A Lesson in Economic for Liberals

[Ropey]

The repeal of Glass Steagle in 1999 (that would be on Bill Clinton's watch and he signed the bill yanno) made it possible for Lehmann as well as all the other banks to over leverage. Fannie and Freddie at the ready to buy all the bad bundled loans gave them incentive to do it. As long as the economy was good, and it was pretty good for most of Bush's two terms, there was no problem. But then what would normally have been a minor cyclical recessionary trend in 2008 hit at the same time the housing bubble was peaking. With little or no investment in their homes, the 'bad debtors' simply stopped paying for them when things got tight. And as the foreclosures began to mount up, and there weren't enough buyers to take over the loans, housing values began to fall putting many under water. And more of the 'bad debtors' didn't see any reason to pay for a house worth less than the mortgage against them and they stopped paying their mortgages too.

And that's when the whole thing collapsed.

If the government hadn't been backing all those bad loans, most of those loans never would have been made and the few defaults on loans would have been the usual scenario in an ecnomic downturn and not that big a deal.

So its all interrelated, but if Congress had acted to rein in Fannie and Freddie when President Bush first asked them to do so, the housing bubble never would have developed to the extent it did and we wouldn't be in the horrible economic mess we are currently in that was made far worse by an incompetent President and Congress.

Banks should not be allowed to over leverage.
The government should not be backing or buying bad loans.
And everybody who takes on a 30-year mortgage should have at least 20% invested in that property so they are less motivated to walk away from their debt.

Kind of like in Canada.

 

[cbirch2]

The repeal of Glass Steagle in 1999 (that would be on Bill Clinton's watch and he signed the bill yanno) made it possible for Lehmann as well as all the other banks to over leverage. Fannie and Freddie at the ready to buy all the bad bundled loans gave them incentive to do it. As long as the economy was good, and it was pretty good for most of Bush's two terms, there was no problem. But then what would normally have been a minor cyclical recessionary trend in 2008 hit at the same time the housing bubble was peaking. With little or no investment in their homes, the 'bad debtors' simply stopped paying for them when things got tight. And as the foreclosures began to mount up, and there weren't enough buyers to take over the loans, housing values began to fall putting many under water. And more of the 'bad debtors' didn't see any reason to pay for a house worth less than the mortgage against them and they stopped paying their mortgages too.

And that's when the whole thing collapsed.

If the government hadn't been backing all those bad loans, most of those loans never would have been made and the few defaults on loans would have been the usual scenario in an ecnomic downturn and not that big a deal.

So its all interrelated, but if Congress had acted to rein in Fannie and Freddie when President Bush first asked them to do so, the housing bubble never would have developed to the extent it did and we wouldn't be in the horrible economic mess we are currently in that was made far worse by an incompetent President and Congress.

Banks should not be allowed to over leverage.
The government should not be backing or buying bad loans.
And everybody who takes on a 30-year mortgage should have at least 20% invested in that property so they are less motivated to walk away from their debt.

I love when conservatives go wrong in the first sentence. yea ill agree with a lot of that. Except Glass Steagall had nothing to do with leverage. It removed our separation between investment banks and commercial banks, but it alone didnt allow leverage that was 30:1. Most countries have no separation between the two types of banks. Theres really no reason to have the separation, as long as you can limit systemic risk. The SEC didnt do that.

But the point is that Fannie and Freddie allowed banks to amplify the amount of mortgages they sold. Ill agree with you that they are "problematic institutions", as krugman put it. But they arent the source of the problem. The situation was set up so that the institutions issuing the loans werent responsible for their outcome. They issue the loan and most likely get paid up front by someone else that wants to buy that mortgage, or a bundle of mortgages in a mortage backed security. They can then use the money from selling that mortgage to just lend out another mortgage. So the bank in effect makes its money based on the number of loans it can issue and then sell to someone else, rather than only on the interest of the loan.

Fannie and Freddie contributed to this problem but were hardly the cause. The cause was obviously a decoupling of risk from reward on the end of the private banking system. This is why i keep saying that fannie and freddies share of the subprime mortgage decreased as the bubble grew. The private sector was buying mortgages from the initial lending institutions faster than fannie and freddie were.

 

[American Horse]

The repeal of Glass Steagle in 1999 (that would be on Bill Clinton's watch and he signed the bill yanno) made it possible for Lehmann as well as all the other banks to over leverage. Fannie and Freddie at the ready to buy all the bad bundled loans gave them incentive to do it. As long as the economy was good, and it was pretty good for most of Bush's two terms, there was no problem. But then what would normally have been a minor cyclical recessionary trend in 2008 hit at the same time the housing bubble was peaking. With little or no investment in their homes, the 'bad debtors' simply stopped paying for them when things got tight. And as the foreclosures began to mount up, and there weren't enough buyers to take over the loans, housing values began to fall putting many under water. And more of the 'bad debtors' didn't see any reason to pay for a house worth less than the mortgage against them and they stopped paying their mortgages too.

And that's when the whole thing collapsed.

If the government hadn't been backing all those bad loans, most of those loans never would have been made and the few defaults on loans would have been the usual scenario in an ecnomic downturn and not that big a deal.

So its all interrelated, but if Congress had acted to rein in Fannie and Freddie when President Bush first asked them to do so, the housing bubble never would have developed to the extent it did and we wouldn't be in the horrible economic mess we are currently in that was made far worse by an incompetent President and Congress.

