Quote:And what would've happened to the bank if they declined those loan applications?
The banks were just doing what they were told. They didn't want to make that obscene amount of money at the risk of the entire economy. Oh woe is the poor bankers
Quote:Wait... The fact the banks gambled with our economy and willfully caused it's collapse is the governments fault? You hatred of regulation borders on silly and uncompromisingly extreme at times.
No those banks made the bad investments BECAUSE they new they where insured by the feds. Had the feds not guaranteed those loans through Fannie Mae and Freddie Mack most of those loans would have NEVER been granted. The banks knew people where going to default but didn't care because the government guaranteed they didn't take the loss.
Here's the real messed up part, the Feds created a risk free situation for mortgage companies to create sub prime loans. The banks of course jumped at the chance for essentially risk free money, they even created predatory loans to take advantage of tax payers that had no knowledge of the mortgage lending process. Then when the bubble popped, the Feds bailed out all those bad loans and the banks kept possession of all the properties.
Who got screwed? The tax payers, we funded the banking take over of countless properties and then essentially paid for it twice, that's what happens when you insert the power of the government with the greed of banks.
Quote:Wait... The fact the banks gambled with our economy and willfully caused it's collapse is the governments fault? You hatred of regulation borders on silly and uncompromisingly extreme at times.
While I disagree as to amount of blame, from a dispassionate standpoint yes, the government bears some blame. They pushed through regulations forcing the banks to issue certain amounts/dollar amounts of loans to low income areas, clients, etc. The banks of course happily obliged. The government handed them the matches, the banks poured the gasoline, and clients happily helped light it up.
Quote:The banks were just doing what they were told. They didn't want to make that obscene amount of money at the risk of the entire economy. Oh woe is the poor bankers
Read up on the Community Reinvestment Act if you'd like to see how much that's so.
Quote:No those banks made the bad investments BECAUSE they new they where insured by the feds. Had the feds not guaranteed those loans through Fannie Mae and Freddie Mack most of those loans would have NEVER been granted. The banks knew people where going to default but didn't care because the government guaranteed they didn't take the loss.
Here's the real messed up part, the Feds created a risk free situation for mortgage companies to create sub prime loans. The banks of course jumped at the chance for essentially risk free money, they even created predatory loans to take advantage of tax payers that had no knowledge of the mortgage lending process. Then when the bubble popped, the Feds bailed out all those bad loans and the banks kept possession of all the properties.
Who got screwed? The tax payers, we funded the banking take over of countless properties and then essentially paid for it twice, that's what happens when you insert the power of the government with the greed of banks.
I'm sure that's part of the story, but that's not exactly the way I see it.
Banks were encouraged to make subprime mortgages by the fact that they could sell the mortgages to 3rd parties who then bundled them and then cut the bundles up into mortgage backed securities which were sold on the open market to investors, who mistakenly thought that since these mortgage backed securities contained many mortgages, that they were sufficiently diversified, and that that would mitigate their risk. Which of course, in hindsight, was total nonsense. Nobody thought about the fact that all the mortgages could go bad at once. All people saw was real estate prices rising steadily. As long as real estate prices kept going up, everything was fine.
I'm sure the government had a role in this whole fiasco, but a lot of the blame, if you want to assign blame, should go to the free market, in which people saw that other people were making a whole lot of money, and they didn't want to get left out. Large institutions got involved in investments they didn't really understand.
You can cherry pick aspects of the whole affair in order to support your thesis that government is too big, but the fact is, it was basically driven by simple greed and the delusions and ignorance of people who were scared of missing out on getting richer.
Quote:I'm sure that's part of the story, but that's not exactly the way I see it.
Banks were encouraged to make subprime mortgages by the fact that they could sell the mortgages to 3rd parties who then bundled them and then cut the bundles up into mortgage backed securities which were sold on the open market to investors, who mistakenly thought that since these mortgage backed securities contained many mortgages, that they were sufficiently diversified, and that that would mitigate their risk. Which of course, in hindsight, was total nonsense. Nobody thought about the fact that all the mortgages could go bad at once. All people saw was real estate prices rising steadily. As long as real estate prices kept going up, everything was fine.
