Drudge Retort: The Other Side of the News
Friday, August 22, 2014

Government leaders are expected to agree in November that the world's top banks must issue special bonds to increase the amount of capital which can be tapped in a crisis instead of calling on taxpayers to come to the rescue, industry and G20 officials said. The bonds, known as "gone concern loss absorption capacity" or GLAC, are seen by regulators as essential to stopping the world's 29 biggest lenders from being "too big to fail." "Adopting GLAC is the final chapter in reforming the condition of banks," said Thomas Huertas, a former UK banks supervisor.

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Admin's note: Participants in this discussion must follow the site's moderation policy. Profanity will be filtered. Abusive conduct is not allowed.

Sounds like progress. There will be pushback. The interests of the average man are poorly represented.

#1 | Posted by nutcase at 2014-08-22 09:28 AM | Reply | Flag:

Agreed. They need to fail. Taken over by the government - broken up. And all management fired. Only by adding back in risk will they become more careful.

#2 | Posted by foshaffer at 2014-08-22 09:30 AM | Reply | Flag:

Government bail-outs of the banks ARE the problem. They need to sink or swim on their own.

Look up how many times the banks have been bailed-out in the last 150 years. You will be shocked.

#3 | Posted by Sniper at 2014-08-22 09:37 AM | Reply | Flag:

Good idea, too bad it will never happen.

#4 | Posted by bat4255 at 2014-08-22 10:22 AM | Reply | Flag:

Part of the problem is the direct influence of the banks on our politicians.

But part of the problem is also the fact that our politicians understand that Americans today are unwilling to make short term sacrifices for the long term good. They know its actually the opposite. We'll always go with the shortsighted, good in the short term, bad in the long term option.

That is a contributing factor to our never having a balanced budget (why should WE have to pay for OUR spending?) and it is a contributing factor in these bailouts. Allowing institutions that are mismanaged to fail is the best thing to do for the long term. But it means some short term pain and that just can't be allowed to happen. Not only would the hacks on the other side have a field day but a politicians own party would turn on him if he were to suggest that we allow our ecocomy to temporarily shrink as these corrections occur.

#5 | Posted by Sully at 2014-08-22 10:38 AM | Reply | Flag:

If we let the banks fail due to their own mismanagement, who would give money to the corrupt politicians?

#6 | Posted by 726 at 2014-08-22 10:49 AM | Reply | Flag:

Love the idea. Admitted insurance carriers pay a premium tax to the individual states they are admitted to do business in and those funds are used to pool into a solvency fund that will respond in case a carrier becomes insolvent and is unable to pay claims.

It's responsible and prudent to require large financial institutions to post a bond or pay a premium to transfer the risk of financial failure.

#7 | Posted by eberly at 2014-08-22 11:26 AM | Reply | Flag:

Government bail-outs of the banks ARE the problem. They need to sink or swim on their own.
#3 | Posted by Sniper

That would be nice, but like Sniper's economic musings, it's simply not realistic. The problem is that when the banks fail, they'll take down everyone relying on them.

For example, let's say you run a business. It's payday. But your bank just failed. How do you pay your employees, pay your bills? You don't. Now you fail.

Free market purists would say that you simply chose a bad bank, and that the market will correct for this naturally. The problem with that approach is that it throws out every baby that had an account at the bank along with the bathwater.

I like the idea of having the banks contribute to their own insolvency fund. Ultimately I expect regulators would still step in if needed, but should provide another firewall between malfeasance and collapse.

#8 | Posted by snoofy at 2014-08-22 11:57 AM | Reply | Flag:

Snoofy, what you are describing is not really what this is about.

the FDIC (and others) exists for the benefit of that business making payday. there is insurance on your deposits subject to limits and those banks are examined on a regular basis and regulated.

this is about the giant giant mega banks that can screw up the entire global economy.

#9 | Posted by eberly at 2014-08-22 12:02 PM | Reply | Flag:

The real solution, however, is to nationalize the Banks. Doing so would eliminate 80% of the current problems with Capitalism. Productive Industry needs to be in the drivers seat of our economy, not paper shuffling Bankers, who get free money to play with.

