Should the Glass Steagall Act be brought back?

[Andylusion]

So was Barney Frank to blame for our woes? There are two lines of argument here, and neither is all that compelling. The first contention is that Frank failed to exercise diligent oversight of Fannie Mae and Freddie Mac as the housing bubble swelled. There’s something to this, though it’s worth noting that Frank was in the congressional minority for most of the period in question. The second argument is that Frank and other Democrats — by promoting policies to boost affordable housing — somehow caused the subprime mess and financial collapse. That argument is especially hard to square with the facts.

First, it’s true that Frank was hardly Fannie and Freddie’s biggest critic. Nor did he spot the housing bubble. Back in 2003, as the Examiner’s Philip Klein points out, Frank said that the government-sponsored entities were not in any sort of crisis. “The more people exaggerate these problems,” Frank told the New York Times, “the more pressure there is on these companies, the less we will see in terms of affordable housing.” Not the most prescient of comments. (Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market. They were actually losing market share to private banks, as the chart on right from researchers at the University of North Carolina shows.) -- Barney Frank didn?t cause the housing crisis - The Washington Post

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

[ame=http://youtu.be/6coIcgdgF5U]Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube[/ame]

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

 

[Dad2three]

In 2009 Frank responded to what he called "wholly inaccurate efforts by Republicans to blame Democrats, and [me] in particular" for the subprime mortgage crisis, which is linked to the financial crisis of 2007–2009.[49] He outlined his efforts to reform these institutions and add regulations, but met resistance from Republicans

BULLSHIT! The Bush Administration made repeated attempts to look at Fanny/Freddie's books but were denied and called "racists" by Maxine Waters with Barney Fag and Dodd cackling in the background. F/F were so corrupt they accepted FOOD STAMPS as income. BTW...Jamie Gorelick, Reno's squeeze, and the woman who built the wall between the CIA and FBI leading us to 9/11, went on to loot Fannie out of several million dollars in bonuses. That's who caused the meltdown along, of course, with the major commercial banks who dove into ticking bomb derivatives rather than face thousands of CRA foreclosers.

RIGHT WING SHIT


Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”



Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”



http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf



Q Why is it commonly called the “subprime bubble” ?

A Because the Bush Mortgage Bubble coincided with the explosive growth of Subprime mortgage and politics. Also the subprime MBS market was the first to collapse in late 2006. In 2003, 10 % of all mortgages were subprime. In 2006, 40 % were subprime. This is a 300 % increase in subprime lending. (and notice it coincides with the dates of the Bush Mortgage bubble that Bush and the Fed said)

“Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006



https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf




Q. Er uh, didn’t you notice your link said the explosive growth of subprime mortgages started in 2001?

A. It did kinda say that didn’t it? However, the link below clearly states subprime was 10 % in 2003. 9% in 2001 to 10% in 2003 is only a 1% increase. A 1 % increase over 3 years is flat not explosive. 10 % in 2003 to 40% in 2006 is explosive. So the explosive growth started in 2004 which lines up pretty good but not exactly with the timeframe of the Bush Mortgage Bubble.


“In dollar terms, nonprime mortgages represented 32 percent of all mortgage originations in 2005, more than triple their 10 percent share only two years earlier


FRB: Finance and Economics Discussion Series: Screen Reader Version - 200899




Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN’T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.




Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.


http://www.usmessageboard.com/economy/362889-facts-on-dubya-s-great-recession.html

 

[Andylusion]

Lehman Brothers was an investment bank. It did not do Commercial. It did not do Retail. It did not do insurance.

No amount of Glass Steagall would have done ANYTHING to Lehman Brothers either way.

There you go again! Lehman (who bilked ME out of $130K) isn't the issue here. It's Chase, BofA, and Wells Fargo (to a lesser extent) who got into the derivatives game after GS was repealed. They had no idea they'd end up like they did.....pawning off crap mortgages all over the world. To this day, you better do one HELL of a title search before you buy a distressed property because nobody knows who really owns a lot of them....you can be in for a BIG SURPRISE down the road when you get a letter stating the property you bought didn't belong to the party who sold it to you.