Banks should not be allowed to over leverage.
The government should not be backing or buying bad loans.
And everybody who takes on a 30-year mortgage should have at least 20% invested in that property so they are less motivated to walk away from their debt.

I love when conservatives go wrong in the first sentence. yea ill agree with a lot of that. Except Glass Steagall had nothing to do with leverage. It removed our separation between investment banks and commercial banks, but it alone didnt allow leverage that was 30:1. Most countries have no separation between the two types of banks. Theres really no reason to have the separation, as long as you can limit systemic risk. The SEC didnt do that.

But the point is that Fannie and Freddie allowed banks to amplify the amount of mortgages they sold. Ill agree with you that they are "problematic institutions", as krugman put it. But they arent the source of the problem. The situation was set up so that the institutions issuing the loans werent responsible for their outcome. They issue the loan and most likely get paid up front by someone else that wants to buy that mortgage, or a bundle of mortgages in a mortage backed security. They can then use the money from selling that mortgage to just lend out another mortgage. So the bank in effect makes its money based on the number of loans it can issue and then sell to someone else, rather than only on the interest of the loan.

Fannie and Freddie contributed to this problem but were hardly the cause. The cause was obviously a decoupling of risk from reward on the end of the private banking system. This is why i keep saying that fannie and freddies share of the subprime mortgage decreased as the bubble grew. The private sector was buying mortgages from the initial lending institutions faster than fannie and freddie were.

but weren't F&F the main agents of removing those mortgages from the books of the hanks, so that they could go on to make more loans, which the politicians demanded be made to non-creditworthy borrowers? The CRA was the stick, and Fannie and Freddie were the carrot. Without those two GSEs the whole scenario wouldn't have fed on itself like it did, filtering down to ever spiraling real estate appraisals, which became geared to nothing more than a willing buyer/willing seller formula. That's what I saw as a person working in the real estate industry, and saw advanced warnings about it a decade ahead of the debacle in the WSJ editorial pages.

 

[cbirch2]

The repeal of Glass Steagle in 1999 (that would be on Bill Clinton's watch and he signed the bill yanno) made it possible for Lehmann as well as all the other banks to over leverage. Fannie and Freddie at the ready to buy all the bad bundled loans gave them incentive to do it. As long as the economy was good, and it was pretty good for most of Bush's two terms, there was no problem. But then what would normally have been a minor cyclical recessionary trend in 2008 hit at the same time the housing bubble was peaking. With little or no investment in their homes, the 'bad debtors' simply stopped paying for them when things got tight. And as the foreclosures began to mount up, and there weren't enough buyers to take over the loans, housing values began to fall putting many under water. And more of the 'bad debtors' didn't see any reason to pay for a house worth less than the mortgage against them and they stopped paying their mortgages too.

And that's when the whole thing collapsed.

If the government hadn't been backing all those bad loans, most of those loans never would have been made and the few defaults on loans would have been the usual scenario in an ecnomic downturn and not that big a deal.

So its all interrelated, but if Congress had acted to rein in Fannie and Freddie when President Bush first asked them to do so, the housing bubble never would have developed to the extent it did and we wouldn't be in the horrible economic mess we are currently in that was made far worse by an incompetent President and Congress.

Banks should not be allowed to over leverage.
The government should not be backing or buying bad loans.
And everybody who takes on a 30-year mortgage should have at least 20% invested in that property so they are less motivated to walk away from their debt.

I love when conservatives go wrong in the first sentence. yea ill agree with a lot of that. Except Glass Steagall had nothing to do with leverage. It removed our separation between investment banks and commercial banks, but it alone didnt allow leverage that was 30:1. Most countries have no separation between the two types of banks. Theres really no reason to have the separation, as long as you can limit systemic risk. The SEC didnt do that.

But the point is that Fannie and Freddie allowed banks to amplify the amount of mortgages they sold. Ill agree with you that they are "problematic institutions", as krugman put it. But they arent the source of the problem. The situation was set up so that the institutions issuing the loans werent responsible for their outcome. They issue the loan and most likely get paid up front by someone else that wants to buy that mortgage, or a bundle of mortgages in a mortage backed security. They can then use the money from selling that mortgage to just lend out another mortgage. So the bank in effect makes its money based on the number of loans it can issue and then sell to someone else, rather than only on the interest of the loan.

Fannie and Freddie contributed to this problem but were hardly the cause. The cause was obviously a decoupling of risk from reward on the end of the private banking system. This is why i keep saying that fannie and freddies share of the subprime mortgage decreased as the bubble grew. The private sector was buying mortgages from the initial lending institutions faster than fannie and freddie were.

but weren't F&F the main agents of removing those mortgages from the books of the hanks, so that they could go on to make more loans, which the politicians demanded be made to non-creditworthy borrowers? The CRA was the stick, and Fannie and Freddie were the carrot. Without those two GSEs the whole scenario wouldn't have fed on itself like it did, filtering down to ever spiraling real estate appraisals, which became geared to nothing more than a willing buyer/willing seller formula. That's what I saw as a person working in the real estate industry, and saw advanced warnings about it a decade ahead of the debacle in the WSJ editorial pages.

From the statistics i see private investors owned well over half of the subprime mortgage market.