I'm sure the government had a role in this whole fiasco, but a lot of the blame, if you want to assign blame, should go to the free market, in which people saw that other people were making a whole lot of money, and they didn't want to get left out. Large institutions got involved in investments they didn't really understand.
You can cherry pick aspects of the whole affair in order to support your thesis that government is too big, but the fact is, it was basically driven by simple greed and the delusions and ignorance of people who were scared of missing out on getting richer.
All of that is true, however the subprime market would not have existed if not for the state interfering in the first place. A mortgage is a risk investment for banks they are waging if you'll pay off the note they have no desire to be landlords. Removing the risk created the subprime market, I believe there was even a percentage of subprime loans that where mandatory starting in the 90s
Quote:All of that is true, however the subprime market would not have existed if not for the state interfering in the first place. A mortgage is a risk investment for banks they are waging if you'll pay off the note they have no desire to be landlords. Removing the risk created the subprime market, I believe there was even a percentage of subprime loans that where mandatory starting in the 90s
You complain that regulations caused this to happen and you honestly think that no regulations will cause banks to behave in a proper manner that does not risk the overall economy? Why would they even care if they get bailed out? They have already made the money and have it stored off shore so they can participate in various tax loop holes. What do they care what the end result is if they can scoop up tens of millions in personal profits?
Intelligent regulation is the only thing that keep the banks in a capitalistic economy like outs in check.
Quote:And no one is in jail.
That is the real shame, they all got away with it.
Quote:You complain that regulations caused this to happen and you honestly think that no regulations will cause banks to behave in a proper manner that does not risk the overall economy? Why would they even care if they get bailed out? They have already made the money and have it stored off shore so they can participate in various tax loop holes. What do they care what the end result is if they can scoop up tens of millions in personal profits?
Intelligent regulation is the only thing that keep the banks in a capitalistic economy like outs in check.
I'm not saying no regulations was the option, I'm saying the market was created by legislation. The banks had never entered the sub-prime mortgage before because they where BAD loans, they knew it, everyone knew it. Writing bad loans is how banks go out of business, it wasn't until the Feds mandated a percentage of the loans be sub prime and then they would guarantee those loans that the market developed.
Quote:That is the real shame, they all got away with it.
I'm not saying no regulations was the option, I'm saying the market was created by legislation. The banks had never entered the sub-prime mortgage before because they where BAD loans, they knew it, everyone knew it. Writing bad loans is how banks go out of business, it wasn't until the Feds mandated a percentage of the loans be sub prime and then they would guarantee those loans that the market developed.
You can't convince them that the government forced the bank to make risky loans, it damages their belief that all banks and corporations are evil.
Quote:That is the real shame, they all got away with it.
I'm not saying no regulations was the option, I'm saying the market was created by legislation. The banks had never entered the sub-prime mortgage before because they where BAD loans, they knew it, everyone knew it. Writing bad loans is how banks go out of business, it wasn't until the Feds mandated a percentage of the loans be sub prime and then they would guarantee those loans that the market developed.
Ignoring the fact that they did more than just issue loans but what they did with them afterwards as being just as bad, if not worse than the initial lending of the loans, you don't think the banks themselves had a hand in pushing for these regulations to their bought and paid for politicians? This is what money does when unlimited bribes can be legally injected into the system. Mammoth ROI on contributions by those with massive sums of wealth.
Quote:You can't convince them that the government forced the bank to make risky loans, it damages their belief that all banks and corporations are evil.
Yes the bankers did nothing wrong. Some education for you:
http://hosted.ap.org/specials/interactiv...ml?SITE=AP
http://www.nytimes.com/2009/12/24/busine...d=all&_r=0
You can blame the issuing of the loans on the government all you want and it's probably partly true even if you think the bankers didn't push for those rules from their bought politicians in the first place. What they did with the bad loans they knew were going to fail was their own doing to recklessly create vast sums of wealth at the direct expense of their clients and the economy. To say they acted in poor faith is an understatement in the matter.
Quote:http://www.washingtonpost.com/business/w...ory_1.html
Lot of good information in there. Interesting to note it was a combination of regulation and deregulation that aided the banks in their wealth gathering.