No, they were always in the derivatives game, long before GSA was repealed. In fact, the entire housing price bubble started before the GSA was repealed.

Further..... um.... doing a title search is given. Yeah, if you don't do a title search, you are asking for a problem. That's on you. Just like you don't buy a car unless they have the title on hand, and you go to title agency right then to make sure.

 

[Dad2three]

So was Barney Frank to blame for our woes? There are two lines of argument here, and neither is all that compelling. The first contention is that Frank failed to exercise diligent oversight of Fannie Mae and Freddie Mac as the housing bubble swelled. There’s something to this, though it’s worth noting that Frank was in the congressional minority for most of the period in question. The second argument is that Frank and other Democrats — by promoting policies to boost affordable housing — somehow caused the subprime mess and financial collapse. That argument is especially hard to square with the facts.

First, it’s true that Frank was hardly Fannie and Freddie’s biggest critic. Nor did he spot the housing bubble. Back in 2003, as the Examiner’s Philip Klein points out, Frank said that the government-sponsored entities were not in any sort of crisis. “The more people exaggerate these problems,” Frank told the New York Times, “the more pressure there is on these companies, the less we will see in terms of affordable housing.” Not the most prescient of comments. (Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market. They were actually losing market share to private banks, as the chart on right from researchers at the University of North Carolina shows.) -- Barney Frank didn?t cause the housing crisis - The Washington Post

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

[ame=http://youtu.be/6coIcgdgF5U]Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube[/ame]

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

LOL, BARNEY FRANK MINORITY MEMBER OF THE GOP HOUSE 1995-2007? PLEASE tell me thew super powers he had? lol

Q Why would Bush’s regulators let banks lower their lending standards?

A. Federal regulators at the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision work for Bush and he was pushing his “Ownership Society” programs that was a major and successful part of his re election campaign in 2004. And Bush’s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Invesntment bank’s capital requirements, Net Capital rule
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional 440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING


But the biggest policy was regulators not enforcing lending standards.




Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."


June 17, 2004


Builders to fight Bush's low-income plan


NEW YORK (CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.



Home builders fight Bush's low-income housing - Jun. 17, 2004




Predatory Lenders' Partner in Crime

Predatory lending was widely understood to present a looming national crisis.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative


Eliot Spitzer - Predatory Lenders' Partner in Crime




Agency’s ’04 Rule Let Banks Pile Up New Debt

2004 Dubya allowed the leverage rules to go from 12-1 to 35-1+ which flooded the market with cheap money!


“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.


After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules.

http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=all



Bush drive for home ownership fueled housing bubble


He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend as much as $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for government insured mortgages with no money down


http://www.usmessageboard.com/economy/362889-facts-on-dubya-s-great-recession.html

 

[Andylusion]

Should the Glass Steagall Act be brought back?

Specifically, this...............

The Glass-Steagall Act Explained

2. Separation of Commercial and Investment Banking

As important as the FDIC’s creation was, the term Glass-Steagall usually refers to the set of rules that kept a savings-and-loan type bank from engaging in speculative, risky training with customers’ deposits. If a bank took deposits, it could not trade in anything other than government bonds; if it underwrote securities or engaged in market-making, it could not take deposits.

The motivation for this separation rested on alleged conflicts of interest. Glass and Steagall, as well as others, accused banks of partnering with affiliates which later sold securities to repay banks’ debts, or accepted loans from banks to buy securities. They also worried that banks engaged in risk-taking speculation, rather than investing in corporations to promote growth.

Five provisions of the Banking Act pertained to this separation:

Section 19: Federally chartered banks could not buy or sell securities, unless they were investment securities, government bonds or trades made on behalf of a customer.
Section 5(c): Glass-Steagall would also apply to state-chartered banks.
Section 20: Banks could not be affiliated with firms whose primary purpose was trading securities.
Section 21: If a bank did trade securities, it could not take deposits.
Section 32: Officers and directors of commercial banks (banks part of the Federal Reserve System) were barred from holding advisory positions in companies whose primary purpose was trading securities.

Abso-fucking-lutely!

I of course am the one vote against bringing back the Glass-Steagal Act.

I have asked this question hundreds of times, and I never get an answer.