#10 | Posted by nutcase at 2014-08-22 12:12 PM | Reply | Flag:

NUT. Really. Nationalize the banks to give to the corrupt government?

So Obama and the DEMS can use it to implement more failed policies and skim money off of the top?? Really?

Can you get any more corrupt than using the IRS, ICE and EPA for political purposes...now you want to give them the banks???

A group that cannot balance a budget with a 14% income increase EVERY YEAR!! Do you ever think these things through?

And they allow you to vote.

#11 | Posted by foshaffer at 2014-08-22 12:28 PM | Reply | Flag:

Nationalize the banks? It's been tried. With disastrous results.

#12 | Posted by JeffJ at 2014-08-22 12:31 PM | Reply | Flag:

That would be nice, but like Sniper's economic musings, it's simply not realistic. The problem is that when the banks fail, they'll take down everyone relying on them.

#8 | Posted by snoofy

If they knew there was no bail-out, they wouldn't make all thoes bad loans unless the government forced them again.

#13 | Posted by Sniper at 2014-08-22 12:35 PM | Reply | Flag:

Centrally planned economies cause untolds amount of human suffering. Its been tried time and again. Why some people think 'this time will be different' is beyond me.

#14 | Posted by JeffJ at 2014-08-22 12:36 PM | Reply | Flag:

#14

Tell it to China.

#15 | Posted by Corky at 2014-08-22 12:36 PM | Reply | Flag:

If they knew there was no bail-out, they wouldn't make all thoes bad loans
#13 | Posted by Sniper

Bull.
Sorry, but that's just not how addicts think.

#16 | Posted by snoofy at 2014-08-22 01:12 PM | Reply | Flag:

Shouldn't it be the G19 since they kicked Russia out of the G8 and made it the G7?

#17 | Posted by kanrei at 2014-08-22 01:13 PM | Reply | Flag:

Nationalize the banks? It's been tried. With disastrous results.
#12 | Posted by JeffJ

What is The Fed to you? Or is the past century of economic prosperity a disastrous result?

#18 | Posted by snoofy at 2014-08-22 01:15 PM | Reply | Flag: | Newsworthy 1

I'm sure most banks love this idea. They'll pass the costs of this fund, along with a little extra "padding", on to their tax paying consumers.

What needs to happen is the reinstatement of Glass-Steagal,

#19 | Posted by sentinel at 2014-08-22 02:26 PM | Reply | Flag:

Snoofy- The FED is not a nationalized bank. It is not an official arm of the federal government. It supports monitary policy.

We have independent banking system.

We do not own Citi, Wells, Bank of America, HSBC etc.

We allow any bank to trade in the US as long as it complies to regulation. THAT is why we have been an economic engine and why we have had the prosperity we enjoy.

Nut is saying that all goes away and all those company's would be owned and operated by the Federal government. That same government that has given you. cnsnews.com OPPS lost 50 million there. The Government Accountability Office reports that despite great progress, "the amount of SNAP benefits paid in error is substantial, totaling about $2.2 billion in 2009 ahh another 2.2 B. www.cnn.com Here is another 28B...www.businessinsider.com and 16 Billion here..

Sure thing...lets let the government who just misplaces 50B run our banks! So effective and effecient!

#20 | Posted by foshaffer at 2014-08-22 02:53 PM | Reply | Flag:

North Dakota is living proof of the wisdom of taking away the privilege of making money with a computer keystroke from the private sector. The whole problem with Government corruption begins with payoffs from the private sector anyway. Interest and profits earned in North Dakota are returned to the State coffers for the benefit of all North Dakotans, not just the hopelessly corrupt Jamie Dimon or Lloyd Blankfein. These people are criminals protected by the Department of Justice.

#21 | Posted by nutcase at 2014-08-22 03:00 PM | Reply | Flag:

Finance Capitalism, which dominates the US economy, has no interest in increasing industrial output or lowering the cost of production. Their only interest is to make money from money, which they get for free. Their bailout would pay for welfare for 35 years, unless you charge interest, then forever. This outcome would surprise early economists who expected countries to act in their best long term interests to increase the means of production and avoid excess exploitation, under-consumption and debt deflation. But finance couldn't care less. Money equals credit equals debt.

