Posted on 09/23/2008 5:35:26 PM PDT by Fox_Mulder77
Anyone who tries to explain the Wall Street crisis in a single sound-bite is foolish…or worse. But House Democratic Leaders have found a culprit they can agree on: deregulation.
“This is the fruit of decades of ‘leave the market alone, don’t regulate it. It will take care of itself,” Says House Banking Committee Chairman Barney Frank. His solution? “Clearly we’ve got to get some regulation here.”
“The Bush Administration’s eight long years of failed deregulation policies” is the problem, declares House Speaker Nancy Pelosi.
“A stark failure of the economy and this administration’s laissez faire, take the referee off the field, let anyone do whatever they want to do and everything will be fine,” adds House Democratic Leader Steny Hoyer.
The problem with the Democrats’ “deregulation did it” meme is that it didn’t happen – deregulation that is.
The most significant financial regulatory action in the Bush Administration was Sarbanes-Oxley (Sarbox), a law significantly increasing regulation of the accounting and securities businesses. It spawned twenty – count-em – twenty new rulemakings at the Securities and Exchange Commission, and created a whole new regulatory organ, the Public Company Accounting Oversight Board (PCAOB).
(Excerpt) Read more at blog.heritage.org ...
Banks had two important reasons to write bad loans. 1)They were expected to prove that they were reaching out by providing loans to people who otherwise were underserviced. This was a requirement, for example, of banks who wanted to be approved by regulators to expand into other financial services under the Gramm-Leach-Billey Act of 1999. It was required for Democrat support. 2)Fannie Mae/Freddie Mac bought bad mortgages from banks under their mandate to expand home ownership
Both of these points were driven by Democrats and should be cleaned up.
One could argue that Greenspan is to blame by artificially keeping interest rates low to feed the economy /housing starts in the wake of 9/11 resulting in overbuilding and easy credit.
The Democrats provided the defective balloons and Greenspan provided the air.
I can't blame Wall Street when someone tells you to go out and sell all you can, take a good fee and sell your obligations to the taxpayer for what is left over.
Would you be able to give me a link to a sight that shows me what the votes were? I have a Democrat sister-in-law who needs proof.
Pelosi thinks that a deep recession will be the event that will deliver her the political power to create her socialist/influence peddling utopia. She doesn’t need to understand how the world works, what responsibilities come with her position, and the rights of Americans. All she knows is that she wants the world to slave for her so that she can save the world. She is one stupid b***h.
Start a Federal plan of paying their downpayments on house purchases using ARM Loans and the Liar loans, the undocumented ones where they can come in off the street saying here's my ID Number, I don't have an SSI number. They say they make $6,000 a month, you write it down.
After all these are poor immigrants from foreign countries and all the odds are against them, so be compassionate, dammit! They can't even get a drivers license. Everybody is prejudiced against them! They're just looking for some way to support their families so I don't want to hear of you questioning what they tell you, got that?
You will make your 15% from the loan when you sell it off to the hedge fund buyers, so shut up. The real estate agent makes their 6%. The property taxes get paid and the cities are happy. The Feds paid the downpayment and everybody is happy. real happy because there's money flowing like wine. Even the stupid American taxpayer who doesn't know he's getting it in the butt every payday is happy.
We got these people a job building new homes, driving trucks, in darn near every kitchen and fast food joint in the country, working illegal narcotics and the economy is doing just great. Their kids are in school with a free breakfast and lunch. The parents come by and pick them up at 4:30 or 5:00PM and all is going just great. Until ........
Those damn ARM loans start to hit the rollover dates into standard loans and the mortgage payments go from $600 a month to $1400 a month and the poor undocumented immigrant folks can't pay it.
The excuses start, I just bought a new pickup, Senor’, my wife had another baby and I don't have the money. Nobody told me this was going to happen (which is probably true in most cases). It wouldn't have mattered in most cases because they still don't qualify for a standard real estate loan of any size or type!
Where was America going to get the workers we needed to do the manufacturing jobs, huh? Oh, that's right with NAFTA we sold off or moved most of the heavy manufacturing plants and those jobs out of the country to Mexico or China. Then there's the 3% of illegal aliens who work in agriculture, they're not home buyers though, so they don't count in this picture either.
We're going global with the trade agreements. Remember the first four years of Bush? Done, so now we are stacking workers around the country to step in as the older Americans retire. Are you still wondering why McCain is going to give them an amnesty?
That's called social engineering.
_______________________________
palmer; NoLibZone; river rat; Aunt B; Tennessee Nana, you got anything to add in here?
ping 26
The systemic risk was freezing the financial system, requiring AIG bailouts, etc. If you paid off the mortgage of every deadbeat and every potential deadbeat (a lot less than 700B), the systemic risk would not go down one iota. We have been screwed by Greenspan and his financial industry, not by social engineers.
There is a program going today that will pay 3% of your downpayment if you have not owned a house for the previous 90 days. Who do you think this was designed for? People like you and me?
"Second, recent events highlight the absurdity of the attempt by several pundits to blame recent problems on "financial deregulation." That complaint was aimed at the Financial Modernization Act of 1999, which passed the House by a vote of 362-57 and the Senate by 90-8, yanking the last brick out of the 1933 Glass-Steagall Act's regulatory wall between commercial banks and investment banks.
