How Alan Greenspan Destroyed America

[Bombur]

• Politicians who pushed loans for people who shouldn't have had them
• Ratings agencies that completely fucked up and over-rated many securities
• An abject failure of regulatory agencies to do their fucking job
• Greed on the part of a variety of financial services operations with a variety of securities
• Consumers who willingly signed on the bottom line for a home they knew they couldn't afford
• A culture of conspicuous consumption at all income and age strata

.

Politicians, yes absolutely.
Consumers, yes absolutely.
Culture, yes absolutely.

When Michael Jackson can make $100 Million a year, and have an estimated debt of $500 Million when he died.... that's consumer and culture, resulting in insanity.

And the politicians pushed it.

So I'm with you on that. However the rest of that, I'm not so sure about.

Greed.

Human nature hasn't changed in 10 years, 20, 40, 100, 200, 1000, 2000 years, 4000 years.

If the problem was greed, then why did the problem not happen 50 years ago? Or 100 years ago? Or 1000 years ago? There's no evidence to support that all the benevolent bankers of 50 years ago, magically became greedy all of a sudden. Just not a supportable claim.

Failure of the Regulators.

What evidence do you have of that? I can't find anything to suggest that the regulators were not doing exactly what they were expected to do.

Some people (I am not accusing you specifically), seem to get this idea that 'if there is a problem, then they were not doing their job'. That's not true. That's like saying if there is ever any crime, then police are not doing their job.

The police could be doing their job perfectly, and still have crime. Similarly, the regulators could be operating perfectly, and still have a crash.

Remember, banking by it's very nature is risk taking. You can't regulate out risk, or there would be no banking system at all. The very act of giving a loan, automatically includes the risk of default. The very act of investing, inherently includes the risk of failure.

But all of this ignores the fundamental problem of the regulators. The regulators are tools of the state. If the state wants banks to make sub-prime loans (which it did), do you think the state would allow the state regulator to at the same time penalize banks for making the loans the state wanted? Do you think Bill Clinton would allow the SEC to penalize banks for making the loans Bill Clinton pushed them to make? Can you imagine the fire storm in the press over that?

Of course not. When you realize this, the regulators were doing exactly as they were expected to do.

Rating Agencies.

First off, why do we even have a "big three" rating agencies? Why do we have Moody's, S&P and Fitch?

Here's the dirty little secret of the whole thing. Every time you regulate an industry, naturally by the very act of regulating it, you end up with a monopoly by a few state preferred players.

In the 1960s, there were dozens of independent auto manufacturers. In the 1970s they regulated the hell out of the auto industry. By 1980s, there were the big three.

In the 1960s there were dozens of rating agencies, and buyers went to their rating agency of choice, and paid them to rate investments for them. In 1975 the SEC created "Nationally Recognized Statistical Rating Organization", a certification which was bestowed on a few selected credit rating agencies. By the 1990s, there was only three.

Simply because the certification existed, it eliminated competition, because if S&P is certified, and some other agency is not, who is the average joe investment buyer going to go with? Well obviously S&P must be more trusted because the government gave them a certification.

In reality it had nothing to do with "trust worthy" as much as government agencies wanted a standard to buy investments with. Government workers Union, wanted a standard to invest workers pensions into.

So the Government Unions, and other government programs could only buy investments rated by S&P, Moodys, and Fitch. Well of course, now that the big three had a lock on those investments, they could start charging the issuers of those investments.

Before, the government workers union, would ask S&P to rate X investment for them, and then decide to buy it. Well of course, if the investment was bad, they spent the money to have an investment rated that they didn't use. But now, if you have an investment, and you want any government agency (the largest buyer of investments) to buy your stuff, you have to have a S&P rating..... and S&P knows it. So they can charge you to get that rating, or your investment won't sell.

The government setup this whole deal.

Additionally, and this is something that a ton of people don't know.... but the very first AAA rated sub-prime loan, was because of a contract by Freddie Mac.... which guaranteed the sub-prime loan, with the AAA rating.

So even the rating agencies were following the dictates of government.

There are a lot of regulations in place that if followed and enforced would have helped. You can throw out any reason you want to make up for why these regulations were not followed or enforced but that doesn't change the fact that they weren't followed.

Fannie Mac guaranteed MBS.

It is not the government's fault that ratings agencies didn't do their job.

It is not the government's fault that financial institutions made bad decisions.

Ultimately everyone thought the MBS creation process actually created securities worth a AAA rating and made decisions based off of that perception. All of them are responsible for making sure that the AAA rating is correct. All of them failed.