#22 | Posted by nutcase at 2014-08-22 05:01 PM | Reply | Flag:

Ask yourself where did the money go and why? Everything else falls from that.

#23 | Posted by nutcase at 2014-08-22 05:02 PM | Reply | Flag:

The largest segment of the US economy is usury capital, consisting of: mortgages, personal and credit card debt, government bonds for lost wars, and debt leveraged gambling in the derivatives market. ALL NON-PRODUCTIVE ACTIVITY. This is a doomed economy, which the 1% love.

#24 | Posted by nutcase at 2014-08-22 05:07 PM | Reply | Flag:

Alan Greenspan and Company consider debt-leveraged asset-price inflation to be "wealth-creation". Everything in our economic GDP is counted and treated equally by the BLS, but not the IRS, where productive workers pay more. This is insane.

#25 | Posted by nutcase at 2014-08-22 05:12 PM | Reply | Flag:

The Government Accountability Office reports that despite great progress, "the amount of SNAP benefits paid in error is substantial, totaling about $2.2 billion in 2009 ahh another 2.2 B. www.cnn.com Here is another 28B...www.businessinsider.com and 16 Billion here..

Sure thing...lets let the government who just misplaces 50B run our banks! So effective and effecient!
#20 | Posted by foshaffer

Meanwhile, the cost of the Great Recession, brought on by banks, is somewhere between six and fourteen trillion dollars. www.google.com

Apparently, if you're a right-wing economist, fifty billion in government waste is a much greater evil than, oh, let's call it ten trillion going *poof*.

It's amazing that you still think you have any credibility when you try to speak about economics. How could this have happened? Did you get a lot of "participation" trophies as a child?

#26 | Posted by snoofy at 2014-08-22 05:46 PM | Reply | Flag:

Nutcase, you into board games?
You'd make a wicked Imperial player.
boardgamegeek.com

Europe is in the age of imperialism. Internationally operating financial investors aim for the highest political influence in Europe. Great Britain, German Reich, Russian Empire, Austria-Hungary, Kingdom of Italy, and Republic of France are each controlled by different investors. The six imperial nations build factories, troops and fleets to expand their power in Europe. They collect taxes from occupied regions to pay interests to their investors. As financial control over the imperial nations changes, there are always new strategic alliances and conflicts emerging between them.

The players represent internationally operating investors who stay in the background. There are always six imperial nations acting in the game, no matter how many investors take part. Only the investor who gets the best return on his investments, who controls the most powerful imperial nations, and who shows the best diplomatic skill, may win the game!

Imperial is a challenging strategy game without any luck of cards or dice. Players take over the role of internationally operating financial investors and control European diplomacy in imperial times.

#27 | Posted by snoofy at 2014-08-22 05:52 PM | Reply | Flag:

I do love chess, but play less and less as the years go by.

#28 | Posted by nutcase at 2014-08-22 07:14 PM | Reply | Flag:

In late 2013 Yanukovych rejected a European Union agreement tied to a $17 billion IMF loan, whose terms are only now being revealed. Instead, Yanukovych chose a Russian aid package worth $15 billion plus a discount on Russian natural gas. Riots ensued, financed by the USA. Now Monsanto will benefit from this new arrangement. Ukraine, will now open that country to genetically-modified (GM) crops and genetically-modified organisms (GMOs) in agriculture.

Ukraine's rich black soil is ideal for growing grains, and in 2012 Ukrainian farmers harvested more than 20 million tonnes of corn. Ukraine has been long considered "the bread basket of Europe." Eastern Europe, are among the most promising growth markets for farm-equipment giant Deere, as well as seed producers Monsanto and DuPont'." Current Ukrainian law bars farmers from growing GM crops, as does the EU. That is being fixed as Monsanto invests $300 million in another monopolistic coup, sold as a "free market".

WikiLeaks released U.S. diplomatic cables showing that the U.S. State Department has been lobbying worldwide for Monsanto and other biotechnology corporations like DuPont, Syngenta, Bayer and Dow. According to Nuland, who should know, US taxpayers paid $5 billion for this coup as of December 2013.