Name ONE bank that if Glass-Steagall was still enforced, would have not crashed? And on what basis would you make the claim?

Countrywide? Nope.
IndyMac? Nope.
Bear Stearns? Nope.
Wachovia? Nope.
AIG? Nope.
Washington Mutual? Nope.

The vast vast majority of all the banks that crashed... none of them would have been affected by Glass-Steagall in any way.

So now, if you have a reason to bring back Glas Steagall, what is it?

And don't tell me it is to prevent another sub-prime melt down, because if so, then I want the name of the banks (not one), bank(S) that would have been 'saved' under Glass Steagall, and I want a specific provision of Glass Steagall, and how it applied to those banks, that would have stopped them from crash.

If you can provide me that evidence, I'll consider it.

You are correct, not a regulation failure, but a REGULATOR failure called Dubya




Glass-Steagall Is Mostly A Red Herring


But wasn’t the repeal of Glass-Steagall the key to the emergence of these gigantic banks with huge political influence? Certainly it helps. If you’re a bank, plus some other large enterprise, then you have more clout than a mere bank would have. But the bank-qua-bank can’t get any bigger by merging with something that’s not a bank. What really did keep banks small was that when the 1927 McFadden Act let nationally charted banks get in the branching game, it prohibited them from operating branches in more than one state. What’s more, states were allowed to put tighter restrictions than that on branching. The “one state only” rule is totally arbitrary. There’s no principled reason you should be allowed to have branches in Manhattan and Buffalo but not Manhattan and Newark, or that it’s okay to work with a local branch of a very large bank in Yuba City but not in Utah. But it does limit the overall size of banks pretty severely. California, Texas, and New York banks would be kinda big and banks in most of the country would be quite small. And the fact that the rule is so plainly arbitrary makes it relatively easy to enforce. Since it simply piggybacks on existing lines rather than claiming to be some fine tuned optimization, it’s relatively difficult to game the system without people noticing.

Federal regulators started to relax this rule in the 1980s and it was firmly repealed in the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. It seems to me that if you want to look at a piece of 1990s financial deregulation that set off waves of bank consolidation, this is where you want to look. But was it a good idea?



Glass-Steagall Is Mostly A Red Herring | ThinkProgress

Bush was only doing what every president since Carter had been doing. If you really want to trace the housing bubble to it's roots, it started in the 90s under Clinton.

But again, every administration has assumed that encouraging more home ownership was an automatic inherent plus to society.... when clearly it was not.

 

[Andylusion]

In 2009 Frank responded to what he called "wholly inaccurate efforts by Republicans to blame Democrats, and [me] in particular" for the subprime mortgage crisis, which is linked to the financial crisis of 2007–2009.[49] He outlined his efforts to reform these institutions and add regulations, but met resistance from Republicans

BULLSHIT! The Bush Administration made repeated attempts to look at Fanny/Freddie's books but were denied and called "racists" by Maxine Waters with Barney Fag and Dodd cackling in the background. F/F were so corrupt they accepted FOOD STAMPS as income. BTW...Jamie Gorelick, Reno's squeeze, and the woman who built the wall between the CIA and FBI leading us to 9/11, went on to loot Fannie out of several million dollars in bonuses. That's who caused the meltdown along, of course, with the major commercial banks who dove into ticking bomb derivatives rather than face thousands of CRA foreclosers.

While everything you said is true.... it's also true that Bush promoted home ownership as well.

 

[Andylusion]

So was Barney Frank to blame for our woes? There are two lines of argument here, and neither is all that compelling. The first contention is that Frank failed to exercise diligent oversight of Fannie Mae and Freddie Mac as the housing bubble swelled. There’s something to this, though it’s worth noting that Frank was in the congressional minority for most of the period in question. The second argument is that Frank and other Democrats — by promoting policies to boost affordable housing — somehow caused the subprime mess and financial collapse. That argument is especially hard to square with the facts.