 

[Andylusion]

• Politicians who pushed loans for people who shouldn't have had them
• Ratings agencies that completely fucked up and over-rated many securities
• An abject failure of regulatory agencies to do their fucking job
• Greed on the part of a variety of financial services operations with a variety of securities
• Consumers who willingly signed on the bottom line for a home they knew they couldn't afford
• A culture of conspicuous consumption at all income and age strata

.

Politicians, yes absolutely.
Consumers, yes absolutely.
Culture, yes absolutely.

When Michael Jackson can make $100 Million a year, and have an estimated debt of $500 Million when he died.... that's consumer and culture, resulting in insanity.

And the politicians pushed it.

So I'm with you on that. However the rest of that, I'm not so sure about.

Greed.

Human nature hasn't changed in 10 years, 20, 40, 100, 200, 1000, 2000 years, 4000 years.

If the problem was greed, then why did the problem not happen 50 years ago? Or 100 years ago? Or 1000 years ago? There's no evidence to support that all the benevolent bankers of 50 years ago, magically became greedy all of a sudden. Just not a supportable claim.

Failure of the Regulators.

What evidence do you have of that? I can't find anything to suggest that the regulators were not doing exactly what they were expected to do.

Some people (I am not accusing you specifically), seem to get this idea that 'if there is a problem, then they were not doing their job'. That's not true. That's like saying if there is ever any crime, then police are not doing their job.

The police could be doing their job perfectly, and still have crime. Similarly, the regulators could be operating perfectly, and still have a crash.

Remember, banking by it's very nature is risk taking. You can't regulate out risk, or there would be no banking system at all. The very act of giving a loan, automatically includes the risk of default. The very act of investing, inherently includes the risk of failure.

But all of this ignores the fundamental problem of the regulators. The regulators are tools of the state. If the state wants banks to make sub-prime loans (which it did), do you think the state would allow the state regulator to at the same time penalize banks for making the loans the state wanted? Do you think Bill Clinton would allow the SEC to penalize banks for making the loans Bill Clinton pushed them to make? Can you imagine the fire storm in the press over that?

Of course not. When you realize this, the regulators were doing exactly as they were expected to do.

Rating Agencies.

First off, why do we even have a "big three" rating agencies? Why do we have Moody's, S&P and Fitch?

Here's the dirty little secret of the whole thing. Every time you regulate an industry, naturally by the very act of regulating it, you end up with a monopoly by a few state preferred players.

In the 1960s, there were dozens of independent auto manufacturers. In the 1970s they regulated the hell out of the auto industry. By 1980s, there were the big three.

In the 1960s there were dozens of rating agencies, and buyers went to their rating agency of choice, and paid them to rate investments for them. In 1975 the SEC created "Nationally Recognized Statistical Rating Organization", a certification which was bestowed on a few selected credit rating agencies. By the 1990s, there was only three.

Simply because the certification existed, it eliminated competition, because if S&P is certified, and some other agency is not, who is the average joe investment buyer going to go with? Well obviously S&P must be more trusted because the government gave them a certification.

In reality it had nothing to do with "trust worthy" as much as government agencies wanted a standard to buy investments with. Government workers Union, wanted a standard to invest workers pensions into.

So the Government Unions, and other government programs could only buy investments rated by S&P, Moodys, and Fitch. Well of course, now that the big three had a lock on those investments, they could start charging the issuers of those investments.

Before, the government workers union, would ask S&P to rate X investment for them, and then decide to buy it. Well of course, if the investment was bad, they spent the money to have an investment rated that they didn't use. But now, if you have an investment, and you want any government agency (the largest buyer of investments) to buy your stuff, you have to have a S&P rating..... and S&P knows it. So they can charge you to get that rating, or your investment won't sell.

The government setup this whole deal.

Additionally, and this is something that a ton of people don't know.... but the very first AAA rated sub-prime loan, was because of a contract by Freddie Mac.... which guaranteed the sub-prime loan, with the AAA rating.

So even the rating agencies were following the dictates of government.

There are a lot of regulations in place that if followed and enforced would have helped. You can throw out any reason you want to make up for why these regulations were not followed or enforced but that doesn't change the fact that they weren't followed.

Fannie Mac guaranteed MBS.

It is not the government's fault that ratings agencies didn't do their job.

It is not the government's fault that financial institutions made bad decisions.

Ultimately everyone thought the MBS creation process actually created securities worth a AAA rating and made decisions based off of that perception. All of them are responsible for making sure that the AAA rating is correct. All of them failed.

We agree to disagree. You keep repeating the same arguments, that I don't see have any validity. This debate will never get past that point, because your arguments are lame.

They may make great sense to you, but to me, they are incompetent, and you repeating incompetent doesn't make then any less incompetent.

We've been over this. What regulation do you think would have stopped this? I can't think of a single one.

How do you expect the Rating Agencies to over turn the will of the Federal government?