We're living in a period when the economy is changing its structure. The economic structure that has been driving economic growth for the last 30 years has exhausted itself. We need to make a transition to a new system of technologies. This kind of transition, unfortunately, has always come about through war. That's how it was in the '30s when the Great Depression gave way to an arms race and then the Second War World War. That's how it was during the Cold War when an arms race in space gave rise to complex information and communication technologies which became the basis of a technological structure that has been driving the world's economy for the last 30 years. Today we are faced with a similar crisis. The world is shifting to a new technological system.

Putin pushes Free Trade Zone to ease transition to New Global Economy. Washington sees War in Europe as best way to Preserve its hegemony. Germany is still Occupied Territory. Nazism is on the Rise. This means capital is free and human beings are not.

US leadership is being threatened by a rapidly rising China. The USA wants to weaken Europe, break up Russia, and subjugate the entire Eurasian continent. It believes that is the only way it can maintain their hegemony and beat China. The strategy was first put forth by Bismark, then picked up by the British,, and then finally by the leading american political scientist Zbigniew Brzezinski, who said on many occasions that Russia cannot be a superpower without Ukraine and that embroiling Russia with Ukraine will benefit America and the West.

For the past 20 years americans have been grooming Ukraine Nazism aimed at Russia. Tens of thousands of Ukrainian Nazis were brought to America and have been carefully cultivated and nurtured during the whole post war period. This wave of immigrants descended on Ukraine after the collapse of the Soviet Union.

Economic warfare is equivalent to conquering wars throughout man's history in that they always render the occupied nation unable to pay an alleged tax (debt) leading to bankruptcy or more war.

#29 | Posted by nutcase at 2014-08-22 07:16 PM | Reply | Flag:

Nut - I have never read something so ...well I am lost for words- far removed from reality.

Sure AMERICAN politicians always look for ways to advance US businesses. There is nothing sinister in that. That is part of the job. Unlike you they are pro American. Since the end of the cold war we have tried to move the Ukraine toward the West. But that is what the Ukrainians want. They are tired of being a Russian door mat.

The only Nazi left are in the middle east -the Muslim Brotherhood is just Nazi in turbans. Why you take things that are straight forward and twist them into some convoluted tale of some sinister plot is beyond me.

#30 | Posted by foshaffer at 2014-08-22 08:44 PM | Reply | Flag:

Snoopy - ah again - like all good liberals you have to put on the personal attack. The list is just the tip of the incompetence of government.
It was not meant to be all encompassing. But you knew that (I think) you just side stepped the point with another crack.

Not that you will understand that it wasn't something simple - it wasn't the banks that caused the bubble or burst it. If it was, what logic do you use to explain why they would do it, when it was them that got hurt the most?

The fact is the CRA and the Democrats blocking the over site of Fannie years before because their people were in charge it brought the misery on us. m.youtube.com

It was years in the making. It was a confluence of removal of Glass Stegal, the CRA, the Loan packaging by Fannie that took the risk out, the blocking of an oversight group requested by the Republicans. The pushing of no money down loan products like balloon and interest only loans pushed by the House banking committee under the idea that everyone should buy a home. No matter if they could not afford it. The bond rating assessment formula that did not include the potential for real estate devaluation, and derivatives based on the underlying loan structure that was unsound.

Like all things it is not just one thing that causes a train wreck it is many. Watch the video it had a lot on it in their own words and it shows how two faced Frank and Pelosi were in all of this. But I know you will not. It takes some effort to be educated. So much easier just to say your smart and everyone else is stupid.

#31 | Posted by foshaffer at 2014-08-22 09:30 PM | Reply | Flag:

Under unregulated Capitalism it happens over and over again. And in recent history the very same people made money at every turn. But according to the rightie-tighties its an "unfortunate accident" (Geithner)and the fault lies with the victims (Drudging idiots).

#32 | Posted by nutcase at 2014-08-22 09:44 PM | Reply | Flag:

Our capitalism us not unregulated. If anything it is well over regulated. Prove your point that the same people make out every time. I do not believe it.