 

[American Horse]

I love when conservatives go wrong in the first sentence. yea ill agree with a lot of that. Except Glass Steagall had nothing to do with leverage. It removed our separation between investment banks and commercial banks, but it alone didnt allow leverage that was 30:1. Most countries have no separation between the two types of banks. Theres really no reason to have the separation, as long as you can limit systemic risk. The SEC didnt do that.

But the point is that Fannie and Freddie allowed banks to amplify the amount of mortgages they sold. Ill agree with you that they are "problematic institutions", as krugman put it. But they arent the source of the problem. The situation was set up so that the institutions issuing the loans werent responsible for their outcome. They issue the loan and most likely get paid up front by someone else that wants to buy that mortgage, or a bundle of mortgages in a mortage backed security. They can then use the money from selling that mortgage to just lend out another mortgage. So the bank in effect makes its money based on the number of loans it can issue and then sell to someone else, rather than only on the interest of the loan.

Fannie and Freddie contributed to this problem but were hardly the cause. The cause was obviously a decoupling of risk from reward on the end of the private banking system. This is why i keep saying that fannie and freddies share of the subprime mortgage decreased as the bubble grew. The private sector was buying mortgages from the initial lending institutions faster than fannie and freddie were.

but weren't F&F the main agents of removing those mortgages from the books of the hanks, so that they could go on to make more loans, which the politicians demanded be made to non-creditworthy borrowers? The CRA was the stick, and Fannie and Freddie were the carrot. Without those two GSEs the whole scenario wouldn't have fed on itself like it did, filtering down to ever spiraling real estate appraisals, which became geared to nothing more than a willing buyer/willing seller formula. That's what I saw as a person working in the real estate industry, and saw advanced warnings about it a decade ahead of the debacle in the WSJ editorial pages.

From the statistics i see private investors owned well over half of the subprime mortgage market.

I'm fine with that, but how much of that other half had originally passed through F&F? Do we know that?

 

[Toddsterpatriot]

Why are you obsessing over fannie and freddie? The problem was that the SEC allowed banks like lehman to leverage up to 30:1.

Lehman isn't going to cost the taxpayer a thing.

Fannie and Freddie are costing us over $100 billion.

 

[cbirch2]

The repeal of Glass Steagle in 1999 (that would be on Bill Clinton's watch and he signed the bill yanno) made it possible for Lehmann as well as all the other banks to over leverage. Fannie and Freddie at the ready to buy all the bad bundled loans gave them incentive to do it. As long as the economy was good, and it was pretty good for most of Bush's two terms, there was no problem. But then what would normally have been a minor cyclical recessionary trend in 2008 hit at the same time the housing bubble was peaking. With little or no investment in their homes, the 'bad debtors' simply stopped paying for them when things got tight. And as the foreclosures began to mount up, and there weren't enough buyers to take over the loans, housing values began to fall putting many under water. And more of the 'bad debtors' didn't see any reason to pay for a house worth less than the mortgage against them and they stopped paying their mortgages too.

And that's when the whole thing collapsed.

If the government hadn't been backing all those bad loans, most of those loans never would have been made and the few defaults on loans would have been the usual scenario in an ecnomic downturn and not that big a deal.

So its all interrelated, but if Congress had acted to rein in Fannie and Freddie when President Bush first asked them to do so, the housing bubble never would have developed to the extent it did and we wouldn't be in the horrible economic mess we are currently in that was made far worse by an incompetent President and Congress.

Banks should not be allowed to over leverage.
The government should not be backing or buying bad loans.
And everybody who takes on a 30-year mortgage should have at least 20% invested in that property so they are less motivated to walk away from their debt.

I love when conservatives go wrong in the first sentence. yea ill agree with a lot of that. Except Glass Steagall had nothing to do with leverage. It removed our separation between investment banks and commercial banks, but it alone didnt allow leverage that was 30:1. Most countries have no separation between the two types of banks. Theres really no reason to have the separation, as long as you can limit systemic risk. The SEC didnt do that.

But the point is that Fannie and Freddie allowed banks to amplify the amount of mortgages they sold. Ill agree with you that they are "problematic institutions", as krugman put it. But they arent the source of the problem. The situation was set up so that the institutions issuing the loans werent responsible for their outcome. They issue the loan and most likely get paid up front by someone else that wants to buy that mortgage, or a bundle of mortgages in a mortage backed security. They can then use the money from selling that mortgage to just lend out another mortgage. So the bank in effect makes its money based on the number of loans it can issue and then sell to someone else, rather than only on the interest of the loan.

Fannie and Freddie contributed to this problem but were hardly the cause. The cause was obviously a decoupling of risk from reward on the end of the private banking system. This is why i keep saying that fannie and freddies share of the subprime mortgage decreased as the bubble grew. The private sector was buying mortgages from the initial lending institutions faster than fannie and freddie were.

but weren't F&F the main agents of removing those mortgages from the books of the hanks, so that they could go on to make more loans, which the politicians demanded be made to non-creditworthy borrowers? The CRA was the stick, and Fannie and Freddie were the carrot. Without those two GSEs the whole scenario wouldn't have fed on itself like it did, filtering down to ever spiraling real estate appraisals, which became geared to nothing more than a willing buyer/willing seller formula. That's what I saw as a person working in the real estate industry, and saw advanced warnings about it a decade ahead of the debacle in the WSJ editorial pages.