●Glass-Steagall legislation, which kept Wall Street and Main Street banks walled off from each other, was repealed in 1998. This allowed FDIC-insured banks, whose deposits were guaranteed by the government, to engage in highly risky business. It also allowed the banks to bulk up, becoming bigger, more complex and unwieldy.
Quote:<a class="bbc_url" href='http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story_1.html'>http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story_1.html</a>
This was a great read, thanks for sharing it!
Like everything, there is a fine balance that needs to be maintained.
I think for the most part we all see the benefits of capitalism, but with out a government that is strong, one that dictates what is best for the entire society and not one that riggs the system to benefit only the few, capitalism eats itself.
Quote:This was a great read, thanks for sharing it!
Like everything, there is a fine balance that needs to be maintained.
I think for the most part we all see the benefits of capitalism, but with out a government that is strong, one that dictates what is best for the entire society and not one that riggs the system to benefit only the few, capitalism eats itself.
A government that is strong and dictates what is best for the entire society? Be careful what you hope for.
How about a government that is strong that actually works for the people?
Quote:This was a great read, thanks for sharing it!
Like everything, there is a fine balance that needs to be maintained.
I think for the most part we all see the benefits of capitalism, but with out a government that is strong, one that dictates what is best for the entire society and not one that riggs the system to benefit only the few, capitalism eats itself.
Here's how I see it, economies only work on small scales, be it socialism, capitalism, communism, there can be case for any one of them working in specific cultures and capacities. However when you have an economy as large, vast and complicated as ours it becomes more difficult to keep an economy pure of corruption and ultimately corruption is what kills an economy. I only advocate capitalism because it gives the consumer the most power to fight corruption, in communism and socialism you're counting on political officials to fight back corruption, I have yet to see that really work out well.
Quote:Ignoring the fact that they did more than just issue loans but what they did with them afterwards as being just as bad, if not worse than the initial lending of the loans, you don't think the banks themselves had a hand in pushing for these regulations to their bought and paid for politicians? This is what money does when unlimited bribes can be legally injected into the system. Mammoth ROI on contributions by those with massive sums of wealth.
I'm not ignoring it, I fully admit and blame the banking cartels for what happened in 2008 with the housing market. I'm simply pointing out that market would not exist if not for government creating the market. Prior to legislation no one was seeking to lend money to low income individual who had a high risk of default to purchase a house, why because it was a bad investment. Of course once the government created a risk free investment in bad loans the banking cartel ran wild, they knew it was a balloon and they padded their wallets as deep as they could, was it wrong HELL yes, should they be arrested absolutely.
Quote:http://www.washingtonpost.com/business/w...ory_1.html
No one's arguing for a deregulated market, he's creating a false narrative and tearing it down.
The Federal Government created the subprime mortgage market with Fannie Mae and Freddie Mack then turned a blind eye to the wild abuse by the investment banks. That's the point people have been making, the whole "we have to make housing affordable for the poor" argument is the reason we had a subprime mortgage to abuse in the first place.
You want the hard truth, the hard truth is poor people shouldn't own homes and it's why they didn't own homes prior to federal involvement.
Quote:No one's arguing for a deregulated market, he's creating a false narrative and tearing it down.
The Federal Government created the subprime mortgage market with Fannie Mae and Freddie Mack then turned a blind eye to the wild abuse by the investment banks. That's the point people have been making, the whole "we have to make housing affordable for the poor" argument is the reason we had a subprime mortgage to abuse in the first place.
You want the hard truth, the hard truth is poor people shouldn't own homes and it's why they didn't own homes prior to federal involvement.
He's not building a false narrative at all.
http://www.forbes.com/sites/stevedenning...1/22/5086/
Quote:
Many actors obviously played a role in this story. Some of the actors were in the public sector and some of them were in the private sector. But the public sector agencies were acting at behest of the private sector. It’s not as though Congress woke up one morning and thought to itself, “Let’s abolish the Glass-Steagall Act!” Or the SEC spontaneously happened to have the bright idea of relaxing capital requirements on the investment banks. Or the Office of the Comptroller of the Currency of its own accord abruptly had the idea of preempting state laws protecting borrowers. These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits.