Regulation of the financial industry

[Neubarth]

It DOES NOT MAKE IT MANDATORY that they loan to everyone in a reinvestment area, that is simply a LIE Frank, a BIG OLE FLAT OUT LIE.

my in laws were dirt poor, below dirt poor.....as a white person, my father in law still got a loan for his very modest house....Yes, they charged him a higher interest rate, than the going rate, because he was poor and had no collateral and was making very little in income, but he FINALLY did QUALIFY for a loan....AND HE PAID OFF THAT HOMEMortgage in 20 years, AS A POOR PERSON....because the banks gave him this opportunity, my husband and all of his many siblings and strangers they took in, had a home.

CRA does NOT make it mandatory that the banks loan to ALL PEOPLE THAT ASK....

again....that's a LIE....and why you continue to LIE about this is beyond reason.

Less than 6% of the loans in default across our nation were issued to people in CRA communities...94% OF THE SHITTY SUBPRIME LOANS in default or bankruptcy were issue to citizens in this country NOT IN COMMUNITY REINVESTMENT AREAS.

I admire your frankness. There is a lot of misinformation out there being spread by people. They latch on to half truths and outright falsehoods and propagate them everywhere they go.

The only way to deal with all of the lies out there is to call them for what they are, LIES. We have to set standards for honesty where ever WE go. Call it as you see it. Never let a lie go unchallenged.

If everybody spoke up when a liar stated spreading his vile filth to mislead people, we would have a far more honest world. We should make that our goal.

 

[Neubarth]

There’s no economic benefit due to a trade deficit. Each dollar decrease of our trade deficit of goods induces a three dollar increase of our GDP. Our GDP bolsters our median.

Respectfully, Supposn

One for three? Since I am learning economics from reading posts on this board, I thank you for that information. Is there a way we can substantiate that info? I would like to believe that it is accurate, but before I use it in my knowledge base, I need a link or a reference. Thanks.

 

[Care4all]

It DOES NOT MAKE IT MANDATORY that they loan to everyone in a reinvestment area, that is simply a LIE Frank, a BIG OLE FLAT OUT LIE.

my in laws were dirt poor, below dirt poor.....as a white person, my father in law still got a loan for his very modest house....Yes, they charged him a higher interest rate, than the going rate, because he was poor and had no collateral and was making very little in income, but he FINALLY did QUALIFY for a loan....AND HE PAID OFF THAT HOMEMortgage in 20 years, AS A POOR PERSON....because the banks gave him this opportunity, my husband and all of his many siblings and strangers they took in, had a home.

CRA does NOT make it mandatory that the banks loan to ALL PEOPLE THAT ASK....

again....that's a LIE....and why you continue to LIE about this is beyond reason.

Less than 6% of the loans in default across our nation were issued to people in CRA communities...94% OF THE SHITTY SUBPRIME LOANS in default or bankruptcy were issue to citizens in this country NOT IN COMMUNITY REINVESTMENT AREAS.

I admire your frankness. There is a lot of misinformation out there being spread by people. They latch on to half truths and outright falsehoods and propagate them everywhere they go.

The only way to deal with all of the lies out there is to call them for what they are, LIES. We have to set standards for honesty where ever WE go. Call it as you see it. Never let a lie go unchallenged.

If everybody spoke up when a liar stated spreading his vile filth to mislead people, we would have a far more honest world. We should make that our goal.

I don't think Frank is intentionally lying Neubarth, I think he believes what he has been told.....

It is a LIE none the less though...

 

[The Rabbi]

Interesting, coming from someone who flings crap out and then scurries away when called on it.
Pressure to make low income/affordable housing loans may not have been the primary cause of the meltdown (low interest rates were) but they sure contributed to it.

 

[Truthmatters]

List of recessions in the United States - Wikipedia, the free encyclopedia

Take a look ath the history of recession in the US.

We had a recession every couple of years for decades until Glass Steagal was in place.

Then the economy became manageable.

When you have a constant Boom and Bust cycle the middle class is destroyed every five years or so.

The down times are killers to people who work for a living.

The down times are a GREAT OPPORTUNITY for the people who invest for a living.

There is an obvious reason that some factions dont want regulation.

They can pick up bargans and hang on to them until the boom and sell them high.

The vast majority loses everything and gets no where.

History is replete with the exmples of this.

