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Because savvy businessmen like to go out of business? No, I dont think so. They might do that knowing Uncle is going to bail them out. That's what "moral hazard" is all about. And "too big to fail" is the ultimate moral hazard.
That's the theory. In practice, it doesn't always work out. If I give you the choice of making $50 million this year but your trades could put the bank out of business within the next three years, especially when you think your trade is relatively low risk, what choice are you going to make? Most take the shot at the $50MM.
You base this on what?
In actual fact that isn't what happens. Managers look out for their self interest. And that means continued employment.
In the distant past bank directors were personally on the hook for losses their banks incurred. That really cut down on risky lending.
That's the theory. In practice, it doesn't always work out. If I give you the choice of making $50 million this year but your trades could put the bank out of business within the next three years, especially when you think your trade is relatively low risk, what choice are you going to make? Most take the shot at the $50MM.
You base this on what?
In actual fact that isn't what happens. Managers look out for their self interest. And that means continued employment.
In the distant past bank directors were personally on the hook for losses their banks incurred. That really cut down on risky lending.
I deal with these people all the time It's a classic agency problem. They are risking the shareholders money, not their own.
In investment banking and trading, you can make enough in three to five years to retire if you're good. Top guys literally make tens or even hundreds of millions of dollars in a very short period of time. Most of these guys do NOT stay in the business once they have made their bundle because it is a brutal business.
based up on this is what caused the financial collapse..... idiotBecause savvy businessmen like to go out of business? No, I dont think so. They might do that knowing Uncle is going to bail them out. That's what "moral hazard" is all about. And "too big to fail" is the ultimate moral hazard.
That's the theory. In practice, it doesn't always work out. If I give you the choice of making $50 million this year but your trades could put the bank out of business within the next three years, especially when you think your trade is relatively low risk, what choice are you going to make? Most take the shot at the $50MM.
You base this on what?
In actual fact that isn't what happens. Managers look out for their self interest. And that means continued employment.
In the distant past bank directors were personally on the hook for losses their banks incurred. That really cut down on risky lending.
OK, so you have no answer. You can show that I am idiot pretty easily by pointing to a political entity run by blacks that has been successful in the ways I mention. That would pretty much refute my basic premise.
Instead you'd rather lob ad homs. Maybe you are the racist here?
So you defend your logical fallacy as not being a logical fallacy by...repeating it!
Genius.
Please show what logical fallacy is introduced by a question based on fact.
I truly think you are clueless or a racist. Possibly both.
Of course those of us who aren't insane SEE what the effect of failure to properly regulate banks has done ot our economy.
And for the others there's always FAITH BASED economics to fall back on.
You don't see jackshit as banks are and have always been very highly regulated institutions. There is no regulation that would have prevented this meltdown short of nationalization.
This Act shall supersede and preempt the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops
In line with new capital adequacy standards coming into force soon under Europe's Basel accords, brokerages granted CSE status would be able to use in-house, risk-measuring computer models to figure how much net capital they need to set aside.
Since the new CSE rules will apply to the largest brokerages without bank affiliates, SEC Commissioner Harvey Goldschmid said, "If anything goes wrong, it's going to be an awfully big mess."
So you defend your logical fallacy as not being a logical fallacy by...repeating it!
Genius.
Please show what logical fallacy is introduced by a question based on fact.
I truly think you are clueless or a racist. Possibly both.
The logical fallacy is as I have explained. If your mind is so small as to be unable to grasp the explanation, re-explaining it to you will be to no avail.
In addition, the question is not to name two black run countries that aren't failures, the question is why you cannot name two such countries when they do exist.
It is because you have never actually looked. To look would be to challenge your racialist belief system, and you can't have that. So you state something as fact which isn't.
Did you know your kind used to ask for ONE such country? I guess after having their balls handed to them many times over (including by me), they decided to start asking for two. I suppose a year from now they will be asking for three. Whatever it takes to maintain your delusions.
Even though I know I am wasting my time with you, I will go into more depth for the benefit of others.
The logical fallacy of which you are guilty is the assumption that a black country fails because it is run by blacks and therefore that proves blacks are inferior people. It never enters your little pea brain that a country might be failing for other painfully obvious reasons. And it never enters your little mind, except when it is convenient, that many white nations had the exact same struggles in their early days after throwing off the yoke of oppression. It took France nearly a century to get its act together after the French Revolution, the immediate aftermath of which was nearly unparalleled in its brutality and bloodshed. And here we are nearly a century after the Russian revolution still waiting for that country to emerge from the dark ages. The Russian people have suffered purges that make your idol Hitler look like a relative saint.
