running the government. On Thursday night, Bernanke had called Congressional leaders together and terrified them into supporting a quadrillion-dollar rescue plan. Legend has it that there was a time when these sorts of gatherings took place at the White House, but it would probably have really cast a pall on the president of Ghana’s big night.
Anyway, by the time Bush got around to making his speech, or at least a speechlet, Bernanke had already made the plan public. The stock market had rallied, and if the president had just stayed inside practicing his pending welcome for the Boston Celtics, the world would have little noted nor long remembered.
“This is no time for partisanship,” Bush concluded.
Bipartisanship! That’s the ticket. There have been more vicious political eras in the nation’s history, but probably never one in which so much vitriol has been mixed with so many demands for reaching across the aisle in fellowship.
Down in Florida, Barack Obama was also endorsing a bipartisan approach to the rescue. For good measure, he also tacked on a call on both parties to join together in backing “an emergency economic plan” crafted out of a whole bunch of things that the Republicans are never going to support in a million years.
Obama declined to provide many specifics. The most notable thing about his performance this week — besides his really extraordinary skill in packing large numbers of economic advisers onto a stage — has been his calm. Even this late in the campaign, it’s hard to tell whether it’s the product of wise serenity or a low metabolism. But, under present circumstances, it was definitely soothing.
John McCain, on the other hand, was angry. Still. He had been angry Monday, when he blamed the financial crisis on greedy speculators, and on Tuesday, when he blamed it on people who didn’t respect the American worker. He was furious on Wednesday, when he blamed the crisis on C.E.O.’s with golden parachutes until it was pointed out that one of his highest-profile advisers, Carly Fiorina, had sailed out of Hewlitt-Packard with a 24-karat whopper. On Thursday, he was mad at the head of the Securities Exchange Commission.
On Friday, McCain looked steamed when he gave a new policy speech in Wisconsin with Sarah Palin at his side. The Republicans have discovered that McCain can’t draw a crowd without Palin, and the dangers of letting her float off by herself are apparent. So the two are manacled together these days like Tony Curtis and Sidney Poitier in that old escape-from-a-chain-gang movie.
McCain’s proposals were pretty much in line with the emerging Washington consensus. The real theme of the speech was assignment of blame. Normally at times of great national trauma top politicians say they want to avoid finger-pointing. But the McCainian digit was ready for action, and its owner assured the audience that he had found “plenty of places to point.”
The main culprit, the finger’s final resting place, turned out to be — Obama! His opponent, McCain claimed, took campaign contributions from officials at Fannie Mae and Freddie Mac, and had a couple of former C.E.O.’s of Fannie Mae as advisers. “In a McCain-Palin administration, there will be no seat for these people at the policy-making table,” he vowed.
Given the amount of time the campaigns have spent arguing about the misdeeds of advisers, I think we might all be better off if the term was eliminated completely. From now on, everybody who is invited to consult with a candidate should be referred to as “complete-stranger-who-dropped-by-to-talk” or perhaps “the person I thought was a FedEx deliverer.”
Actually McCain’s remarks were a bit more muted than on Thursday, when he helped restore the financial markets’ shattered confidence by accusing Obama of responding to the crisis with “the kind of me-first, country-second politics” that “sees an economic crisis as a political opportunity instead of a time to lead.”
Still, he managed to get himself pretty riled up, culminating in a claim that people like Obama were “too busy gaming the system” to fix things, and that the junior senator from Illinois, despite his brief career in Washington, was smack dab in the middle of a “culture of lobbying and influence-peddling” that created the whole financial crisis.
He ended with a call for bipartisanship.
When DEMOCRATS want “bipartisanship” it means that Democrats KNOW they have been caught with their hands in the cookie jar!
BUT War,
is a time for Partisanship.
Pelosi and Obama must have something to hide here. They are being way to non-partisan about this issue.
No Congressional Investigation?
WTF? $700 Billion and No Congressional Investigation?
WORSE CONGRESS EVER !!!!!!!!!!!!!!!!!!!!!!!!!!!!!
It seems that there are a few people that are part of WallStreet who want to exploit everyone. I ma sure that they do not care that the market is in the tank as long as their pockets continue to be lined. I would hope that if there is any criminal wrongdoings, these people go to jail and never get out. I would also like them to lose their ill gotten gains. These so called financial wizards manipulate the market for PERSONAL gain. IT is time we change the whole system.
1. Dodd, Christopher J
S
D-CT
$133,900
2. Kerry, John
S
D-MA
$111,000
3. Obama, Barack
S
D-IL
$105,849
4. Clinton, Hillary
S
D-NY
$75,550
5. Kanjorski, Paul E
H
D-PA
$65,500
6. Bennett, Robert F
S
R-UT
$61,499
7. Johnson, Tim
S
D-SD
$61,000
8. Conrad, Kent
S
D-ND
$58,991
9. Davis, Tom
H
R-VA
$55,499
10. Bond, Christopher S ‘Kit’
S
R-MO
$55,400
11. Bachus, Spencer
H
R-AL
$55,300
12. Shelby, Richard C
S
R-AL
$55,000
13. Emanuel, Rahm
H
D-IL
$51,750
14. Reed, Jack
S
D-RI
$50,750
15. Carper, Tom
S
D-DE
$44,389
16. Frank, Barney
H
D-MA
$40,100
17. Maloney, Carolyn B
H
D-NY
$38,750
18. Bean, Melissa
H
D-IL
$37,249
19. Blunt, Roy
H
R-MO
$36,500
20. Pryce, Deborah
H
R-OH
$34,750
21. Miller, Gary
H
R-CA
$33,000
22. Pelosi, Nancy
H
D-CA
$32,750
23. Reynolds, Tom
H
R-NY
$32,700
24. Hoyer, Steny H
H
D-MD
$30,500
25. Hooley, Darlene
H
D-OR
$28,750
The way to playing online is financial. I think banks though.