Look what happened when S&P lowered the US credit rating.
Timothy Geithner allegedly promised to get even with S&P for downgrading US debt | The Daily Caller

The US government sued S&P. And you think S&P should have just told everyone that sub-prime mortgage backed securities were horrible, when the government at every level, including Fannie and Freddie was pushing them?

That's easy for you to say, when it's not your butt being hauled into court.

I promise you, without any doubt in my mind, that if Fannie and Freddie had not existed, and if the Federal Government had not been suing banks to make these loans, no rating agency would have given sub-prime loans a AAA rating. No question in my mind.

And again, Financial institutions didn't make those decisions until government pushed them too. Where were the sub-prime mortgage backed securities prior to 1997? They didn't exist. Why not? Nothing happened in the 90s that made sub-prime mortgage backed securities legal. There was no regulation against them in the 1990s, 1980s, and even 1970s.

If it was just "Financial institutions made bad choices", why did it start in 1997? Why not 2003? or 06? Or 92? Or 85? If greed is the problem, were they not greedy in the 1980s?

And it wasn't this gradual thing either. It's not like a few people were doing it, and then a few more, and then a few more, and then it just gradually grew.

Not like that at all. Before 1997, the Sub-prime mortgage market was completely flat. It was a niche market.

Then in 1997, to 1998, it shot off like a rocket. Something had to cause the entire industry, from California, to New York, to suddenly think that Sub-prime mortgages are safe. It wasn't just a few niche banks, it was nearly the entire market.

And the only entities that has that kind of influence, are the entities that were designed from the start to have that kind of influence. Namely Fannie and Freddie, both of which were designed from their creation, to be dominate influences on the mortgage market.

Again... your arguments you can repeat them as many times as you like, they are still very very lame. Until you have some more real hard evidence to support the idea that rating agencies just.... randomly.... decided to give sub-prime loans a AAA rating, and financial institutions just..... randomly... decided sub-prime loans were safe.... I just need more real evidence to support that claim.

You essentially have provided nothing at all, except a general "well it's not governments fault, and that's my opinion"... which is nice... but if you want to convince someone of a position, that's not enough.

I suppose there are some that would be convinced by opinion alone, but not me.

So there's no point in repeating an unsupported, and rather lame argument over and over. If you have something new, or some evidence to support your claim, by all means. Otherwise, I'll just keep repeating all my evidence, and you can keep repeating "it's not governments fault" over and over.

 

[Rshermr]

Politicians, yes absolutely.
Consumers, yes absolutely.
Culture, yes absolutely.

When Michael Jackson can make $100 Million a year, and have an estimated debt of $500 Million when he died.... that's consumer and culture, resulting in insanity.

And the politicians pushed it.

So I'm with you on that. However the rest of that, I'm not so sure about.

Greed.

Human nature hasn't changed in 10 years, 20, 40, 100, 200, 1000, 2000 years, 4000 years.

If the problem was greed, then why did the problem not happen 50 years ago? Or 100 years ago? Or 1000 years ago? There's no evidence to support that all the benevolent bankers of 50 years ago, magically became greedy all of a sudden. Just not a supportable claim.

Failure of the Regulators.

What evidence do you have of that? I can't find anything to suggest that the regulators were not doing exactly what they were expected to do.

Some people (I am not accusing you specifically), seem to get this idea that 'if there is a problem, then they were not doing their job'. That's not true. That's like saying if there is ever any crime, then police are not doing their job.

The police could be doing their job perfectly, and still have crime. Similarly, the regulators could be operating perfectly, and still have a crash.

Remember, banking by it's very nature is risk taking. You can't regulate out risk, or there would be no banking system at all. The very act of giving a loan, automatically includes the risk of default. The very act of investing, inherently includes the risk of failure.

But all of this ignores the fundamental problem of the regulators. The regulators are tools of the state. If the state wants banks to make sub-prime loans (which it did), do you think the state would allow the state regulator to at the same time penalize banks for making the loans the state wanted? Do you think Bill Clinton would allow the SEC to penalize banks for making the loans Bill Clinton pushed them to make? Can you imagine the fire storm in the press over that?

Of course not. When you realize this, the regulators were doing exactly as they were expected to do.

Rating Agencies.

First off, why do we even have a "big three" rating agencies? Why do we have Moody's, S&P and Fitch?

Here's the dirty little secret of the whole thing. Every time you regulate an industry, naturally by the very act of regulating it, you end up with a monopoly by a few state preferred players.

In the 1960s, there were dozens of independent auto manufacturers. In the 1970s they regulated the hell out of the auto industry. By 1980s, there were the big three.