White Nationalists like to point to countries like Zimbabwe as evidence black people suck at running countries. They like to say that its former incarnation, Rhodesia, was a more stable and more successful state. From the white colonialists' perspective it must have been wonderful, but from the perspective of the beleagured black people of that nation it was an unmitigated disaster. And so they threw off the yoke of oppression. And since their cruel masters claimed to represent the best of Western democracy, it was only natural these people would turn toward a marxist solution.
And just like with Russia, Zimbabwe is a demonstration of the failure of marxism, not the failure of a race.
But this is all over your head. Not only do you not see past your biases, you don't want to.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
.
Citi CEO: Banks need regulation - Video - Business News
hmm banks agreeing banks need to be regulated. interesting....
im not trying to play the partisan game with this. this was a bad bill to repeal and both the GOP and dems should have known that. so they both get the blame.The 1999 repeal of Glass-Steagle was the kicker...
In the House of Representatives, the final vote to adopt Financial Services Modernization Act (aka Gramm-Leach-Bliley) was taken on Nov. 4, 1999.
Code:
YEAS NAYS PRES NV
REPUBLICAN 207 5 10
DEMOCRATIC 155 51 5
INDEPENDENT 1
TOTALS 362 57 15
As we can see, the bill received a great deal of support from both sides of the aisle. This was very clearly not a vote along partisan lines. Current Speaker of the House Nancy Pelosi voted for the bill, as did a number of Democratic Party notables.
The full roll-call vote record is here: http://clerk.house.gov/evs/1999/roll570.xml
Moving to the other wing of the Capitol, let's check the Senate.
The Senate vote was also taken on Nov. 4, 1999.
Code:
YEAs 90
NAYs 8
Present 1
Not Voting 1
Seven of the eight nays were Democratic members of the Senate. The Present and Not Voting members were Republicans.
The 90%of the Senate that voted for the bill included current Majority Leader Harry Reid, Vice President Joe Biden, and Democratic Senatorial legend Ted Kennedy.
The full roll-call record may be found here:
U.S. Senate: Legislation & Records Home > Votes > Roll Call Vote
And Ron Paul voted AGAINST it...
Ron Paul explains why he voted against repeal of Glass-Steagall - YouTube
i am simply pointing out that regulation of the banks is not a negative thing.
I'm not, either, that's why I posted the vote totals. It was a bi-partisan bill that got overwhelming support from both sides of the aisle. It was the dumbest thing Congress has done in a long time. Dorgan knew it was bad news, Ron Paul knew it was bad news, but most everybody else was listening to the damned bankers.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
.
Yes. They were bailed out by the Bush and Obama Administrations.
The cause of the crash was not derivatives. That was only later. The cause was bad mortgages made because the Fed kept rates too low, making mortgage loans very attractive to lenders. That is the only "regulation" that can be blamed.
You clearly do not understand the role of derivatives. And you smell funny.
None of this would have happened if the entire bill would have been implimented
No brokers to sell the fucked up securities and they would not have finacially benifited from them.
That means they would have no reason to write so many bad loans.
No bad loans no collapse.
Bush and SEC under Bush caused this mess.
Of course those of us who aren't insane SEE what the effect of failure to properly regulate banks has done ot our economy.
And for the others there's always FAITH BASED economics to fall back on.
You don't see jackshit as banks are and have always been very highly regulated institutions. There is no regulation that would have prevented this meltdown short of nationalization.
This is just so much bullshit.
The SEC and CFTC battled for years over who would regulate the derivatives market. Our regulations were not keeping pace with the new financial products being created at an accelerating pace.
The CFMA settled the issue by preventing either one from regulating the derivatives market. The derivatives market was given free rein, and immediately ran out of control.
Not only that, but Bush expanded the size of federal government, including increased the number of regulations. However, he decreased the size and scope of two agencies; the SEC and the EPA.
So there was no one on watch during Bush's tenure.
The Commodities Futures Modernization Act of 2000.
Bucket shops! A clear admission that structured finance products are crooked gambling products. And I never heard anyone screaming about "states rights" over the federal government pre-empting state laws on bucket shops.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
In line with new capital adequacy standards coming into force soon under Europe's Basel accords, brokerages granted CSE status would be able to use in-house, risk-measuring computer models to figure how much net capital they need to set aside.