The unfettered market creating "magic" for the people when "it takes care of itself" as they say has no historical examples to claim as it always leads to huge disparity between the rich and the rest of the population.

 

[The Rabbi]

There’s no economic benefit due to a trade deficit. Each dollar decrease of our trade deficit of goods induces a three dollar increase of our GDP. Our GDP bolsters our median.

Respectfully, Supposn

One for three? Since I am learning economics from reading posts on this board, I thank you for that information. Is there a way we can substantiate that info? I would like to believe that it is accurate, but before I use it in my knowledge base, I need a link or a reference. Thanks.

In his post on the topic Supposn links to a blog. Of course the blog is written by him. So it is self referential, a logical self-suck.
I would bet there is no such correlation. In fact I would imagine the opposite as every decrease in economic trade adversely affects someone in our economy. Money is made by making transactions, after all.

 

[The Rabbi]

List of recessions in the United States - Wikipedia, the free encyclopedia

Take a look ath the history of recession in the US.

We had a recession every couple of years for decades until Glass Steagal was in place.

Then the economy became manageable.

When you have a constant Boom and Bust cycle the middle class is destroyed every five years or so.

The down times are killers to people who work for a living.

The down times are a GREAT OPPORTUNITY for the people who invest for a living.

There is an obvious reason that some factions dont want regulation.

They can pick up bargans and hang on to them until the boom and sell them high.

The vast majority loses everything and gets no where.

History is replete with the exmples of this.

The unfettered market creating "magic" for the people when "it takes care of itself" as they say has no historical examples to claim as it always leads to huge disparity between the rich and the rest of the population.

Did you actually read the link? Glass Steagal did not prevent recessions. No amount of regulation short of repealing capitalism can prevent recession.
And for every company that goes out of business because of poor planning and excess capacity there is a company that rises using the ill-deployed resources of the dead company. That is creative destruction.
Quit making class warfare.

 

[Supposn]

There’s no economic benefit due to a trade deficit. Each dollar decrease of our trade deficit of goods induces a three dollar increase of our GDP. Our GDP bolsters our median.

Respectfully, Supposn

One for three? Since I am learning economics from reading posts on this board, I thank you for that information. Is there a way we can substantiate that info? I would like to believe that it is accurate, but before I use it in my knowledge base, I need a link or a reference. Thanks.

Refer to the first topic of www.USA-Trade-Deficit.Blogspot.Com foe an explanation.

Respectfully, Supposn

 

[Supposn]

The problem is the bailouts rewarded the very behavior that regulation was supposed to stop. In any case no one has stated what regulations would have made the current melt down impossible. There aren't any, btw.

Rabbi, does it upset you to be 9in this instance (at very least) partially in agreement with me?

In the introductory message to this topic I wrote “USA’s last financial fiasco wasn’t due to the “business cycle” but was induced a climate to deregulation, and dependence upon self control and governments reluctance to police. In many cases the foxes were left to guard the hen houses”.

You responded with “The problem is the bailouts rewarded the very behavior that regulation was supposed to stop. In any case no one has stated what regulations would have made the current melt down impossible”.

BTW, that same introductory message mentions three regulations that would have significantly mitigated if not have prevented our financial fiasco.

Respectfully, Supposn

 

[The Rabbi]

The problem is the bailouts rewarded the very behavior that regulation was supposed to stop. In any case no one has stated what regulations would have made the current melt down impossible. There aren't any, btw.

Rabbi, does it upset you to be 9in this instance (at very least) partially in agreement with me?

In the introductory message to this topic I wrote “USA’s last financial fiasco wasn’t due to the “business cycle” but was induced a climate to deregulation, and dependence upon self control and governments reluctance to police. In many cases the foxes were left to guard the hen houses”.

You responded with “The problem is the bailouts rewarded the very behavior that regulation was supposed to stop. In any case no one has stated what regulations would have made the current melt down impossible”.

BTW, that same introductory message mentions three regulations that would have significantly mitigated if not have prevented our financial fiasco.