First, it’s true that Frank was hardly Fannie and Freddie’s biggest critic. Nor did he spot the housing bubble. Back in 2003, as the Examiner’s Philip Klein points out, Frank said that the government-sponsored entities were not in any sort of crisis. “The more people exaggerate these problems,” Frank told the New York Times, “the more pressure there is on these companies, the less we will see in terms of affordable housing.” Not the most prescient of comments. (Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market. They were actually losing market share to private banks, as the chart on right from researchers at the University of North Carolina shows.) -- Barney Frank didn?t cause the housing crisis - The Washington Post

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

[ame=http://youtu.be/6coIcgdgF5U]Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube[/ame]

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

LOL, BARNEY FRANK MINORITY MEMBER OF THE GOP HOUSE 1995-2007? PLEASE tell me thew super powers he had? lol

Q Why would Bush’s regulators let banks lower their lending standards?

A. Federal regulators at the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision work for Bush and he was pushing his “Ownership Society” programs that was a major and successful part of his re election campaign in 2004. And Bush’s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Invesntment bank’s capital requirements, Net Capital rule
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional 440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING


But the biggest policy was regulators not enforcing lending standards.




Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."


June 17, 2004


Builders to fight Bush's low-income plan


NEW YORK (CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.

Home builders fight Bush's low-income housing - Jun. 17, 2004

Predatory Lenders' Partner in Crime

Predatory lending was widely understood to present a looming national crisis.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative

Eliot Spitzer - Predatory Lenders' Partner in Crime

Agency’s ’04 Rule Let Banks Pile Up New Debt

2004 Dubya allowed the leverage rules to go from 12-1 to 35-1+ which flooded the market with cheap money!


“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.


After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules.

http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=all



Bush drive for home ownership fueled housing bubble


He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend as much as $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for government insured mortgages with no money down


http://www.usmessageboard.com/economy/362889-facts-on-dubya-s-great-recession.html

Yes, I don't contend with *most* of what you posted here.

The problem is, nearly all of this was also pushed by a prior administration... namely the Clinton Administration.

And... the sub-prime mortgage market shot off under Clinton.
And... the housing bubble started under Clinton.

Bush was following the same policies that Clinton was pushing. Which Ironically was the same policies as Bush Sr, and Reagan, and Carter, who originally pushed for 'affordable housing' goals.

But nevertheless, the fact is Bush did continue the policy. True. But Clinton is the one who really started the Bubble, when he made HUD give affordable housing goals to the GSEs.

 

[Contumacious]

Should the Glass Steagall Act be brought back?

.

FUCK NO.

Shattering the Glass-Steagall myth

Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.

The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.

Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender."

.

It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it

It is clear to anyone who has studied the fascist/socialist axis that they are prejudiced against the private sector. Thwy will use any pretext to complete nationalize the means of production.

The former Federal Reserve chairman, Alan Greenspan, has conceded that the global financial crisis has exposed a "mistake" in the free market ideology which guided his 18-year stewardship of US monetary policy.

Alan Greenspan, aka, Judas Iscariot sold his soul for 20 silver coins.

He did not, and could not, explain how there can be a central bank and a free market simultaneously.

.

.

 

[Dad2three]

So was Barney Frank to blame for our woes? There are two lines of argument here, and neither is all that compelling. The first contention is that Frank failed to exercise diligent oversight of Fannie Mae and Freddie Mac as the housing bubble swelled. There’s something to this, though it’s worth noting that Frank was in the congressional minority for most of the period in question. The second argument is that Frank and other Democrats — by promoting policies to boost affordable housing — somehow caused the subprime mess and financial collapse. That argument is especially hard to square with the facts.

First, it’s true that Frank was hardly Fannie and Freddie’s biggest critic. Nor did he spot the housing bubble. Back in 2003, as the Examiner’s Philip Klein points out, Frank said that the government-sponsored entities were not in any sort of crisis. “The more people exaggerate these problems,” Frank told the New York Times, “the more pressure there is on these companies, the less we will see in terms of affordable housing.” Not the most prescient of comments. (Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market. They were actually losing market share to private banks, as the chart on right from researchers at the University of North Carolina shows.) -- Barney Frank didn?t cause the housing crisis - The Washington Post

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

[ame=http://youtu.be/6coIcgdgF5U]Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube[/ame]