In the 1960s there were dozens of rating agencies, and buyers went to their rating agency of choice, and paid them to rate investments for them. In 1975 the SEC created "Nationally Recognized Statistical Rating Organization", a certification which was bestowed on a few selected credit rating agencies. By the 1990s, there was only three.

Simply because the certification existed, it eliminated competition, because if S&P is certified, and some other agency is not, who is the average joe investment buyer going to go with? Well obviously S&P must be more trusted because the government gave them a certification.

In reality it had nothing to do with "trust worthy" as much as government agencies wanted a standard to buy investments with. Government workers Union, wanted a standard to invest workers pensions into.

So the Government Unions, and other government programs could only buy investments rated by S&P, Moodys, and Fitch. Well of course, now that the big three had a lock on those investments, they could start charging the issuers of those investments.

Before, the government workers union, would ask S&P to rate X investment for them, and then decide to buy it. Well of course, if the investment was bad, they spent the money to have an investment rated that they didn't use. But now, if you have an investment, and you want any government agency (the largest buyer of investments) to buy your stuff, you have to have a S&P rating..... and S&P knows it. So they can charge you to get that rating, or your investment won't sell.

The government setup this whole deal.

Additionally, and this is something that a ton of people don't know.... but the very first AAA rated sub-prime loan, was because of a contract by Freddie Mac.... which guaranteed the sub-prime loan, with the AAA rating.

So even the rating agencies were following the dictates of government.

There are a lot of regulations in place that if followed and enforced would have helped. You can throw out any reason you want to make up for why these regulations were not followed or enforced but that doesn't change the fact that they weren't followed.

Fannie Mac guaranteed MBS.

It is not the government's fault that ratings agencies didn't do their job.

It is not the government's fault that financial institutions made bad decisions.

Ultimately everyone thought the MBS creation process actually created securities worth a AAA rating and made decisions based off of that perception. All of them are responsible for making sure that the AAA rating is correct. All of them failed.

We agree to disagree. You keep repeating the same arguments, that I don't see have any validity. This debate will never get past that point, because your arguments are lame.

They may make great sense to you, but to me, they are incompetent, and you repeating incompetent doesn't make then any less incompetent.

We've been over this. What regulation do you think would have stopped this? I can't think of a single one.

How do you expect the Rating Agencies to over turn the will of the Federal government?

Look what happened when S&P lowered the US credit rating.
Timothy Geithner allegedly promised to get even with S&P for downgrading US debt | The Daily Caller

The US government sued S&P. And you think S&P should have just told everyone that sub-prime mortgage backed securities were horrible, when the government at every level, including Fannie and Freddie was pushing them?

That's easy for you to say, when it's not your butt being hauled into court.

I promise you, without any doubt in my mind, that if Fannie and Freddie had not existed, and if the Federal Government had not been suing banks to make these loans, no rating agency would have given sub-prime loans a AAA rating. No question in my mind.

And again, Financial institutions didn't make those decisions until government pushed them too. Where were the sub-prime mortgage backed securities prior to 1997? They didn't exist. Why not? Nothing happened in the 90s that made sub-prime mortgage backed securities legal. There was no regulation against them in the 1990s, 1980s, and even 1970s.

If it was just "Financial institutions made bad choices", why did it start in 1997? Why not 2003? or 06? Or 92? Or 85? If greed is the problem, were they not greedy in the 1980s?

And it wasn't this gradual thing either. It's not like a few people were doing it, and then a few more, and then a few more, and then it just gradually grew.

Not like that at all. Before 1997, the Sub-prime mortgage market was completely flat. It was a niche market.

Then in 1997, to 1998, it shot off like a rocket. Something had to cause the entire industry, from California, to New York, to suddenly think that Sub-prime mortgages are safe. It wasn't just a few niche banks, it was nearly the entire market.

And the only entities that has that kind of influence, are the entities that were designed from the start to have that kind of influence. Namely Fannie and Freddie, both of which were designed from their creation, to be dominate influences on the mortgage market.

Again... your arguments you can repeat them as many times as you like, they are still very very lame. Until you have some more real hard evidence to support the idea that rating agencies just.... randomly.... decided to give sub-prime loans a AAA rating, and financial institutions just..... randomly... decided sub-prime loans were safe.... I just need more real evidence to support that claim.

You essentially have provided nothing at all, except a general "well it's not governments fault, and that's my opinion"... which is nice... but if you want to convince someone of a position, that's not enough.

I suppose there are some that would be convinced by opinion alone, but not me.

So there's no point in repeating an unsupported, and rather lame argument over and over. If you have something new, or some evidence to support your claim, by all means. Otherwise, I'll just keep repeating all my evidence, and you can keep repeating "it's not governments fault" over and over.

Speeking of lame arguments. When you quote "THE DAILY CALLER you loose anyone who knows what the daily caller is. Kind of like some lib posting moveon.org. So, at this point, you are on ignore.