If it was somehow possible in today's world of global electronic finance to the rebuild such a wall, that would mean J.P. Morgan could not have bought Bear Stearns, Bank of America could not have bought Merrill Lynch, Barclays could not buy most of Lehman, and Goldman Sachs and Morgan Stanley could not become bank holding companies. It is hard to imagine how things would have worked out in that situation, but it surely would not have been an improvement.
People like you and me. Look at the homes in California, Florida, Vegas and so many other markets. These aren't low income homes. These are middle upper and upper income homes. Yes, there is a good mix of lower thrown in, but the foreclosure rate among folks like you and me has to have escalated to levels not seen before.
My paraphrasing and re-casting of the excellent article from the WSJ (a must-read). Also, see this Freep thread here.
Our current mess can be tied directly to the Rats in Washington and the greed of Obama’s campaign bigwigs (Jim Johnson, former chairman of Fannie Mae and Franklin Raines, former Fannie Mae CEO). The Rats propped up these two government-sponsored enterprises (GSEs) so their CEOs could reap multiple millions while lining the pockets of Obama and Dodd through massive campaign contributions and perks.
Fannie and Freddie as GSEs were viewed in the capital markets as government-backed buyers, thus they were able to borrow as much as they wanted at below market rates to buy junk mortgages and mortgage-backed securities.
Economists at the Federal Reserve and Congressional Budget Office had studied them in detail, and found that they did not significantly reduce mortgage interest rates despite their subsidized borrowing rates. If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing?
Fed Chairman Alan Greenspan became a powerful opponent and began to call for stricter regulation and limitations on the growth of their risky portfolios.
Fannie Mae and Freddie Mac had accounting scandals in 2003 and 2004, so to avoid regulation and retain their government sponsored low-cost financing advantage, they re-committed to increased financing of "affordable housing." They became the largest buyers of subprime (garbage) and Alt-A (mostly garbage) mortgages between 2004 and 2007, supercharging growth of junk mortgages, exposing taxpayer’s to $1 trillion, and substantially magnifying the costs of this collapse.
Beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to explode from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period it was clear that originators were scraping the bottom of the home-buyer barrel to pump-up Fannie and Freddie profits (i.e. CEO compensation and campaign contributions to Rats) since loan quality declined with low or no down payments and low adjustable initial rates.
Fannie and Freddie bought the support of Rats and were allowed to continue unrestrained. Barney Frank (Rat., Mass), the chair of the House Financial Services Committee, (wrongly, ignorantly, stupidly) described the arrangement with "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing."
In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill. The bill was the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Rats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Rats, remained silent.
Rats are blaming the financial crisis on "deregulation." This is a canard. There has been deregulation in our economy that has produced innovation and lowered consumer prices. The primary "deregulation" in the financial world permitted banks to diversify their risks, which has kept banks relatively stable in this storm.
As a result, U.S. commercial banks have been able to attract more than $100 billion of new capital in the past year to replace most of their subprime-related write-downs.
Deregulation also made possible bank acquisition of Bear Stearns and Merrill Lynch, saving billions in likely resolution costs for taxpayers.
Obama now criticizes Republicans and deregulation, but along with Rats Frank and Dodd, blocked the only reform proposed - causing and increasing the size of current crisis. Sen. McCain has been pointing to systemic risks and trying to do something about them for years. In contrast, Sen. Obama lined his pocket with their money and helped to block Republican and Fed regulation that would have stopped the insanity. Obama likes Fannie and Freddie so much, he hired their former CEOs who cooked the books and left us taxpayers with the bill while keeping their millions in compensation.
If the Rats hadn’t blocked the 2005 legislation, the huge growth in junk loans from Fannie and Freddie could not have occurred, and the scale of the meltdown would have been substantially less. The Rats who today blame Republicans on the lack of regulations were the ones who blocked the only legislative effort that could have stopped it. And the deregulation that did occur mitigated bank risk and positioned them to reduce the cost to taxpayers of this mess - caused by Rats.
Also:
"Second, recent events highlight the absurdity of the attempt by several pundits to blame recent problems on "financial deregulation." That complaint was aimed at the Financial Modernization Act of 1999, which passed the House by a vote of 362-57 and the Senate by 90-8, yanking the last brick out of the 1933 Glass-Steagall Act's regulatory wall between commercial banks and investment banks.
If it was somehow possible in today's world of global electronic finance to the rebuild such a wall, that would mean J.P. Morgan could not have bought Bear Stearns, Bank of America could not have bought Merrill Lynch, Barclays could not buy most of Lehman, and Goldman Sachs and Morgan Stanley could not become bank holding companies. It is hard to imagine how things would have worked out in that situation, but it surely would not have been an improvement.
The promise that junk bonds would be backed by the government as though they were AAA is what made much of this mess possible in the first place.
If printing money was the solution to all problems, Zimbabwe would be the most prosperous country in the world.~ MISH'S Global Economic Trend Analysis"
http://globaleconomicanalysis.blogspot.com
Open Letter To Congress On The $700 Billion Paulson Bailout Plan
http://globaleconomicanalysis.blogspot.com/2008/09/open-letter-to-congress-on-700-billion.html
Most likely she and the other moonbat crooks will be demanding criminal investigations of the Pres and his administration as a way to distract from their own miserable failures.
“Even the stupid American taxpayer who doesn’t know he’s getting it in the butt every payday is happy.”
I don’t recall you or I ever being happy about this scenario.
The stupid American taxpayer is the lifeblood of corrupt politicians.
That’s because we know too much about this box of lies.
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