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

ED PINtO'S DEBUNKED NUMBERS HUH? lol

Private sector loans, not Fannie or Freddie, triggered crisis

Private sector loans, not Fannie or Freddie, triggered crisis | Economics | McClatchy DC



No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data)



1. Private markets caused the shady mortgage boom

2. The government’s affordability mission didn’t cause the crisis


4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now


MY FAV


Bill Black went through what AEI said about the GSEs during the 2000s and it is the same thing — that they were blocking subprime loans from being made. In the words of (AEI) Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”

Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data) | The Big Picture


Why was there a market for these low quality private label securitizations? In a Peabody Awardn winning program,
NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income
investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating
investments had not grown as fast.

Investment banks on Wall Street answered this demand with financial innovation such as the mortgage-backed security (MBS) and collateralized debt obligation (CDO), which were assigned safe ratings by the credit rating agencies.



In effect, Wall Street connected this pool of money to the mortgage market in the U.S., with enormous fees accruing
to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that
funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages
originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain.


Eventually, this speculative bubble proved unsustainable

http://www.stat.unc.edu/faculty/cji/fys/2012/Subprime mortgage crisis.pdf



GSE Critics Ignore Loan Performance

ear after year, decade after decade, before, during and after the housing crash, GSE loan performance has consistently been two-to-six times better than that of any other segment of the market. The numbers are irrefutable, and they show that the entire case against GSE underwriting standards, and their role in the financial crisis, is based on social stereotyping, smoke and mirrors, and little else.

....Mortgage analyst Laurie Goodman estimated that private label securitizations issued during 2005-2007 incurred a loss rate of 24%, whereas the GSE loss rate for 2005-2007 vintage loans was closer to 4%.


GSE Critics Ignore Loan Performance - Bank Think Article - American Banker



YOU UNDERSTAND IF F/F BACKED THEM, THE BANKSTERS WOULDN'T HAD LOST MONEY RIGHT? THAT'S WHAT GUARANTEEING DOES, LOL

 

[Andylusion]

ED PINtO'S DEBUNKED NUMBERS HUH? lol

Normally I would debate you

but.... do you read your own posts? You come across as a ten year old.

I'll wait for someone more mature. Have a nice day.

 

[Dad2three]

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

LOL, BARNEY FRANK MINORITY MEMBER OF THE GOP HOUSE 1995-2007? PLEASE tell me thew super powers he had? lol

Q Why would Bush’s regulators let banks lower their lending standards?

A. Federal regulators at the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision work for Bush and he was pushing his “Ownership Society” programs that was a major and successful part of his re election campaign in 2004. And Bush’s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Invesntment bank’s capital requirements, Net Capital rule
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional 440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING


But the biggest policy was regulators not enforcing lending standards.




Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."


June 17, 2004


Builders to fight Bush's low-income plan


NEW YORK (CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.

Home builders fight Bush's low-income housing - Jun. 17, 2004

Predatory Lenders' Partner in Crime

Predatory lending was widely understood to present a looming national crisis.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative

Eliot Spitzer - Predatory Lenders' Partner in Crime

Agency’s ’04 Rule Let Banks Pile Up New Debt

2004 Dubya allowed the leverage rules to go from 12-1 to 35-1+ which flooded the market with cheap money!


“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.


After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules.

http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=all



Bush drive for home ownership fueled housing bubble


He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend as much as $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for government insured mortgages with no money down


http://www.usmessageboard.com/economy/362889-facts-on-dubya-s-great-recession.html

Yes, I don't contend with *most* of what you posted here.

The problem is, nearly all of this was also pushed by a prior administration... namely the Clinton Administration.

And... the sub-prime mortgage market shot off under Clinton.
And... the housing bubble started under Clinton.

Bush was following the same policies that Clinton was pushing. Which Ironically was the same policies as Bush Sr, and Reagan, and Carter, who originally pushed for 'affordable housing' goals.

But nevertheless, the fact is Bush did continue the policy. True. But Clinton is the one who really started the Bubble, when he made HUD give affordable housing goals to the GSEs.