And loans that were issued by CRA regulated institutions consistently outperformed loans issued by unregulated banks. Despite what you would think, CRA regulated banks were less likely to buy subprime loans than unregulated banks.

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

 

[cbirch2]

Why are you obsessing over fannie and freddie? The problem was that the SEC allowed banks like lehman to leverage up to 30:1.

Lehman isn't going to cost the taxpayer a thing.

Fannie and Freddie are costing us over $100 billion.

The collapse of Lehman cost us nothing? The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.

The collapse of Lehamn cost nothing....jeez....

fannie and freddie have very little real losses attributable to them. much of the loss incurred by fannie and freddie are the result of losses by other banks, like lehman brothers

 

[Toddsterpatriot]

Why are you obsessing over fannie and freddie? The problem was that the SEC allowed banks like lehman to leverage up to 30:1.

Lehman isn't going to cost the taxpayer a thing.

Fannie and Freddie are costing us over $100 billion.

The collapse of Lehman cost us nothing? The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.

The collapse of Lehamn cost nothing....jeez....

fannie and freddie have very little real losses attributable to them. much of the loss incurred by fannie and freddie are the result of losses by other banks, like lehman brothers

The taxpayers aren't on the hook for Lehman. We are on the hook for Fannie and Freddie.

 

[Toddsterpatriot]

Why are you obsessing over fannie and freddie? The problem was that the SEC allowed banks like lehman to leverage up to 30:1.

Lehman isn't going to cost the taxpayer a thing.

Fannie and Freddie are costing us over $100 billion.

The collapse of Lehman cost us nothing? The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.

The collapse of Lehamn cost nothing....jeez....

fannie and freddie have very little real losses attributable to them. much of the loss incurred by fannie and freddie are the result of losses by other banks, like lehman brothers

The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.


If you're talking about TARP, the banks repaid their portion of TARP at a profit to the Treasury. Fannie and Freddie still owe almost $200 billion.

Bailout List: Banks, Auto Companies, and More | Eye on the Bailout | ProPublica

 

[snjmom]

I am so sick of the BIG LIE.

You don't think Forbes is a left-leaning publication, I hope.

Lest We Forget: Why We Had A Financial Crisis

The story of the 2008 financial crisis


So let’s recap the basic facts: why did we have a financial crisis in 2008? Barry Ritholtz fills us in on the history with an excellent series of articles in the Washington Post:

In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business.

Low interest rates fueled an apparent boom: Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

Asset managers sought new ways to make money: Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities.

The credit rating agencies gave their blessing: The credit ratings agencies — Moody’s, S&P and Fitch had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

Fund managers didn’t do their homework: Fund managers relied on the ratings of the credit rating agencies and failed to do adequate due diligence before buying them and did not understand these instruments or the risk involved.

Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error. By 2008, only two of the five banks had survived, and those two did so with the help of the bailout.

The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly.

Compensation schemes encouraged gambling: Wall Street’s compensation system was—and still is—based on short-term performance, all upside and no downside. This creates incentives to take excessive risks. The bonuses are extraordinarily large and they continue–$135 billion in 2010 for the 25 largest institutions and that is after the meltdown.

Wall Street became “creative”: The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations.

Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

Financial gadgets milked the market: “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality.

Derivatives exploded uncontrollably: CDOs provided the first “infinite market”; at height of crash, derivatives accounted for 3 times global economy.

The boom and bust went global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”

Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.

Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.

It was primarily private lenders who relaxed standards: Private lenders not subject to congressional regulations collapsed lending standards. the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.

The driving force behind the crisis was the private sector.

Fannie and Freddie didn't buy all those MBS. Wall St. did until Bear collapsed and Lehman imploded.

 

[Toddsterpatriot]

I am so sick of the BIG LIE.

You don't think Forbes is a left-leaning publication, I hope.

Lest We Forget: Why We Had A Financial Crisis

The story of the 2008 financial crisis


So let’s recap the basic facts: why did we have a financial crisis in 2008? Barry Ritholtz fills us in on the history with an excellent series of articles in the Washington Post:

In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business.

Low interest rates fueled an apparent boom: Following the dot-com bust in 2000, the Federal Reserve dropped rates to 1 percent and kept them there for an extended period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

Asset managers sought new ways to make money: Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities.

The credit rating agencies gave their blessing: The credit ratings agencies — Moody’s, S&P and Fitch had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

Fund managers didn’t do their homework: Fund managers relied on the ratings of the credit rating agencies and failed to do adequate due diligence before buying them and did not understand these instruments or the risk involved.

Derivatives were unregulated: Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

The SEC loosened capital requirements: In 2004, the Securities and Exchange Commission changed the leverage rules for just five Wall Street banks. This exemption replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. This allowed unlimited leverage for Goldman Sachs [GS], Morgan Stanley, Merrill Lynch (now part of Bank of America [BAC]), Lehman Brothers (now defunct) and Bear Stearns (now part of JPMorganChase–[JPM]). These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage left little room for error. By 2008, only two of the five banks had survived, and those two did so with the help of the bailout.

The federal government overrode anti-predatory state laws. In 2004, the Office of the Comptroller of the Currency federally preempted state laws regulating mortgage credit and national banks, including anti-predatory lending laws on their books (along with lower defaults and foreclosure rates). Following this change, national lenders sold increasingly risky loan products in those states. Shortly after, their default and foreclosure rates increased markedly.