 

[Andylusion]

Speeking of lame arguments. When you quote "THE DAILY CALLER you loose anyone who knows what the daily caller is. Kind of like some lib posting moveon.org. So, at this point, you are on ignore.

Not an argument. This story was carried by dozens of new outlets, and it's not like you can argue that S&P wasn't sued, since it's in the public record.

In other words, you refuse to listen to the truth, and now you are going to ignore people for it? That's pathetic. And honestly, if you are this stupid, then ignoring me, benefits me. Now I don't have to deal with your replies.

 

[rdean]

No one has brought more damage to the US than Republicans under Bush.

No one.

They damaged everything they touched.

 

[Iceweasel]

It is not the government's fault that financial institutions made bad decisions.

The government didn't threaten banks with losing their FDIC status if they didn't offer sub-prime loans for all the "disadvantaged"? There was a lot of scaming going on and the government was dealing the cards.

 

[Avorysuds]

No one has brought more damage to the US than Republicans under Bush.

No one.

They damaged everything they touched.

Obama alone has done more damage than Bush.

However, FDR alone takes the first place prize as most destructive President in US history.

Seriously, what did Bush do that Obama has not expanded upon? You blame Bush for the meltdown, well how did we get there? Government pushing for homes sales... What is Obama doing.... Pushing for Home sales... What did Clinton do, deregulated so he could push for homes sales....

War? Obama spends more and has more wars than Bush did. Making the rich more rich? Obama has done more for the rich than Bush, Obama literally gave them money, just handed it to them. Maybe you don't like Bush for making more poor people... Only Obama has done a much better job at creating an impoverished nation.

What area did Bush do so bad that Obama has not done worse? You can't say Bush is the worse when in just 6 years Obama has done far worse than Bush.

Yes, Bush was bad. But you fuckin Obama-bots seem to love all of his polices expanded under Obama.

 

[Rshermr]

Speeking of lame arguments. When you quote "THE DAILY CALLER you loose anyone who knows what the daily caller is. Kind of like some lib posting moveon.org. So, at this point, you are on ignore.

Not an argument. This story was carried by dozens of new outlets, and it's not like you can argue that S&P wasn't sued, since it's in the public record.

In other words, you refuse to listen to the truth, and now you are going to ignore people for it? That's pathetic. And honestly, if you are this stupid, then ignoring me, benefits me. Now I don't have to deal with your replies.

Not the point, me poor ignorant con tool. By posting from The Daily Caller:
1. You are using a source with a really, really obvious agenda. One that will lie, cheat, and steal to get their agenda across.
2. Because of 1, you can believe nothing that is said with out vetting the "facts" that are quoted.
3. Use a source where you can not be at all sure that all of the information is provided.
4. Disrespect everyone by providing information that they will have to question and spend time vetting.

So, hope this helps you to understand a bit about integrity. Look it up if you have questions. I see neither any hope that you will understand nor any reason to waste my time further.

 

[Bombur]

Politicians, yes absolutely.
Consumers, yes absolutely.
Culture, yes absolutely.

When Michael Jackson can make $100 Million a year, and have an estimated debt of $500 Million when he died.... that's consumer and culture, resulting in insanity.

And the politicians pushed it.

So I'm with you on that. However the rest of that, I'm not so sure about.

Greed.

Human nature hasn't changed in 10 years, 20, 40, 100, 200, 1000, 2000 years, 4000 years.

If the problem was greed, then why did the problem not happen 50 years ago? Or 100 years ago? Or 1000 years ago? There's no evidence to support that all the benevolent bankers of 50 years ago, magically became greedy all of a sudden. Just not a supportable claim.

Failure of the Regulators.

What evidence do you have of that? I can't find anything to suggest that the regulators were not doing exactly what they were expected to do.

Some people (I am not accusing you specifically), seem to get this idea that 'if there is a problem, then they were not doing their job'. That's not true. That's like saying if there is ever any crime, then police are not doing their job.

The police could be doing their job perfectly, and still have crime. Similarly, the regulators could be operating perfectly, and still have a crash.

Remember, banking by it's very nature is risk taking. You can't regulate out risk, or there would be no banking system at all. The very act of giving a loan, automatically includes the risk of default. The very act of investing, inherently includes the risk of failure.

But all of this ignores the fundamental problem of the regulators. The regulators are tools of the state. If the state wants banks to make sub-prime loans (which it did), do you think the state would allow the state regulator to at the same time penalize banks for making the loans the state wanted? Do you think Bill Clinton would allow the SEC to penalize banks for making the loans Bill Clinton pushed them to make? Can you imagine the fire storm in the press over that?

Of course not. When you realize this, the regulators were doing exactly as they were expected to do.

Rating Agencies.

First off, why do we even have a "big three" rating agencies? Why do we have Moody's, S&P and Fitch?

Here's the dirty little secret of the whole thing. Every time you regulate an industry, naturally by the very act of regulating it, you end up with a monopoly by a few state preferred players.

In the 1960s, there were dozens of independent auto manufacturers. In the 1970s they regulated the hell out of the auto industry. By 1980s, there were the big three.

In the 1960s there were dozens of rating agencies, and buyers went to their rating agency of choice, and paid them to rate investments for them. In 1975 the SEC created "Nationally Recognized Statistical Rating Organization", a certification which was bestowed on a few selected credit rating agencies. By the 1990s, there was only three.

Simply because the certification existed, it eliminated competition, because if S&P is certified, and some other agency is not, who is the average joe investment buyer going to go with? Well obviously S&P must be more trusted because the government gave them a certification.

In reality it had nothing to do with "trust worthy" as much as government agencies wanted a standard to buy investments with. Government workers Union, wanted a standard to invest workers pensions into.

So the Government Unions, and other government programs could only buy investments rated by S&P, Moodys, and Fitch. Well of course, now that the big three had a lock on those investments, they could start charging the issuers of those investments.

Before, the government workers union, would ask S&P to rate X investment for them, and then decide to buy it. Well of course, if the investment was bad, they spent the money to have an investment rated that they didn't use. But now, if you have an investment, and you want any government agency (the largest buyer of investments) to buy your stuff, you have to have a S&P rating..... and S&P knows it. So they can charge you to get that rating, or your investment won't sell.

The government setup this whole deal.

Additionally, and this is something that a ton of people don't know.... but the very first AAA rated sub-prime loan, was because of a contract by Freddie Mac.... which guaranteed the sub-prime loan, with the AAA rating.

So even the rating agencies were following the dictates of government.

There are a lot of regulations in place that if followed and enforced would have helped. You can throw out any reason you want to make up for why these regulations were not followed or enforced but that doesn't change the fact that they weren't followed.

Fannie Mac guaranteed MBS.

It is not the government's fault that ratings agencies didn't do their job.

It is not the government's fault that financial institutions made bad decisions.

Ultimately everyone thought the MBS creation process actually created securities worth a AAA rating and made decisions based off of that perception. All of them are responsible for making sure that the AAA rating is correct. All of them failed.

We agree to disagree. You keep repeating the same arguments, that I don't see have any validity. This debate will never get past that point, because your arguments are lame.

They may make great sense to you, but to me, they are incompetent, and you repeating incompetent doesn't make then any less incompetent.

We've been over this. What regulation do you think would have stopped this? I can't think of a single one.

How do you expect the Rating Agencies to over turn the will of the Federal government?

Look what happened when S&P lowered the US credit rating.
Timothy Geithner allegedly promised to get even with S&P for downgrading US debt | The Daily Caller

The US government sued S&P. And you think S&P should have just told everyone that sub-prime mortgage backed securities were horrible, when the government at every level, including Fannie and Freddie was pushing them?

That's easy for you to say, when it's not your butt being hauled into court.

I promise you, without any doubt in my mind, that if Fannie and Freddie had not existed, and if the Federal Government had not been suing banks to make these loans, no rating agency would have given sub-prime loans a AAA rating. No question in my mind.

And again, Financial institutions didn't make those decisions until government pushed them too. Where were the sub-prime mortgage backed securities prior to 1997? They didn't exist. Why not? Nothing happened in the 90s that made sub-prime mortgage backed securities legal. There was no regulation against them in the 1990s, 1980s, and even 1970s.

If it was just "Financial institutions made bad choices", why did it start in 1997? Why not 2003? or 06? Or 92? Or 85? If greed is the problem, were they not greedy in the 1980s?

And it wasn't this gradual thing either. It's not like a few people were doing it, and then a few more, and then a few more, and then it just gradually grew.

Not like that at all. Before 1997, the Sub-prime mortgage market was completely flat. It was a niche market.

Then in 1997, to 1998, it shot off like a rocket. Something had to cause the entire industry, from California, to New York, to suddenly think that Sub-prime mortgages are safe. It wasn't just a few niche banks, it was nearly the entire market.

And the only entities that has that kind of influence, are the entities that were designed from the start to have that kind of influence. Namely Fannie and Freddie, both of which were designed from their creation, to be dominate influences on the mortgage market.

Again... your arguments you can repeat them as many times as you like, they are still very very lame. Until you have some more real hard evidence to support the idea that rating agencies just.... randomly.... decided to give sub-prime loans a AAA rating, and financial institutions just..... randomly... decided sub-prime loans were safe.... I just need more real evidence to support that claim.