There's your sub-prime crash explained in a single sentence right there.
Since the new CSE rules will apply to the largest brokerages without bank affiliates, SEC Commissioner Harvey Goldschmid said, "If anything goes wrong, it's going to be an awfully big mess."
Grossest understatement of the new century.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
.
Yes. They were bailed out by the Bush and Obama Administrations.
The cause of the crash was not derivatives. That was only later. The cause was bad mortgages made because the Fed kept rates too low, making mortgage loans very attractive to lenders. That is the only "regulation" that can be blamed.
You clearly do not understand the role of derivatives. And you smell funny.
It is a good bet I know more about derivatives than everyone on this board combined.
And you just demonstrated who the idiot is. Bear Stearns, Merrill Lynch, and Lehman are all gone. Technically, Merrill Lynch is still around since it was absorbed by BofA. But they were not bailed out. If you don't even know that small fact, you are worthless.
If it was only about bad lending, the crash would not have been much deeper than the S&L crisis and would have been easily managed.
i am simply pointing out that regulation of the banks is not a negative thing.
You base this on what?
In actual fact that isn't what happens. Managers look out for their self interest. And that means continued employment.
In the distant past bank directors were personally on the hook for losses their banks incurred. That really cut down on risky lending.
I deal with these people all the time It's a classic agency problem. They are risking the shareholders money, not their own.
In investment banking and trading, you can make enough in three to five years to retire if you're good. Top guys literally make tens or even hundreds of millions of dollars in a very short period of time. Most of these guys do NOT stay in the business once they have made their bundle because it is a brutal business.
OK, so you have no evidence whatsoever. First off, investment banking and trading are not necessarily what banks do. Second, you have dealt with a tiny fraction of all the people who have ever been involved in banking. Third, you are working in a "post moral hazard" business, where failures will be taken up by Uncle.
In all, your opinion here is not based on anything.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
.
Yes. They were bailed out by the Bush and Obama Administrations.
The cause of the crash was not derivatives. That was only later. The cause was bad mortgages made because the Fed kept rates too low, making mortgage loans very attractive to lenders. That is the only "regulation" that can be blamed.
You clearly do not understand the role of derivatives. And you smell funny.
Additionally, the SEC voted unanimously in 2004 to remove the capital reserve requirements for the biggest broker-dealers. So when their derivatives shit ultimately blew up in their faces, NONE OF THEM had had any cash reserves to cover their losses. And we all know what happened to Bear Stearns, Merrill Lynch, and Lehman Brothers as a result.
.
Yes. They were bailed out by the Bush and Obama Administrations.
The cause of the crash was not derivatives. That was only later. The cause was bad mortgages made because the Fed kept rates too low, making mortgage loans very attractive to lenders. That is the only "regulation" that can be blamed.
You clearly do not understand the role of derivatives. And you smell funny.
I understand derivatives and you're wrong. The derivatives that brought down the economy were stuffed with bad mortgages that Wall Street filled structured product with. That's why investment banks went into subprime origination to begin with, so they could have a study supply of inventory to package into structured products and sell to investors. This demand was a big reason why underwriting standards fell.
Yes. They were bailed out by the Bush and Obama Administrations.
The cause of the crash was not derivatives. That was only later. The cause was bad mortgages made because the Fed kept rates too low, making mortgage loans very attractive to lenders. That is the only "regulation" that can be blamed.
You clearly do not understand the role of derivatives. And you smell funny.
I understand derivatives and you're wrong. The derivatives that brought down the economy were stuffed with bad mortgages that Wall Street filled structured product with. That's why investment banks went into subprime origination to begin with, so they could have a study supply of inventory to package into structured products and sell to investors. This demand was a big reason why underwriting standards fell.
Mortgages, however structured, are not derivatives.
I understand derivatives and you're wrong. The derivatives that brought down the economy were stuffed with bad mortgages that Wall Street filled structured product with. That's why investment banks went into subprime origination to begin with, so they could have a study supply of inventory to package into structured products and sell to investors. This demand was a big reason why underwriting standards fell.
Mortgages, however structured, are not derivatives.
The demand which came from structured products lowered underwriting standards and created bad mortgages which otherwise would not have been created. Without the structured product market, the demand for subprime mortgages would have been significantly less. It still would have been big but the demand for structured products played a big role in inflating the Housing Bubble.