I think I was quite clear of the list of related events that lead to it.

#33 | Posted by foshaffer at 2014-08-22 10:28 PM | Reply | Flag:

it wasn't the banks that caused the bubble or burst it. If it was, what logic do you use to explain why they would do it, when it was them that got hurt the most?
#31 | Posted by foshaffer

Again you're trying to use "logic."
See #16 for why that doesn't work.
But really the only bank that lost anything was Bear Sterns.
Their collapse about 15,000 people their jobs.
Compare that to the 9,000,000 Americans who lost their jobs and the 1.2 million homes that went into foreclosure, and you'll realize the banks got off easy.
I caution you that it will require intellectual honesty on your part to continue to be a participant in this conversation.

#34 | Posted by snoofy at 2014-08-22 10:29 PM | Reply | Flag:

The fact is the CRA and the Democrats blocking the over site of Fannie years before because their people were in charge it brought the misery on us.

So what? Congress did not (and still doesn't, I don't think) have the authority to regulate the derivatives the banks were bundling loans into. Beyond that, it was the non-CRA loans defaulting at a higher rate.

You might as well be blaming gun violence on the fact that we're allowed to own guns. Seeing as you're blaming the collapse on the fact that banks are allowed to develop complex investment vehicles, free of all that pesky government regulation. Is that your angle here?

#35 | Posted by snoofy at 2014-08-22 10:39 PM | Reply | Flag:

Citicorp, Countrywide, WAMU, JPMorgan, Goldman-Sachs, Morgan-Stanley, Merrill-Lynch all conspired to cheat their investors. With hi-speed trading which continues, with toxic mortgage securities, with fixing the LIBOR rate, with selling Bonds using fake accounting systems
to hide debt, by betting against the bonds and securities they sold.

It goes beyond snoofy is saying. It is impossible to waste more money than the full value of US Resident and Commercial Real Estate Market which is what the bailout is. Actual cost will depend on what the Federal Reserve and Treasury sell it back into the market all the homes they bought at or near mortgage face value to save the criminal Banks for. The only way to explain a $17 trillion bailout, as revealed by the Paul/Sanders partial Fed audit, is to include the $400 trillion gambling casino called the derivatives market. A monster of self destruction created by Rubin, Summers, Geithner and Greenspan by getting Brookley Born booted from the derivatives chair.

#36 | Posted by nutcase at 2014-08-22 11:10 PM | Reply | Flag:

"peaking in 2010 with 157. Since the start of 2008, the year the financial crisis erupted, 465 banks have failed." So much for YOUR intellectual honesty. But of course the condescending attitude is still there. No wonder you have no friends.

So no it wasn't just one bank that failed. This does not count the number of mortgage lenders that failed as well and this counts only the US lenders. Multiple foreign banks closed as well as some towns went bankrupt as they had invested in the mortgage backed securities.

"In 2012, the average amount of a mortgage went from around $215,000 to $235,000 according to the chart below"
"The number of home loans with negative equity reached 17 million in February 2011, with another 9.7 million in foreclosure or over 90 days in arrears."

The derivatives were on top of this. But they are derivatives-they are based on the soundness of the underlying investment and it's risk profile. If the underlying mortgage was sound the derivatives would be sound. The forcing of the banks to loosen their loan standards and taking the risk away is what caused them and everything else to go bad.

Blaming the derivatives is like eating a rotten ham sandwich and blaming the bread.

#37 | Posted by foshaffer at 2014-08-23 08:44 AM | Reply | Flag:

But they are derivatives-they are based on the soundness of the underlying investment and it's risk profile. If the underlying mortgage was sound the derivatives would be sound. The forcing of the banks to loosen their loan standards and taking the risk away is what caused them and everything else to go bad.
#37 | Posted by foshaffer

So your argument is the banks were forced to make loans.
Even that is suspect, as non-CRA loans had a higher rate of default than the CRA loans banks were "forced" to make.
But as you correctly pointed out, it's not the loans that were the problem, it's the risk.

Were the banks forced to claim that the loans they were making were less risky than they really were? No they were not. That's nowhere in CRA.

