Obama Treasury Appointee Jack Lew: "Deregulation Didn't Cause the Financial Crisis"

[Procrustes Stretched]

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.[53] He outlined his efforts to reform these institutions and add regulations, but met resistance from Republicans, with the main exception being a bill with Republican Mike Oxley that died because of opposition from President Bush.[53]

The 2005 bill included Frank objectives, which were to impose tighter regulation of Fannie and Freddie and new funds for rental housing. Frank and Mike Oxley achieved broad bipartisan support for the bill in the Financial Services Committee, and it passed the House. But the Senate never voted on the measure, in part because President Bush was likely to veto it.

"If it had passed, that would have been one of the ways we could have reined in the bowling ball going downhill called housing," Oxley told Frank. In an op-ed piece in the Wall Street Journal, Lawrence B. Lindsey, a former economic adviser to President George W. Bush, wrote that Frank "is the only politician I know who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters."[7]

Once control shifted to the Democrats, Frank was able to help guide both the Federal Housing Reform Act (H.R. 1427) and the Mortgage Reform and Anti-Predatory Lending Act (H.R. 3915) to passage in 2007.[53] Frank also said that the Republican-led Gramm–Leach–Bliley Act of 1999, which repealed part of the Glass–Steagall Act of 1933 and removed the wall between commercial and investment banks, contributed to the financial meltdown.[53]

Frank stated further that "during twelve years of Republican rule no reform was adopted regarding Fannie Mae and Freddie Mac. In 2007, a few months after I became the Chairman, the House passed a strong reform bill; we sought to get the [Bush] administration's approval to include it in the economic stimulus legislation in January 2008; and finally got it passed and onto President Bush's desk in July 2008. Moreover, "we were able to adopt it in nineteen months, and we could have done it much quicker if the [Bush] administration had cooperated.

Barney Frank - Wikipedia, the free encyclopedia

Barney Frank didn?t cause the housing crisis - The Washington Post

dear you're supposed to debate. We can all post a million links??? Got it now???

the links are proof that what passes for debate with you is called bullshit in the real world

(Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market.

Really? Just what business were they involved in? Spell it out.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

 

[Mad Scientist]

that isn't quite what he said

You're right Jill, it's not "quite" what he said, it's exactly what he said!

 

[Dugdale_Jukes]

Obviously deregulation caused the crash. Serious deregulation started with commodities under Nixon picked up steam with credit cards under Carter and achieved critical mass under Reagan. Anyone who believes it "started" after 1982 simply doesn't understand how national economies work. The crash of 1929 didn't start under Hoover, it started before Coolidge took office.

Anyone who doesn't connect the crash to Clinton's forcing Brooksley Born out doesn't know what they are talking about. Anyone who can't connect Levitt, Greenspan and Rubin to the US$570TRILLION nominal value of derivatives at risk in September 2008 doesn't know what they are talking about. That Lew doesn't do it tells us he isn't an honest man, it doesn't change any of the facts.

Timidfy Geithner was there through it all. After he f*cked it up in Asia (Soros made Geithner look like the chickenshit little pimp he is) his mainline corporate sponsoers promoted him to the NY FED from which chair he personally prevented investigations and enforcement of regulations that might have mitigated the inevitable.

The first bailout is among the most malfeasant presidential decisions in US history. By itself that delayed any possibility of recovery for five years. The second bailout combined with a functionally supply side stimulus (top down through government) probably means the end of the blue collar middle class in America.

Yet to be determined, but ask a formerly middle class blue collar worker how they're doing today. There is today's answer.

 

[emptystep]

You mean, removing rules that separated Investment Banks from Savings Banks DIDN'T cause the meldown?

I know you Liberals must be furious!

HuffPo from 2010, updated 2011:
Jacob Lew, Obama Nominee And Former Citigroup Executive, Doesn't Believe Deregulation Led To Financial CrisisLet's look up "proximate cause" shall we?
Proximate cause - Wikipedia, the free encyclopedia
So he says that Banks had problems BEFORE deregulation AND that the deregulation WASN'T the main driving cause of the Economic Meltdown!

And that means Obama doesn't believe it either because he nominated him!

OK, this is really a lose/lose for the guy. He says that the problem preceded the deregulation. So the problem existed and was not addressed and then deregulation was compounded on top of that preceding problem.

The State/Defense/CIA nominations I agree with but this guy seems wrong person at wrong time.

'This guy' is who the President trusts and values. I am sure if the President and 'this guy' have differences, Obama will do what he wants and 'this guy' will follow orders

What's with the ' 'this guy' '?

From what I can tell Obama does not micromanage. I don't think the was aware of either Benghazi or gunwalking. He does fire people when they don't do what he wants, example is the change of commanders in the Iraq/Afghanistan conflicts. The problem with this methodology is if 'this guy' screws up the financial structure sure Obama can fire him but the horse is already out of the barn.

 

[Procrustes Stretched]

that isn't quite what he said

You're right Jill, it's not "quite" what he said, it's exactly what he said!

you're confusing the sensational headline with reporting of the facts

Headline: Jacob Lew, Obama Nominee And Former Citigroup Executive, Doesn't Believe Deregulation Led To Financial Crisis

was asked Thursday during his confirmation hearing before the Senate Budget Committee by Sen. Bernie Sanders whether he believed that the "deregulation of Wall Street, pushed by people like Alan Greenspan [and] Robert Rubin, contributed significantly to the disaster we saw on Wall Street."

Lew, a former OMB chief for President Bill Clinton, told the panel that "the problems in the financial industry preceded deregulation," and after discussing those issues, added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."

 

[Procrustes Stretched]

OK, this is really a lose/lose for the guy. He says that the problem preceded the deregulation. So the problem existed and was not addressed and then deregulation was compounded on top of that preceding problem.

The State/Defense/CIA nominations I agree with but this guy seems wrong person at wrong time.

'This guy' is who the President trusts and values. I am sure if the President and 'this guy' have differences, Obama will do what he wants and 'this guy' will follow orders

What's with the ' 'this guy' '?

From what I can tell Obama does not micromanage. I don't think the was aware of either Benghazi or gunwalking. He does fire people when they don't do what he wants, example is the change of commanders in the Iraq/Afghanistan conflicts. The problem with this methodology is if 'this guy' screws up the financial structure sure Obama can fire him but the horse is already out of the barn.

you're an idiot barking up the wrong tree. all Lew did was state that the systemic problems in the banking and financial industries existed before the deregulation wars.

he is not advocating anything that would warrant alarm,.

now go away

 

[Toddsterpatriot]

Barney Frank - Wikipedia, the free encyclopedia

Barney Frank didn?t cause the housing crisis - The Washington Post



the links are proof that what passes for debate with you is called bullshit in the real world

(Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market.

Really? Just what business were they involved in? Spell it out.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

 

[Toddsterpatriot]

Obviously deregulation caused the crash. Serious deregulation started with commodities under Nixon picked up steam with credit cards under Carter and achieved critical mass under Reagan. Anyone who believes it "started" after 1982 simply doesn't understand how national economies work. The crash of 1929 didn't start under Hoover, it started before Coolidge took office.

Anyone who doesn't connect the crash to Clinton's forcing Brooksley Born out doesn't know what they are talking about. Anyone who can't connect Levitt, Greenspan and Rubin to the US$570TRILLION nominal value of derivatives at risk in September 2008 doesn't know what they are talking about. That Lew doesn't do it tells us he isn't an honest man, it doesn't change any of the facts.

Timidfy Geithner was there through it all. After he f*cked it up in Asia (Soros made Geithner look like the chickenshit little pimp he is) his mainline corporate sponsoers promoted him to the NY FED from which chair he personally prevented investigations and enforcement of regulations that might have mitigated the inevitable.

The first bailout is among the most malfeasant presidential decisions in US history. By itself that delayed any possibility of recovery for five years. The second bailout combined with a functionally supply side stimulus (top down through government) probably means the end of the blue collar middle class in America.

Yet to be determined, but ask a formerly middle class blue collar worker how they're doing today. There is today's answer.

US$570TRILLION nominal value of derivatives at risk

Nominal. So what?
I place $10 bets on sports teams with a combined nominal value of over $1 billion.
If I lose, do I have to sell my house? Do I put the economy at risk?

 

[emptystep]

'This guy' is who the President trusts and values. I am sure if the President and 'this guy' have differences, Obama will do what he wants and 'this guy' will follow orders

What's with the ' 'this guy' '?

From what I can tell Obama does not micromanage. I don't think the was aware of either Benghazi or gunwalking. He does fire people when they don't do what he wants, example is the change of commanders in the Iraq/Afghanistan conflicts. The problem with this methodology is if 'this guy' screws up the financial structure sure Obama can fire him but the horse is already out of the barn.

you're an idiot barking up the wrong tree. all Lew did was state that the systemic problems in the banking and financial industries existed before the deregulation wars.

he is not advocating anything that would warrant alarm,.

now go away

So exactly when did Jacob Lew become aware that there were "systemic problems in the banking and financial industries existed before the deregulation wars"? Has he had any other revelations since he was OMB?

 

[Procrustes Stretched]

(Note, however, that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market.

Really? Just what business were they involved in? Spell it out.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

The broader argument, meanwhile, is that Democrats like Barney Frank actually helped create the crisis by pushing the government to expand its affordable-housing programs. New York mayor Michael Bloomberg has made a version of this argument: Congress forced banks to make shoddy loans to people who couldn’t afford them, and that caused the subprime meltdown. But it’s not true. Barry Ritholz has dubbed this argument “The Big Lie.” And disproving it simply requires a few graphs.

http://www.washingtonpost.com/blogs...ousing-crisis/2011/11/28/gIQANqLH5N_blog.html

But what if we focus solely on the United States? As it turns out, not only were Fannie and Freddie late in getting into the subprime game, but they remained a bit player in the whole affair. According to a Federal Reserve study, more than 84 percent of the subprime mortgages in 2006 were issued by private lenders:

What’s more, only one of the top 25 subprime lenders in 2006 was subject to affordable-housing laws. For the most part, private firms such as Countrywide Financial were issuing “nontraditional” mortgages in order to package them off to Wall Street and make money, not to please Barney Frank. Like most policymakers, Frank didn’t appear to see the housing bubble or looming subprime crisis before it was too late. But he didn’t cause them, either.

 

[EdwardBaiamonte]

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

The broader argument, meanwhile, is that Democrats like Barney Frank actually helped create the crisis by pushing the government to expand its affordable-housing programs. New York mayor Michael Bloomberg has made a version of this argument: Congress forced banks to make shoddy loans to people who couldn’t afford them, and that caused the subprime meltdown. But it’s not true. Barry Ritholz has dubbed this argument “The Big Lie.” And disproving it simply requires a few graphs.

in fact, if you read the definitive book "Reckless Endangerment" you learn that Fan Fred controlled the entire market even when not involved directly. They had the government guarantee so yes they could take more and more of the good loans forcing all the others into more and more risky loan just to stay alive.

Its much like Apple controlling the cell phone market with just one smart phone or Microsoft controlling so much of the software market just because they have the operating system.

 

[Procrustes Stretched]

What's with the ' 'this guy' '?

From what I can tell Obama does not micromanage. I don't think the was aware of either Benghazi or gunwalking. He does fire people when they don't do what he wants, example is the change of commanders in the Iraq/Afghanistan conflicts. The problem with this methodology is if 'this guy' screws up the financial structure sure Obama can fire him but the horse is already out of the barn.

you're an idiot barking up the wrong tree. all Lew did was state that the systemic problems in the banking and financial industries existed before the deregulation wars.

he is not advocating anything that would warrant alarm,.

now go away

So exactly when did Jacob Lew become aware that there were "systemic problems in the banking and financial industries existed before the deregulation wars"? Has he had any other revelations since he was OMB?

yet another surfaces at USMB

 

[Dugdale_Jukes]

US$570TRILLION nominal value of derivatives at risk

Nominal. So what?
I place $10 bets on sports teams with a combined nominal value of over $1 billion.
If I lose, do I have to sell my house? Do I put the economy at risk? - T'ster

----------------------------------------------------

A ten dollar bet on a sports game is a ten dollar bet - the most striking resemblance between a sports bet and derivatives speculation is one does not need an "insurable interest" (one does not need to be a principal party in the underlying asset) while the most striking difference is one can bet "other people's money". A closer but still inaccurate analogy is an odds-based bet, say, betting five dollars to win three, or more likely, betting one dollar in hopes of wining X more dollars. In sum, there is no connection whatever between a sports bet and the value of the team and no connection between UNSECURED derivative bets and the value of the underlying assets. Value is determined by the contract.

Ask the taxpayers in Boston and Orange County California what losing million dollar plus bets with hundred million dollar tails means. A derivative is basically an insurance policy when it all goes as planned. It is like a bullwhip when things gang agley, in that a million dollar bet can force a payout a fixed multiple based on the contract. Massachusetts paid about two of the four billion they owed to settle a four billion dollar debt on a $250MN dollar "bet". Orange County was functionally bankrupt until the banks settled.

When scum like Greenspan allow scum like Paulsen of governement sachs and the US Treasury to take both sides of bets against suckers and then force the US Treasury to pay off the bets, well, that would seem to undermine the gloriously self regulating (by rational risk management, d'ye see?) free market system so valued by Randroid FriedmaNUTs.

Woudn't it? Those scum played with fantasy money but got paid back IN FULL out of the US Treasury. Not to be out done Obama looted the Treasury to prop up fat, dumb and happy state and local governments. The total cost probably means blue collar labor is finished as a serious middle class in America for another six or seven years, maybe it'll never come back as a serious consumer group with leisure time and disposable income.

 

[Procrustes Stretched]

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

The broader argument, meanwhile, is that Democrats like Barney Frank actually helped create the crisis by pushing the government to expand its affordable-housing programs. New York mayor Michael Bloomberg has made a version of this argument: Congress forced banks to make shoddy loans to people who couldn’t afford them, and that caused the subprime meltdown. But it’s not true. Barry Ritholz has dubbed this argument “The Big Lie.” And disproving it simply requires a few graphs.

in fact, if you read the definitive book "Reckless Endangerment" you learn that Fan Fred controlled the entire market even when not involved directly. They had the government guarantee so yes they could take more and more of the good loans forcing all the others into more and more risky loan just to stay alive.

Its much like Apple controlling the cell phone market with just one smart phone or Microsoft controlling so much of the software market just because they have the operating system.

really? hmmmmmmmmmmmmm.,.... methinks you can't help spinning and twisting to suit your own agenda

http://www.nytimes.com/2011/05/29/b...rgenson-and-joshua-rosner.html?pagewanted=all

All this gave Fannie’s executives free rein to underwrite far more loans, further enriching themselves and their shareholders, but at increasing risk to taxpayers as lending standards declined. A company called Countrywide Financial became Fannie’s single largest provider of home loans and the nation’s largest mortgage lender. Countrywide abandoned standards altogether, even doctoring loans to make applicants look creditworthy, while generating a fortune for its co-founder, Angelo R. Mozilo.

Meanwhile, Wall Street banks received fat fees underwriting securities issued by Fannie and Freddie, and even more money providing lenders like Countrywide with lines of credit to expand their risky lending and then bundling the mortgages into securities they peddled to their clients. The Street, Morgenson and Rosner say, knew lending standards were declining but maintained the charade because it was so profitable. Goldman Sachs even used its own money to bet against the bundles — making huge profits off the losses of its clients on the very securities it had marketed to them. Eventually, of course, everything came crashing down.

The real problem, which the authors only hint at, is that Washington and the financial sector have become so tightly intertwined that public accountability has all but vanished. The revolving door described in “Reckless Endangerment” is but one symptom. The extraordinary wealth of America’s financial class also elicits boundless cooperation from politicians who depend on it for campaign contributions and from a fawning business press, as well as a stream of honors from universities, prestigious charities and think tanks eager to reward their generosity. In this symbiotic world, conflicts of interest are easily hidden, appearances of conflicts taken for granted and abuses of public trust for personal gain readily dismissed.

 

[EdwardBaiamonte]

really? hmmmmmmmmmmmmm.,.... methinks you can't help spinning and twisting to suit your own agenda

why not read the book before you talk about it rather than quote a liberal paper that is trying to use the crisis to promote liberalism when clearly the Fed, Fan/Fred regulation caused the crisis. How could it happen without the Fed printing all the money?????? Did you think the Girl Scouts printed the money???

 

[Procrustes Stretched]

really? hmmmmmmmmmmmmm.,.... methinks you can't help spinning and twisting to suit your own agenda

why not read the book before you talk about it rather than quote a liberal paper that is trying to use the crisis to promote liberalism when clearly the Fed, Fan/Fred regulation caused the crisis. How could it happen without the Fed printing all the money?????? Did you think the Girl Scouts printed the money???

because:
The authors, Gretchen Morgenson, a Pulitzer Prize-winning business reporter and columnist at The New York Times, and Joshua Rosner, an expert on housing finance,

gawd, you're an imbecile

 

[Toddsterpatriot]

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

The broader argument, meanwhile, is that Democrats like Barney Frank actually helped create the crisis by pushing the government to expand its affordable-housing programs. New York mayor Michael Bloomberg has made a version of this argument: Congress forced banks to make shoddy loans to people who couldn’t afford them, and that caused the subprime meltdown. But it’s not true. Barry Ritholz has dubbed this argument “The Big Lie.” And disproving it simply requires a few graphs.

Barney Frank didn?t cause the housing crisis - The Washington Post

But what if we focus solely on the United States? As it turns out, not only were Fannie and Freddie late in getting into the subprime game, but they remained a bit player in the whole affair. According to a Federal Reserve study, more than 84 percent of the subprime mortgages in 2006 were issued by private lenders:

What’s more, only one of the top 25 subprime lenders in 2006 was subject to affordable-housing laws. For the most part, private firms such as Countrywide Financial were issuing “nontraditional” mortgages in order to package them off to Wall Street and make money, not to please Barney Frank. Like most policymakers, Frank didn’t appear to see the housing bubble or looming subprime crisis before it was too late. But he didn’t cause them, either.

that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market

Considering that that is their business, of course they were heavily involved.
In fact, they were so heavily involved in the MBS market, that they've lost over $100 billion of taxpayer money.

 

[Procrustes Stretched]

reading and comprehension issues?

You bet.
I read on this thread a claim "that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market".

In 2003, I can't comprehend what other business they could have been involved in.
Maybe you could clear up my confusion?
Thanks in advance.

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

The broader argument, meanwhile, is that Democrats like Barney Frank actually helped create the crisis by pushing the government to expand its affordable-housing programs. New York mayor Michael Bloomberg has made a version of this argument: Congress forced banks to make shoddy loans to people who couldn’t afford them, and that caused the subprime meltdown. But it’s not true. Barry Ritholz has dubbed this argument “The Big Lie.” And disproving it simply requires a few graphs.

Barney Frank didn?t cause the housing crisis - The Washington Post

But what if we focus solely on the United States? As it turns out, not only were Fannie and Freddie late in getting into the subprime game, but they remained a bit player in the whole affair. According to a Federal Reserve study, more than 84 percent of the subprime mortgages in 2006 were issued by private lenders:

What’s more, only one of the top 25 subprime lenders in 2006 was subject to affordable-housing laws. For the most part, private firms such as Countrywide Financial were issuing “nontraditional” mortgages in order to package them off to Wall Street and make money, not to please Barney Frank. Like most policymakers, Frank didn’t appear to see the housing bubble or looming subprime crisis before it was too late. But he didn’t cause them, either.

that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market

Considering that that is their business, of course they were heavily involved.
In fact, they were so heavily involved in the MBS market, that they've lost over $100 billion of taxpayer money.

please, don't let any facts get in the way

 

[Toddsterpatriot]

US$570TRILLION nominal value of derivatives at risk

Nominal. So what?
I place $10 bets on sports teams with a combined nominal value of over $1 billion.
If I lose, do I have to sell my house? Do I put the economy at risk? - T'ster

----------------------------------------------------

A ten dollar bet on a sports game is a ten dollar bet. A closer but still inaccurate analogy would be an odds-based bet, say, betting five dollars to win three, or more likely, betting one dollar in hopes of wining X more dollars. In sum, there is no connection whatever between a sports bet and the value of the team and no connection between UNSECURED derivative bets and the value of the underlying assets. Value is determined by the contract.

Ask the taxpayers in Boston and Orange County California what losing million dollar plus bets with hundred million dollar tails means. A derivative is basically an insurance policy when it all goes as planned. It is like a bullwhip when things gang agley, in that a million dollar bet can force a payout a fixed multiple based on the contract. Massachusetts paid about two of the four billion they owed to settle a four billion dollar debt on a $250MN dollar "bet". Orange County was functionally bankrupt until the banks settled.

When scum like Greenspan allow scum like Paulsen of governement sachs and the US Treasury to take both sides of bets against suckers and then force the US Treasury to pay off the bets, well, that would seem to undermine the gloriously self regulating (by rational risk management, d'ye see?) free market system so valued by Randroid FriedmaNUTs.

Woudn't it? Those scum played with fantasy money but got paid back IN FULL out of the US Treasury. Not to be out done Obama looted the Treasury to prop up fat, dumb and happy state and local governments. The total cost probably means blue collar labor is finished as a serious middle class in America for another six or seven years, maybe it'll never come back as a serious consumer group with leisure time and disposable income.

A ten dollar bet on a sports game is a ten dollar bet.

Yes, it's a $10 bet with the underlying "security" valued at over $1 billion.

Value is determined by the contract.

Yes, like the $100 call option I bought that controls over $15,000 worth of stock.
The nominal value is over $15,000, but all I can lose is $100.

A derivative is basically an insurance policy when it all goes as planned.

It's a bet. One guy wins $X, the other guy loses $X. No matter how scary the nominal is.

Massachusetts paid about two of the four billion they owed to settle a four billion dollar debt on a $250MN dollar "bet".

Really? You have a link?

 

[Toddsterpatriot]

reading and comprehension issues?

the link has a graph and more... Barney Frank didn?t cause the housing crisis - The Washington Post

(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.)

that in 2003, Fannie and Freddie weren’t yet heavily involved in the mortgage-backed security market

Considering that that is their business, of course they were heavily involved.
In fact, they were so heavily involved in the MBS market, that they've lost over $100 billion of taxpayer money.

please, don't let any facts get in the way

I'm pretty sure that combined, in 2003, Fannie and Freddie issued over $2 trillion worth of MBS. Does that fact mean they were "heavily involved"?