Compensation schemes encouraged gambling: Wall Street’s compensation system was—and still is—based on short-term performance, all upside and no downside. This creates incentives to take excessive risks. The bonuses are extraordinarily large and they continue–$135 billion in 2010 for the 25 largest institutions and that is after the meltdown.

Wall Street became “creative”: The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations.

Private sector lenders fed the demand: These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to relax underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

Financial gadgets milked the market: “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

Commercial banks jumped in: To keep up with these newfangled originators, traditional banks jumped into the game. Employees were compensated on the basis loan volume, not quality.

Derivatives exploded uncontrollably: CDOs provided the first “infinite market”; at height of crash, derivatives accounted for 3 times global economy.

The boom and bust went global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust. A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”

Fannie and Freddie jumped in the game late to protect their profits: Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision.

Fannie Mae and Freddie Mac market share declined. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. The government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.

It was primarily private lenders who relaxed standards: Private lenders not subject to congressional regulations collapsed lending standards. the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.

The driving force behind the crisis was the private sector.

Fannie and Freddie didn't buy all those MBS. Wall St. did until Bear collapsed and Lehman imploded.

In 1998, banks got the green light to gamble: The Glass-Steagall legislation, which separated regular banks and investment banks was repealed in 1998. This allowed banks, whose deposits were guaranteed by the FDIC, i.e. the government, to engage in highly risky business

It was awful. They could suddenly write mortgages. They lost billions!

 

[Bfgrn]

Energy Policy Act of 2005 - Wikipedia, the free encyclopedia

Dude...come on.....Wikipedia? Really? Wikipedia is the only source of information I have specifically banned in my class for students to use as a source of reference. None of my colleagues allow it either that I am aware of. The other links you provided I will accept pending further investigation.

The waivers are only a hold over until the interstate insurance exchanges are set up in 2014, at which point they wont be necessary in such huge numbers.

Why are they even necessary at all? I have a feeling...just a slight little hunch that those waivers will remain intact.

Regardless, it's not the point. I only brought it up to demonstrate that crony capitalism exists on both sides of the aisle. I could have just as easily have brought up Solyndra or a million other things. It's total bullshit regardless of which party is doing it. Additionally, look at the language I used in my post. I said "I don't think you will hear many people argue that we should lift regulations that provide clean drinking water.....". I didn't say you would never hear anyone make that argument. I try very hard to avoid speaking in absolutes because there is almost always an exception.

Holy fuck...you post Fox Nation and Daily Caller; founded by Tucker Carlson and Neil Patel, former adviser to former Vice President Dick Cheney as reliable sources...and you have the NERVE to question sources? You are no teacher. You're a poser. Now you pissed me off.

The waiver is necessary because of corporate malfeasance called mini-meds. It is exactly the kind of regulation that is needed to get rid of corporate garbage designed to rip people off!

Here are the facts:

Today, over 165 million Americans get their health insurance through an employer—comprising nearly 70 percent of America’s insured population. Employers offer health insurance as a way to attract the best and brightest candidates in the work force. Employer-based insurance is the most common and efficient source of insurance coverage, which is why the Affordable Care Act takes steps to strengthen the employer-sponsored insurance market and make it easier and affordable for businesses to offer coverage to their workers.

However, not all coverage offered by employers is the same. Employers who hire full time middle to high income workers tend to offer more comprehensive plans that cover essential health benefits (hospital care, physician visits, preventive services, among others) and provide sufficient security against financial risk of illness and accidents for their employees. These employers offer more comprehensive coverage because workers are more likely to be able to pay their share of the premium. Workers at these firms are also more likely to work at the company for an extended period of time, making it good business sense for employers to invest in their workers’ long-term health since good health is linked to increased productivity. The law ensures this system continues, while helping to lower health care costs and providing financial support for employers who offer coverage to their retirees too young for Medicare through the Early Retiree Reinsurance Program.

Unfortunately, many workers don’t have this kind of quality coverage. Employers who hire lower wage, part time or seasonal workers are more likely to offer limited benefit plans. Retail or chain restaurant employers frequently offer limited benefit plans that contain less comprehensive coverage and annual dollar limits on how much workers can receive in health coverage. The premiums for these limited benefit policies (known as mini-meds) are significantly lower than for policies with comprehensive coverage and are more affordable for lower wage workers and their families. In exchange for the low premiums, these policies generally come with high deductibles and annual dollar caps as low as $2,000. In addition, in many cases, employees are paying the full cost of the insurance policy, with no help from their employer.

The good news is that mini-meds will be eliminated in 2014, thanks to provisions that phase out insurance companies’ use of annual limits between now and 2014. The “phase out” has already begun to kick in, and in 2014 when annual limits are completely eliminated, consumers be able to purchase health insurance in state-based Exchanges -- new competitive marketplaces – where consumers and small businesses can shop for private coverage and will have the market power similar to large employers.

The bad news is that today mini-meds are often the only affordable option for many low-wage workers because retail and chain restaurants rarely offer their workers options beyond these plans. And because mini-meds are built around annual limits, estimates from employers and insurers indicate that beginning the phase out of annual limits this year would cause mini-med premiums to rise by more than 200 percent, forcing employers to drop coverage and sending many low-wage workers to purchase insurance on the more expensive individual insurance market, where they would get an even worse deal than what they have today. The result would be a whole new population of uninsured Americans.

To ensure that we protect the coverage that these workers have today until better options are available for them in 2014, the law allows HHS, in extreme cases, to issue temporary waivers from the phase out of annual limits. There are some important facts to remember about these temporary waivers:

The waivers only apply to one provision of the law – the provisions phasing out annual limits. Insurance companies and employers that receive waivers must comply with all other parts of the Affordable Care Act.

The waivers last one year. Insurance companies must reapply for the waivers each year between now and 2014 when annual limits on coverage will be completely prohibited and individuals will have more affordable and better private insurance choices in the competitive Exchange markets.

All employers and insurers that offer mini-med plans may apply for a waiver if they demonstrate that there will be large increases in premiums or a significant decrease in access to coverage without a waiver. You can read a list of employers and insurers that have received waivers here.

HHS also took an additional step to ensure these workers know more about mini-med policies and the limited coverage they may be buying. The Administration is requiring the issuers of limited benefit plans to notify consumers in plain language that their plan offers extremely limited benefits and direct them to Home | HealthCare.gov, where they may be able to find better coverage options. The Administration has also restricted the sale of new mini-med policies, except under some limited circumstances. You can read more about this new announcement here.

 

[Bfgrn]

All documented in the Congressional record:

2001

•April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity." (2002 Budget Analytic Perspectives, pg. 142)
2002

•May: The Office of Management and Budget (OMB) calls for the disclosure and corporate governance principles contained in the President's 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
2003

•February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market.



•September: Then-Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.



•September: Then-House Financial Services Committee Ranking Member Barney Frank (D-MA) strongly disagrees with the Administration's assessment, saying "these two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis … The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." (Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie Mae," The New York Times, 9/11/03)



•October: Senator Thomas Carper (D-DE) refuses to acknowledge any necessity for GSE reforms, saying "if it ain't broke, don't fix it." (Sen. Carper, Hearing of Senate Committee on Banking, Housing, and Urban Affairs, 10/16/03)



•November: Then-Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
2004

•February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital and calls for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore … should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)



•February: Then-CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)



•April: Rep. Frank ignores the warnings, accusing the Administration of creating an "artificial issue." At a speech to the Mortgage Bankers Association conference, Rep. Frank said "people tend to pay their mortgages. I don't think we are in any remote danger here. This focus on receivership, I think, is intended to create fears that aren't there." ("Frank: GSE Failure A Phony Issue," American Banker, 4/21/04)



•June: Then-Treasury Deputy Secretary Samuel Bodman spotlights the risk posed by the GSEs and calls for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
2005

•April: Then-Secretary Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America … Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)



•July: Then-Minority Leader Harry Reid rejects legislation reforming GSEs, "while I favor improving oversight by our federal housing regulators to ensure safety and soundness, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process." ("Dems Rip New Fannie Mae Regulatory Measure," United Press International, 7/28/05)
2007

•August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, the White House, 8/9/07)



•August: Senate Committee on Banking, Housing and Urban Affairs Chairman Christopher Dodd ignores the President's warnings and calls on him to "immediately reconsider his ill-advised" position. (Eric Dash, "Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected, As Critics Complain Of Opportunism," The New York Times, 8/11/07)



•December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, the White House, 12/6/07)
2008

•February: Assistant Treasury Secretary David Nason reiterates the urgency of reforms, saying "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)



•March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)



•April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)



•May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.


◦"Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow state housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)



◦"[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)



◦"Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)


•June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)



•July: Congress heeds the President's call for action and passes reform legislation for Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.



•September: Democrats in Congress forget their previous objections to GSE reforms, as Senator Dodd questions "why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem? … I have a lot of questions about where was the administration over the last eight years." (Dawn Kopecki, "Fannie Mae, Freddie 'House Of Cards' Prompts Takeover," Bloomberg, 9/9/08)

Video record:Video Evidence McCain and Bush both Warned Democrats Early On - POST SCRIPTS

WASHINGTON — When US Representative Barney Frank spoke in a packed hearing room on Capitol Hill seven years ago, he did not imagine that his words would eventually haunt a reelection bid.

The issue that day in 2003 was whether mortgage backers Fannie Mae and Freddie Mac were fiscally strong. Frank declared with his trademark confidence that they were, accusing critics and regulators of exaggerating threats to Fannie’s and Freddie’s financial integrity. And, the Massachusetts Democrat maintained, “even if there were problems, the federal government doesn’t bail them out.’’

Now, it’s clear he was wrong on both points — and that his words have become a political liability as he fights a determined challenger to win a 16th term representing the Fourth Congressional District. Fannie and Freddie collapsed in 2008, forcing the federal government to buy $150 billion worth of stock in the enterprises and $1.36 trillion worth of mortgage-backed securities.

Frank, in his most detailed explanation to date about his actions, said in an interview he missed the warning signs because he was wearing ideological blinders. He said he had worried that Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable housing.

“I was late in seeing it, no question,’’ Frank said about the lenders’ descent into insolvency.

Frank haunted by stance on Fannie, Freddie - The Boston Globe

Maybe some could take off the ideological blinders and admit that while President George W. Bush is responsible for many things that I think are indefensible, he was not the one responsible for the housing bubble crash of 2008.

Right wing fairy tales.

Here is what we DO know:

1) The financial crisis was not caused by low and middle income families buying a home.

2) It was not caused by dead beat poor people.

3) Fannie and Freddie were not to cause.

4) The Community Investment Act was not the culprit either.

The crisis was caused by private lending, to mostly upper middle class and the wealthy. ONLY 6% of of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas. The majority of those foreclosed on were wealthy and upper middle class, plus a large segment of buyers who were wealthy home flippers looking for a fast buck. They strategically walked away from their mortgages, leaving people who bought homes to live in with lower values on their house and neighborhood.

AND, what really sucks for the right wing propaganda of lies, all the way back to the late '90's there was one very outspoken and vocal critic of predatory lending practices, they even held protests at companies like Wells Fargo and Lehman Brothers...ACORN


WSJ - Fed’s Kroszner: Don’t Blame CRA

WSJ - Fed’s Kroszner: Don’t Blame CRA - The Sequel

Reuters - UPDATE 2-Lending to poor didn't spur crisis

Don't Blame the Community Reinvestment Act

Business Insider - Here's Why Fannie And Freddie Are Not At Fault For The Housing Bubble

Center for Responsible Lending - CRA is not to Blame for the Mortgage Meltdown

Don't blame Fannie and Freddie

Private sector loans, not Fannie or Freddie, triggered crisis

ForeclosureS.com - ACORN - Progress in the Fight Against Predatory Lending

Acorn Led Financial Sector With Warnings on Lending

Biggest Defaulters on Mortgages Are the Rich

The Millionaire Foreclosure Club

Foreclosure double standard: Why the rich get away with defaulting

More Rich People Default On Mortgages

The rich bail faster on mortgages

Biggest Defaulters on Mortgages Are the Rich

Rich Borrowers More Likely to Default on Mortgage

Foreclosures & Walking Away: 60 Minutes Eyes an ‘Epidemic’

Speculation By Investors Largely Cause Of Foreclosure Crisis

How the Foreclosure Crisis Started: Investors, Speculators, Mortgage Fraud & Lax Lending Standards


"Eighty percent of Republicans are just Democrats that don't know what's going on"
Robert F. Kennedy Jr.

 

[Bfgrn]

Maybe some could take off the ideological blinders and admit that while President George W. Bush is responsible for many things that I think are indefensible, he was not the one responsible for the housing bubble crash of 2008.

Maybe you just FORGOT...

Bush's 'ownership society'

"America is a stronger country every single time a family moves into a home of their own," George W. Bush said in October 2004. To achieve his vision, Bush pushed new policies encouraging homeownership, like the "zero-down-payment initiative," which was much as it sounds—a government-sponsored program that allowed people to get mortgages without a down payment. More exotic mortgages followed, including ones with no monthly payments for the first two years. Other mortgages required no documentation other than the say-so of the borrower. Absurd though these all were, they paled in comparison to the financial innovations that grew out of the mortgages—derivatives built on other derivatives, packaged and repackaged until no one could identify what they contained and how much they were, in fact, worth.

As we know by now, these instruments have brought the global financial system, improbably, to the brink of collapse.

End of the ‘Ownership Society’

 

[Bfgrn]

Companies say they aren't hiring because of a lack of "demand".

Republicans hear, "Companies aren't hiring because of "uncertainty".

True story.

Here, let me say that again.

Let's see what Democratic businessman Steve Wynn has to say on the matter:

"I'm saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime," Wynn said in an investor conference call published by Business Insider.

"I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right."

Don't think Wynn is acting as some sort of voice box for the Republican party, either. He's not.

Any business owner should fear Obama, he says.


"That's true of Democratic businessman and Republican businessman, and I am a Democratic businessman and I support Harry Reid."

Steve Wynn: Obama Is Killing the Economy


You'll love this video

Steve Wynn on the Economy, Jobs & Hotels - CNBC

Now....you were saying?

Wynn or any other businessman that hires, fire, builds or demolishes based on 'the pwesident dwoesn't wike me' is a MORON, just like YOU.

You 'claim' economic acumen and preach the religion of free markets...and you don't even understand how the fuck business works. Wynn will not build any new hotels in Vegas if people don't DEMAND rooms and have money to spend on entertainment.

AND, he will pick up a shovel and dig his little ass off finishing the foundation of a new hotel when there IS A DEMAND for rooms people have money to spend on entertainment.

It seems Las Vegas hasn't done enough for Steve Wynn

John L. Smith

Billionaire casino boss Steve Wynn says he's seriously considering moving his company's headquarters to Macau, where he plans to build a third gambling palace.

Really.

"I love it out here," Wynn told a Reuters reporter in Macau. "I'm going to bring it (the potential relocation) up at our board meeting in May. But I have to persuade my staff first."

Persuade his staff? That's a good one. It's hard to imagine any Wynn employee standing up to the boss.

When BusinessWeek reporters followed up, Wynn gave them an earful:

"I don't think the Las Vegas market at the moment beckons a large investment. The economic outlook in the United States, the policies of this administration, which do not favor job formation, do not encourage investment at all."

I've noticed no Nevada elected officials or Chamber of Commerce members have blasted Wynn for kicking the Las Vegas economy while it's down. Although they chose their words carefully, for fear of offending the generous benefactor and formidable enemy, Nevada politicians seemed surprised by Wynn's comments.