If your line of reasoning were to be followed faithfully, you'd properly end up blaming the ratings agencies who were vastly overstating the quality of these investment vehicles. For example, "According to the Financial Crisis Inquiry Report, 73% of the mortgage-backed securities Moody's had rated triple-A in 2006 were downgraded to junk by 2010" en.wikipedia.org
Moody's did that, all by themselves.

All told, the problem wasn't really that the ratings agencies were wrong (deliberately so, in my opinion) about the quality of the loans, though that was surely a contributory factor. It was that the banks took these loans -- that they should have known couldn't possibly perform as well as Moody's and S&P claimed, seeing as they were "forced" to make them by evil Democrats -- and leveraged those bets thirty times.

No leverage, no collapse. It's as simple as that. Nothing in CRA forced the banks to package loans as instruments. Nothing in CRA forced the banks to leverage those investment vehicles -- essentially using our deposits to buy more speculative investments based on loans they themselves should have known weren't of high quality.

Now, if you want to blame Congress for any of this, the closest you'll come is the repeal of Glass-Steagall in 1999. What did that do? It allowed the banks to do all this stuff. It did not require them to do it. See the difference? Keep in mind, banks were the ones lobbying for this change.

Blaming the derivatives is like eating a rotten ham sandwich and blaming the bread.

What happened is more like you ordered thirty shots of tequila, crashed your car into the ditch driving home, and now you're blaming it all on the bartender. If that's the way it's gonna be, then banks require regulation as they can't be trusted to act responsibly.

#38 | Posted by snoofy at 2014-08-23 01:51 PM | Reply | Flag:

It wasn't the regulation per second it was the way it was Enforced.

"get-tough regulatory regime mattered so crucially because bank deregulation had set off a wave of mega-mergers, including the acquisition of the Bank of America by NationsBank, BankBoston by Fleet Financial, and Bankers Trust by Deutsche Bank. Regulatory approval of such mergers depended, in part, on positive CRA ratings. "To avoid the possibility of a denied or delayed application," advises the NCRC in its deadpan tone, "lending institutions have an incentive to make formal agreements with community organizations." By intervening -- even just threatening to intervene -- in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city.

#39 | Posted by foshaffer at 2014-08-23 03:44 PM | Reply | Flag:

AND IT SPAWNED A GROUP OF LIBERAL LOANERS THAT THOUGHT THEY WERE DOING GOOD MAKING THEY TO PEOPLE WHO COULD NOT AFFORD THEM. LIBERAL BLACK MAILING TO " DO GOOD" killed us all.

There is no more important player in the CRA-inspired mortgage industry than the Boston-based Neighborhood Assistance Corporation of America. Chief executive Bruce Marks has set out to become the Wal-Mart of home mortgages for lower-income households. Using churches and radio advertising to reach borrowers, he has made NACA a brand name nationwide, with offices in 21 states, and he plans to double that number within a year. With "delegated underwriting authority" from the banks, NACA itself -- not the banks -- determines whether a mortgage applicant is qualified, and it closes sales right in its own offices. It expects to close 5,000 mortgages next year, earning a $2,000 origination fee on each. Its annual budget exceeds $10 million.

Marks, a Scarsdale native, NYU MBA, and former Federal Reserve employee, unabashedly calls himself a "bank terrorist" -- his public relations spokesman laughingly refers to him as "the shark, the predator," and the NACA newspaper is named the Avenger. They're not kidding: bankers so fear the tactically brilliant Marks for his ability to disrupt annual meetings and even target bank executives' homes that they often call him to make deals before they announce any plans that will put them in CRA's crosshairs. A $3 billion loan commitment by Nationsbank, for instance, well in advance of its announced merger with Bank of America, "was a preventive strike," says one NACA spokesman.

Marks is unhesitatingly candid about his intent to use NACA to promote an activist, left-wing political agenda.

*** These were the type of people that were making the loans. And why it all came tumbling down****

#40 | Posted by foshaffer at 2014-08-23 03:53 PM | Reply | Flag:

left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city.
#39 | Posted by foshaffer

Get real. You need to add two or three zeros to those numbers to make them "eye-popping."

And when you cut and paste stuff, you should provide a link. Like this: www.city-journal.org

#41 | Posted by snoofy at 2014-08-23 03:58 PM | Reply | Flag:

These were just a few examples of what was rampant at the time. Like I stated prior it was not one thing but multiple things that converged together. To say evil greedy bankers were responsible is just dumb. If that was the case we would have had multiple housing bubbles.

What was different was idea that you can break standard lending practices. An idea that was enforced by the government. Economic black mail does not do anyone any good. Like most feel good policies they end in disasters.

#42 | Posted by foshaffer at 2014-08-23 04:53 PM | Reply | Flag:

Take the 17 million times the 250k and add 9.5 million times 250k. That is the eye popping number that took us out. One of the more entertaining books on this is The Big Short by Lewis. books.wwnorton.com

#43 | Posted by foshaffer at 2014-08-23 04:59 PM | Reply | Flag:

CRA loans have been around since the 1970s.

They didn't become a bubble until Congress legislated away their power to regulate banks.

If you want to blame Congress, understand you are suggesting to Congress that they need to provide more, not less, oversight of banks.

To say evil greedy bankers were responsible is just dumb.

Who was buying the loans, CRA and otherwise, bundling them up, and selling off tranches? Certainly not Congress. The banks did that, all by themselves. To claim otherwise is to deny reality.

From your link: "Who understood the risk inherent in the assumption of ever-rising real estate prices, a risk compounded daily by the creation of those arcane, artificial securities loosely based on piles of doubtful mortgages?" The people who invented those products are the ones who needed to understand the risks. It's not Congress's job to micro-manage the banks.

You might as well be blaming Congress for steroids in baseball. Why didn't they oversee baseball enough!?

#44 | Posted by snoofy at 2014-08-23 06:19 PM | Reply | Flag:

Its exhausted to try to explain anything to someone as misinformed as full of it.

Shorting a stock, bond or security is the same thing as betting against it.

The people that placed the bet knew what they sold would fail. They knew this because they knew the mortgages they bundled were full of unqualified no-doc borrowers. Conservative Libertarian Greenspan is legally responsible for establishing and enforcing underwriting standards. All the Investment Banks engaged in this fraud until the loans began defaulting. At that point their customers quit buying those products and they were left holding bags full of toxic securities. So the Fed and Treasury rolled these companies into the FDIC system, bought the bags of toxic securities at face value and bailed other crooks out such as AIG.

But according to full of it, Government efforts to stop redlining were a root cause of the financial crisis. This is absurd. There was no requirement to lower lending standards. There was a requirement to not redline these communities.

As events played out during the financial crisis, it was the moral equivalent of shooting your neighbor after taking out a life insurance policy, but these concepts are beyond full of it's comprehension. He cannot bring himself to believe the simple truth that our financial system is run by crooks, and those same crooks control Washington. In general the role of politicians is they accept money which gets passed through our broadcast system to get them re-elected. But all the money at every step ends up back in some crooked CEOs pocket and his cronies.

#45 | Posted by nutcase at 2014-08-23 08:04 PM | Reply | Flag:

I guess when you have your head up your ad the view never changes. It is obvious your liberal bias makes you impervious to both logic and facts.

No it got to be some crook somewhere instead of a policy gone bad.

Liberal policy can never be to blame. It is always someone else's fault. Blame Bush Blame Bankers Blame anyone but who is really to blame - the people who took loans out that couldn't afford them and the policy and political environment that allowed it to happen.

#46 | Posted by foshaffer at 2014-08-24 12:04 AM | Reply | Flag:

Foshaffer.

Let's say some irresponsible individual leaves an unloaded gun on the street.

Let's say another person comes along, picks up the gun, buys some ammo, loads the weapon, and stars shooting.

Who is more to blame for the murder?

#47 | Posted by snoofy at 2014-08-24 03:45 PM | Reply | Flag:

The guy that bought the gun loaded it and pulled the trigger.

A gun is nothing. Just a piece of metal. The decision to load it and pull the trigger is the human. They made the decision.

#48 | Posted by foshaffer at 2014-08-24 05:59 PM | Reply | Flag:

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