NONSENSE


Examining the big lie: How the facts of the economic crisis stack up


The boom and bust was 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.” It is highly unlikely that a simultaneous boom and bust everywhere else in the world was caused by one set of factors (ultra-low rates, securitized AAA-rated subprime, derivatives) but had a different set of causes in the United States. Indeed, this might be the biggest obstacle to pushing the false narrative.



Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.



Private lenders not subject to congressional regulations collapsed lending standards.


Examining the big lie: How the facts of the economic crisis stack up | The Big Picture



Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”




"(In 2000, CLINTON) HUD restricted Freddie and Fannie, saying it would not credit them for loans they purchased that had abusively high costs or that were granted without regard to the borrower's ability to repay."

How HUD Mortgage Policy Fed The Crisis

"In 2004, (BUSH), the 2000 rules were dropped and high‐risk loans were again counted toward affordable housing goals."

http://www.prmia.org/sites/default/files/references/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf



The American mortgage market in was 2000, stood at $1 trillion a year. The real surge in the mortgage market began in 2001 (the year of the stock market crash). From 2000 -2004, residential originations the U.S. climbed from about $1trillion to almost $4 trillion.

About 70% of this rise was accounted for by people refinancing their conventional mortgages at lower interest rates

http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf





But beginning in 2003, we begin to see rapid compositional shift toward non-conventional loans. In contrast to conventional loans, securitization of these types of mortgages was centered on private - sector banks rather than GSEs.


http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf

 

[Dad2three]

So was Barney Frank to blame for our woes? There are two lines of argument here, and neither is all that compelling. The first contention is that Frank failed to exercise diligent oversight of Fannie Mae and Freddie Mac as the housing bubble swelled. There’s something to this, though it’s worth noting that Frank was in the congressional minority for most of the period in question. The second argument is that Frank and other Democrats — by promoting policies to boost affordable housing — somehow caused the subprime mess and financial collapse. That argument is especially hard to square with the facts.

First, it’s true that Frank was hardly Fannie and Freddie’s biggest critic. Nor did he spot the housing bubble. Back in 2003, as the Examiner’s Philip Klein points out, Frank said that the government-sponsored entities were not in any sort of crisis. “The more people exaggerate these problems,” Frank told the New York Times, “the more pressure there is on these companies, the less we will see in terms of affordable housing.” Not the most prescient of comments. (Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market. They were actually losing market share to private banks, as the chart on right from researchers at the University of North Carolina shows.) -- Barney Frank didn?t cause the housing crisis - The Washington Post

Well first, Barney Frank is on record as saying there was no bubble, and that he planned to continue to push for easier home ownership.

[ame=http://youtu.be/6coIcgdgF5U]Barney Frank 2005: "This is not a housing bubble, it wont collapse" - YouTube[/ame]

So that's not a matter of debate, it's just a flat out fact.

Second, the claim that Fannie and Freddie were not heavily involved in Sub-prime loans, is just flat out wrong.

They were both heavily heavily involved in sub-prime loans.

FHFA Conservator?s Report ? Why Fannie Mae And Freddie Mac Failed | Problem Bank List

According to the conservator's report, almost 40% of all of Fannie and Freddies mortgages were sub-prime by 2003. That's balls deep into sub-prime in my book.

The reason some people claim Fannie and Freddie were not buying up so many sub-prime loans, is because they deliberately hid the number of sub-prime loans, by categorizing them as Alt-A. But Alt-A *IS* a sub-prime loan.

Additionally, a lot of people seem to forget that Fannie and Freddie are not only in the business of buying loans. They also securitize loans.

A private mortgage lender will make a loan. Then they bundle that loan together with a bunch of others, and make a Mortgage Backed Security.

They take this security, and have Freddie or Fannie, stamp their guarantee on that MBS, and then sell it on the open market.

Half of all the losses Freddie and Fannie had, were not from Mortgages they owned, but rather mortgages they guaranteed.

When people look at their portfolio and say 'they were not involved', they simply don't know what they are talking about. They only owned a small fraction of the sub-prime loans, yes. But their stamp of approval was on hundreds of billions of dollars worth in the market.

LIES, I'M SHOCKED. YOU KNOW WHAT A GUARANTEE MEANS RIGHT? IF THE GSE'S GUARANTEED IT, WHY WOULD BANKS LOSE MONEY?l ol



GSE critics also claim that Fannie and Freddie led the rest of the market in a race to the bottom. This fanciful theory is based on a series of false equivalencies, wherein low-income borrowers are considered no different from subprime borrowers, and no different from those who took out two-year teaser rates or liar loans.

This race-to-the-bottom narrative implies that GSE securitizations are the same as private label securitizations, as if concepts like, "nonrecourse," or "originate to distribute," versus "buy and hold," are not meaningful.

Since every GSE mortgage securitization benefits from a corporate guarantee, GSEs' retention of credit risk is diversified among huge portfolios of low risk loans booked before, during and after the bubble. By way of contrast, a private label securitization is a single static portfolio in liquidation. So it made no sense for private label deals to mimic GSE credit standards.

GSE Critics Ignore Loan Performance - Bank Think Article - American Banker


Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie

 

[Dad2three]

ED PINtO'S DEBUNKED NUMBERS HUH? lol

Normally I would debate you

but.... do you read your own posts? You come across as a ten year old.

I'll wait for someone more mature. Have a nice day.

Got it, You wont TRY to use AEI's talking points from Ed Pinto, Peter Wallison and their ilk get trumped by FACTUAL data!


Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie

 

[Contumacious]

Private sector loans, not Fannie or Freddie, triggered crisis

Fannie and Freddie

"the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans"

.

 

[Dad2three]

ED PINtO'S DEBUNKED NUMBERS HUH? lol

Normally I would debate you

but.... do you read your own posts? You come across as a ten year old.

I'll wait for someone more mature. Have a nice day.

YOU MEANT BARNEY SAID THEIR WAS NO BUBBLE IN 2003 AND 2004 F/F ACCOUNTING SCANDALS? lol

We want more people owning their own home in America," Bush said. His goal is to have 5.5 million minority homeowners in the country by the end of the decade.

March 26, 2004

Bush Ties Policy to Record Home Ownership

Bush Ties Policy to Record Home Ownership | Fox News


GOP HOUSE HEARING F/F 2004


Mr. Frank: ...Are we in a crisis now with these entities?

Secretary Snow. No, that is a fair characterization, Congressman Frank, of our position. We are not putting this proposal before you because of some concern over some imminent danger to the financial system for housing; far from it.
“

- THE TREASURY DEPARTMENT'S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES

or this one



"Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs' commitment to low-income homebuyers. "

George W. Bush: Statement of Administration Policy: H.R. 1461 - Federal Housing Finance Reform Act of 2005



One president controlled the regulators that not only let banks stop checking income but cheered them on. And as president Bush could enact the very policies that caused the Bush Mortgage Bubble and he did. And his party controlled congress.






Fannie, Freddie to Suffer Under New Rule, Frank Says

Fannie Mae and Freddie Mac would suffer financially under a Bush administration requirement that they channel more mortgage financing to people with low incomes, said the senior Democrat on a congressional panel that sets regulations for the companies.


So if your narrative is "GSEs are to blame" then you have to blame bush


http://democrats.financialservices....s/112/06-17-04-new-Fannie-goals-Bloomberg.pdf

 

[Dad2three]

Private sector loans, not Fannie or Freddie, triggered crisis

Fannie and Freddie

"the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans"

.

Got it,. MORE MYTHS


Weird, the GSE's worked for 70 years to bring about higher home ownership rates, what happened?

Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.


Regulators and policymakers enabled this process at virtually every turn. Part of the reason they failed to understand the housing bubble was willful ignorance: they bought into the argument that the market would equilibrate itself. In particular, financial actors and regulatory officials both believed that secondary and tertiary markets could effectively control risk through pricing.


http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf



Conservative Ideas Can't Escape Blame for the Financial Crisis


The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation. As the crisis quickly spiraled out of control, it quickly became apparent that the massive credit bubble of the mid-2000s, followed by the inevitable bust that culminated with the financial markets freeze in the fall of 2008, occurred predominantly among those parts of the financial system that were least regulated, or where regulations existed but were largely unenforced.