Not me.

Wynn's inability to self-edit grows each year. It makes me wonder whether anyone on his board of directors ever whispers anything but affirmation in his ear.

It's hardly the first time Wynn has bellowed about how hard it is to do business. When the British failed to license him in the early 1980s, he screamed politics. When New Jersey regulators scrutinized his casino customers, he called it oppressive. When the going gets tough in Las Vegas, he enthuses over Macau, an outpost with almost no history of regulation.

Wynn's comments are not only offensive, they're also metaphorically inaccurate. You see, he doesn't really do much business in the United States.

He does business in Las Vegas, where casino barons rule and are treated with gushing adulation usually reserved for pop stars and pinup girls. Wynn has had the best of it here for decades.

When Wynn owned the Golden Nugget, he decided he needed to expand toward Carson Street. City fathers helped him close it.

When Wynn fell in love with the idea of swimming with dolphins, a federally protected species, Nevada politicians rallied to help him make the laughable argument that dolphins at a casino were really about giving Clark County schoolchildren an educational opportunity.

When Wynn's taste in art translated into a growing personal collection worth many millions, the Legislature couldn't wait to please him by passing the infamous "Show Me the Monet" art tax break.

The list is long and newsprint is expensive. The bottom line: Las Vegas has been very good to Steve Wynn.

And Wynn's resorts have been among the finest in Las Vegas history. He has put to work thousands of people and carved out a reputation as a visionary in a business where someone who can read a wine list is treated as if he has discovered the Salk vaccine.

Wynn does business in Las Vegas, where Gaming Inc. pays a 6.75 percent tax rate and casino bosses bray like thunderstruck donkeys when someone reminds them Mississippi casinos pay 8 percent, Atlantic City casinos contribute 9, and Louisiana riverboats pay 21.5.

Wynn claims he is sincerely considering moving his headquarters to Macau, an Asian mob-infested smuggler's paradise ruled by a communist government where casinos pay an aggregate 40 percent tax rate.

This is the atmosphere he says is less oppressive than the United States?

It's no secret Wynn is making a major score in Macau, where the Chinese control the flow of travel visas and have the ability to nationalize the casino industry at any time. It's also obvious Las Vegas, which has given Wynn everything he has ever asked, is struggling. Unlike Wynn, most locals can't cut and run.

If after all Las Vegas has done for Steve Wynn isn't enough to engender his loyalty, then there's only one thing left to do.

Help the ingrate pack.

It seems Las Vegas hasn't done enough for Steve Wynn - News - ReviewJournal.com

 

[Bfgrn]

Our 'lower taxes' still result in the second highest, by a tiny fraction, corporate tax rate in the world and our Fearless Leader is just salivating with intent to raise it. We have much more government interference now and multiple times more regulation than we had a half century ago.

AGAIN, you LIE!

A Call to Overhaul Corporate Taxes - Wall Street Journal

In his State of the Union address, Mr. Obama said he wanted to lower the corporate tax rate, now at 35%, "without adding to our deficit." That means offsetting any cut in the overall rate by ending scores of broad tax deductions, the impact of which would be distributed unevenly across corporate America.

 

[cbirch2]

Lehman isn't going to cost the taxpayer a thing.

Fannie and Freddie are costing us over $100 billion.

The collapse of Lehman cost us nothing? The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.

The collapse of Lehamn cost nothing....jeez....

fannie and freddie have very little real losses attributable to them. much of the loss incurred by fannie and freddie are the result of losses by other banks, like lehman brothers

The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.


If you're talking about TARP, the banks repaid their portion of TARP at a profit to the Treasury. Fannie and Freddie still owe almost $200 billion.

Bailout List: Banks, Auto Companies, and More | Eye on the Bailout | ProPublica

The idea that TARP has been repaid is pretty ridiculous. Unless you consider filling in one loan with another credible.

But if your really going to take it that far its a moot point anyway, because both will eventually be repaid.

 

[snjmom]

It was awful. They could suddenly write mortgages. They lost billions!

Are you a complete idiot? How many residential mortgages did Goldman Sachs write before 98? They could suddenly gamble with (invest in riskier instruments for greater profit) your FDIC insured deposit money. You know, like the Savings and Loan collapse.

Here is a thought to chew on. Profit = risk. How profitable should the financial sector that underpins our economy and allows it to operate as one with freely moving capital be?

 

[Toddsterpatriot]

The collapse of Lehman cost us nothing? The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.

The collapse of Lehamn cost nothing....jeez....

fannie and freddie have very little real losses attributable to them. much of the loss incurred by fannie and freddie are the result of losses by other banks, like lehman brothers

The collapse of lehman brought the banking system to its knees and forced an $800 billion bailout.


If you're talking about TARP, the banks repaid their portion of TARP at a profit to the Treasury. Fannie and Freddie still owe almost $200 billion.

Bailout List: Banks, Auto Companies, and More | Eye on the Bailout | ProPublica

The idea that TARP has been repaid is pretty ridiculous. Unless you consider filling in one loan with another credible.

But if your really going to take it that far its a moot point anyway, because both will eventually be repaid.

The banks haven't repaid their portion of TARP?

The banks replaced their TARP loans with other loans? Who did they borrow from?

The only parts of TARP that will lose money are the auto part, the Fannie and Freddie part and the mortgage give away part.

The bank part was profitable.