You essentially have provided nothing at all, except a general "well it's not governments fault, and that's my opinion"... which is nice... but if you want to convince someone of a position, that's not enough.

I suppose there are some that would be convinced by opinion alone, but not me.

So there's no point in repeating an unsupported, and rather lame argument over and over. If you have something new, or some evidence to support your claim, by all means. Otherwise, I'll just keep repeating all my evidence, and you can keep repeating "it's not governments fault" over and over.

It is not an opinion that ratings agencies are responsible for rating. That is a fact. It is your opinion that it is somehow the government's fault that they rated things incorrectly.

MBS are not the same as sub-prime loans. Rating a MBS as AAA is not the same as rating a loan AAA.

You just fundamentally refuse to learn anything about the situation so you remain confused and ignorant.

The heart of the crisis was not sub-prime loans mandated by the CRA. The heart of the crisis was the MBS that hid that risk which lead to a large increase of sub-prime loans beyond the mandates of CRA. There is no doubt that the market failure was a result of bad decisions made at F&F. Those same bad decisions were made at the ratings agencies and the financial institutions buying and pricing MBS.

A MBS isn't just some corn flakes you buy at Wal Mart. The financial institutions that are involved are committing billions of dollars to a purchase. They are the ones that are establishing the price of these MBS which in turn establishes the rating.

Regulations that should have helped are ones involved in the creation of the loans in the first place, the regulation of F&F which would have helped establish their risk, and the regulation of the holders of the MBS to establish their risk. There was widespread regulatory failure by the government.

By the way MBS do help manage the risk of sub-prime loans. The problem was that the formula used couldn't react to the massive price bubble and the demand for sub-prime loans increased so drastically that the regulations concerning the loan creation process decreased below what it should have been.

 

[Bombur]

It is not the government's fault that financial institutions made bad decisions.

The government didn't threaten banks with losing their FDIC status if they didn't offer sub-prime loans for all the "disadvantaged"? There was a lot of scaming going on and the government was dealing the cards.

There is more to consider than just mandated CRA loans. Your argument relies on the premise that the financial institutions couldn't manage the risk mandated by the government. In reality the financial institutions took on risk far in excess of the mandates. More importantly though they had portfolios that miscalculated the risk inherent in the MBS. This lead them to become over leveraged. When rating changed they had massive liquidity problems as well.

In simpler terms, if the government tells you to make 500 sub-prime loans and you make 2000 it is hard to blame the government for you making sub-prime loans. It is also hard to blame government for the make-up of your entire portfolio of investments which became horribly illiquid once the crisis hit.

 

[Iceweasel]

You just fundamentally refuse to learn anything about the situation so you remain confused and ignorant.

By the way MBS do help manage the risk of sub-prime loans. The problem was that the formula used couldn't react to the massive price bubble and the demand for sub-prime loans increased so drastically that the regulations concerning the loan creation process decreased below what it should have been.

And who pushed for those sub-prime loans? Politicians via government. And anyone who has first hand experience with dealing with the government knows it is not the model of efficiency.

 

[Sallow]

.

Yeah, it's always that guy's fault, that guy over there.

The Meltdown was caused by a wide variety of culprits over at least a couple of decades. Examples:

• Politicians who pushed loans for people who shouldn't have had them
• Ratings agencies that completely fucked up and over-rated many securities
• An abject failure of regulatory agencies to do their fucking job
• Greed on the part of a variety of financial services operations with a variety of securities
• Consumers who willingly signed on the bottom line for a home they knew they couldn't afford
• A culture of conspicuous consumption at all income and age strata

But I know it's much easier to just blame that guy, over there.



.

The CRA had zero to do with the housing bubble.

Nadda, zilch.

Pushing that idea is an ol' conservative chestnut that poor people are to blame for this country's ills.

 

[Iceweasel]

In simpler terms, if the government tells you to make 500 sub-prime loans and you make 2000 it is hard to blame the government for you making sub-prime loans. It is also hard to blame government for the make-up of your entire portfolio of investments which became horribly illiquid once the crisis hit.

Not so fast there. Assuming everything you said is true, if the environment was created to make those sub-prime loans government doesn't get off the hook. How are you so certain that they didn't like taking on the risk and wanted to better their odds?

 

[iamwhatiseem]

Interesting...always fun to see Katsungs many-many-many threads all over the internet.
This guy is everywhere, and has been doing it for years.
Rarely if ever answers a post.
Always provides numbers for each paragraph.
I am talking maaaajor conspiracy theorist this one.
All kinds of accusations...I remember a post where he claims the FBI took money out of his gift card.
Homeland security reading his mail....tracking his phone calls.
He has been art this for at least 10 years in dozens and dozens of forums.