Predictably, many conservatives sought to blame the bogeymen they always blamed


Politics Most Blatant | Center for American Progress

 

[Dad2three]

I of course am the one vote against bringing back the Glass-Steagal Act.

I have asked this question hundreds of times, and I never get an answer.

Name ONE bank that if Glass-Steagall was still enforced, would have not crashed? And on what basis would you make the claim?

Countrywide? Nope.
IndyMac? Nope.
Bear Stearns? Nope.
Wachovia? Nope.
AIG? Nope.
Washington Mutual? Nope.

The vast vast majority of all the banks that crashed... none of them would have been affected by Glass-Steagall in any way.

So now, if you have a reason to bring back Glas Steagall, what is it?

And don't tell me it is to prevent another sub-prime melt down, because if so, then I want the name of the banks (not one), bank(S) that would have been 'saved' under Glass Steagall, and I want a specific provision of Glass Steagall, and how it applied to those banks, that would have stopped them from crash.

If you can provide me that evidence, I'll consider it.

You are correct, not a regulation failure, but a REGULATOR failure called Dubya




Glass-Steagall Is Mostly A Red Herring


But wasn’t the repeal of Glass-Steagall the key to the emergence of these gigantic banks with huge political influence? Certainly it helps. If you’re a bank, plus some other large enterprise, then you have more clout than a mere bank would have. But the bank-qua-bank can’t get any bigger by merging with something that’s not a bank. What really did keep banks small was that when the 1927 McFadden Act let nationally charted banks get in the branching game, it prohibited them from operating branches in more than one state. What’s more, states were allowed to put tighter restrictions than that on branching. The “one state only” rule is totally arbitrary. There’s no principled reason you should be allowed to have branches in Manhattan and Buffalo but not Manhattan and Newark, or that it’s okay to work with a local branch of a very large bank in Yuba City but not in Utah. But it does limit the overall size of banks pretty severely. California, Texas, and New York banks would be kinda big and banks in most of the country would be quite small. And the fact that the rule is so plainly arbitrary makes it relatively easy to enforce. Since it simply piggybacks on existing lines rather than claiming to be some fine tuned optimization, it’s relatively difficult to game the system without people noticing.

Federal regulators started to relax this rule in the 1980s and it was firmly repealed in the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. It seems to me that if you want to look at a piece of 1990s financial deregulation that set off waves of bank consolidation, this is where you want to look. But was it a good idea?



Glass-Steagall Is Mostly A Red Herring | ThinkProgress

Bush was only doing what every president since Carter had been doing. If you really want to trace the housing bubble to it's roots, it started in the 90s under Clinton.

But again, every administration has assumed that encouraging more home ownership was an automatic inherent plus to society.... when clearly it was not.

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”



"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
http://www.federalreserve.gov/newsev...3_analysis.pdf




CARTER? IT STARTED WITH FDR...


Weird how Reagan ignored regulator warnings in 1984 then Bush did the same thing 20 tears later right? lol

 

[Dad2three]

Private sector loans, not Fannie or Freddie, triggered crisis

Fannie and Freddie

"the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans"

.

WORLD WIDE CREDIT BUBBLE AND BUST. Auto loans and commercial R/E bubbles in the US they have a F/F too?

 

[Dad2three]

FUCK NO.

Shattering the Glass-Steagall myth

Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.

The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.

Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender."

.

It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it

It is clear to anyone who has studied the fascist/socialist axis that they are prejudiced against the private sector. Thwy will use any pretext to complete nationalize the means of production.

The former Federal Reserve chairman, Alan Greenspan, has conceded that the global financial crisis has exposed a "mistake" in the free market ideology which guided his 18-year stewardship of US monetary policy.

Alan Greenspan, aka, Judas Iscariot sold his soul for 20 silver coins.

He did not, and could not, explain how there can be a central bank and a free market simultaneously.

.

.

WORLD WIDE CREDIT BUBBLE AND BUST. Let me guess, the federal reserves worked together? lol

 

[Contumacious]

The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation.

Excuse me dingle berry

In 2007 the Federal Government fully controlled banking and credit via the Federal Reserve Board,

So either you do not know the meaning of deregulation or you have gone full retard.

.