 

[Bombur]

In simpler terms, if the government tells you to make 500 sub-prime loans and you make 2000 it is hard to blame the government for you making sub-prime loans. It is also hard to blame government for the make-up of your entire portfolio of investments which became horribly illiquid once the crisis hit.

Not so fast there. Assuming everything you said is true, if the environment was created to make those sub-prime loans government doesn't get off the hook. How are you so certain that they didn't like taking on the risk and wanted to better their odds?

MBS were very profitable for a time. There is no secret why they were being bought and created so rapidly.

 

[TakeAStepBack]

.

Yeah, it's always that guy's fault, that guy over there.

The Meltdown was caused by a wide variety of culprits over at least a couple of decades. Examples:

• Politicians who pushed loans for people who shouldn't have had them
• Ratings agencies that completely fucked up and over-rated many securities
• An abject failure of regulatory agencies to do their fucking job
• Greed on the part of a variety of financial services operations with a variety of securities
• Consumers who willingly signed on the bottom line for a home they knew they couldn't afford
• A culture of conspicuous consumption at all income and age strata

But I know it's much easier to just blame that guy, over there.



.

All fine and good. But the moral hazard for all of these symptoms come fromt eh root disease of the federal reserves policies (which continue to this day) of easy money, artificially low interest rates which caused a real estate bubble, as predicted, following the nasdaq bubble.

The root cause is fiat money and the federal reserves monetary policy.

 

[Bombur]

You just fundamentally refuse to learn anything about the situation so you remain confused and ignorant.

By the way MBS do help manage the risk of sub-prime loans. The problem was that the formula used couldn't react to the massive price bubble and the demand for sub-prime loans increased so drastically that the regulations concerning the loan creation process decreased below what it should have been.

And who pushed for those sub-prime loans? Politicians via government. And anyone who has first hand experience with dealing with the government knows it is not the model of efficiency.

Government is inefficient, which is why Androw's argument that relies on the market trusting the government to do their jobs for them is so ridiculously stupid.

The idea that the entire financial system would collapse over those mandated loans is a fantasy invented by the woefully ignorant. It is simply not even remotely possible.

On the other hand hundreds of billions in MBS that hide risk and hide exposure to a massive price bubble can. A known risk can be accounted for in banking. The unknown risk cannot.

F&F most definitely have some responsibility for helping hide that risk. So do the ratings agencies and the financial institutions who all made the same mistake as F&F.

 

[Truthmatters]

the sec under Bush refused to implement the broker rules in GLB act for 8 long years.


WHY?




SEC Votes for Final Rules Defining How Banks Can Be Securities Brokers

Eight Years After Passage of the Gramm-Leach-Bliley Act, Key Provisions Will Now Be Implemented

FOR IMMEDIATE RELEASE
2007-190

Washington, D.C., Sept. 19, 2007 - Ending eight years of stalled negotiations and impasse, the Commission today voted to adopt, jointly with the Board of Governors of the Federal Reserve System (Board), new rules that will finally implement the bank broker provisions of the Gramm-Leach-Bliley Act of 1999. The Board will consider these final rules at its Sept. 24, 2007 meeting. The Commission and the Board consulted with and sought the concurrence of the Office of the Comptroller of the Currency,

 

[Truthmatters]

So the banks did not have rules to follow and could do whatever they wanted

 

[Sallow]

It is not an opinion that ratings agencies are responsible for rating. That is a fact. It is your opinion that it is somehow the government's fault that they rated things incorrectly.

MBS are not the same as sub-prime loans. Rating a MBS as AAA is not the same as rating a loan AAA.

You just fundamentally refuse to learn anything about the situation so you remain confused and ignorant.

The heart of the crisis was not sub-prime loans mandated by the CRA. The heart of the crisis was the MBS that hid that risk which lead to a large increase of sub-prime loans beyond the mandates of CRA. There is no doubt that the market failure was a result of bad decisions made at F&F. Those same bad decisions were made at the ratings agencies and the financial institutions buying and pricing MBS.

A MBS isn't just some corn flakes you buy at Wal Mart. The financial institutions that are involved are committing billions of dollars to a purchase. They are the ones that are establishing the price of these MBS which in turn establishes the rating.

Regulations that should have helped are ones involved in the creation of the loans in the first place, the regulation of F&F which would have helped establish their risk, and the regulation of the holders of the MBS to establish their risk. There was widespread regulatory failure by the government.

By the way MBS do help manage the risk of sub-prime loans. The problem was that the formula used couldn't react to the massive price bubble and the demand for sub-prime loans increased so drastically that the regulations concerning the loan creation process decreased below what it should have been.

I think there is a very fundamental misunderstanding of what Mortgage Backed Securities actually are and why the government had nothing to do with their creation.