Respectfully, Supposn

If you think we agree on anything then you are misreading my posts.
The problem very much is part of the business cycle, in this case exacerbated by ultra low interest rates which encouraged crazy risk taking. There is always a trigger to a downturn, like oil price spikes in the 1970s or take over moves in the 1980s. In this case it was MBS's which were immensely profitable.
No regulation short of throttling the entire system would have prevented it. Your idiotic proposal to forbid bundling loans would have increased risk at banks that held those mortgages, which is exactly what happened to the S&Ls.
Had the gov't left those banks to fail there would have been an object lesson for next time. Instead the message is: Take many risks and the gov't will bail you out if you screw up.

 

[Paulie]

With big business and government so closely aligned and fucking the shit out of each other in the proverbial bedroom, what makes anyone think that more regulations would benefit anyone other than big business?

 

[Toro]

What exactly was "deregulated"? Is this an April Fools Financial Parody?

Commodities Modernization Act exempted derivatives from regulatory oversight.

In 2004, the SEC allowed the Big 5 Wall Street investment banks to increase leverage

The OCC overrode states laws to regulate abusive mortgage practices, allowing subprime mortgage brokers to market any shit they wanted.

There's more.

FYI, the CEO of Ameriquest - one of the biggest abusers of shit subprime mortgage products, a company that was sued by 30 states for lying about their mortgage products, and a company that collapsed - was appointed ambassador to Holland by the Bush administration.

But CRA still mandated that banks HAD to provide them with essentially sub-prime paper, right?

If the banks didn't have a willing patsy to buy the mortgages in the form of the American Taxpayer, they would not have done anywhere near the volume they did, which is what tanked the US hosing market

If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.

De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.

Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.

 

[Supposn]

Regulation of the financial industry should be an issue of Obama’s first term in office.

USA’s last financial fiasco wasn’t due to the “business cycle” but was induced a climate to deregulation, and dependence upon self control and governments reluctasnce to police. In many cases the foxes were left to guard the hen houses.

Who chooses the collateral assessors of federally insured loans? Do they work for the financial institutions or the federal government?

Collateral assessors for federally insured loans should be federal employees or licensed contractors acting as federal agents. The assessment cost should be imbedded within the costs of applying for a government insured loan. Such assessors should be subject to criminal penalties for fraud or loss of license for failure to act with due prudence. We cannot afford to risk public funds upon determinations of assessors that are primarily agents of banks or mortgage companies. It is not the institutions money that is primarily at risk.

We should consider prohibiting a government insured loan from being divided, then bundled and resold. The law could specify that such division is prohibited for 10 years, or it could be prohibited the entire life of the loan. We learned the hard way of the problem due to loans being divided and bundled for resale. If there’s a problem further on, no one owns the original loan. If it is financially feasible and advantageous to renegotiate the loan, no one has the legal right to do so.

I’m opposed to Government Supported Entities, (GSEs) purchasing or selling non government insured loans. That’s the function of an investment bank. I’m also opposed to federally insured banks acting as investment banks.

I’m not opposed to our limits of federally insured loan amounts per individuals and their dependents or per individual buildings and/or land or real-estate. I advocate federally insured home loans limits should be modified to reflect the purchasing power of the U.S. dollar in the year the loan is made.

I would not be opposed to federally insuring a portion of the full purchase price if that portion of the loan was a first mortgage and had other superior rights to all other loans and claims upon the property.

Respectfully, Supposn

Rabbi, I assume you’re not deliberately misquoting me. You wrote “Your, (my) idiotic proposal to forbid bundling loans would have increased risk at banks that held those mortgages, which is exactly what happened to the S&Ls”.

I never opposed the bundling of loans for resale. I’m opposed to the slicing and dicing of those loans prior to their being sold.

Respectfully, Supposn

 

[mayya555]

With big business and government so closely aligned and fucking the shit out of each other in the proverbial bedroom, what makes anyone think that more regulations would benefit anyone other than big business?

That should be obvious to everyone.

 

[editec]

I think Bernake is right.

Tighter regulations would have prevented this meltdown.

And if Moody's and Standard and Poor properly evaluated the risk of bonds, this meltdown would not have happened.

And let me go out on a limb and say that if we had sensible trade policies, instead of this destructive FREE TRADE, we would not have had this meltdown, either.

This economic meltdown took a perfect storm of mistaken policies, lies by CEOS and deregulation of the financial industry to manifest.

I think you're an idiot.
Actually I know so.
Securities is one of the most highly regulated industries in this country. THe issue is that loose interest rate policies encouraged mortgage lending by making it easy money. With house prices rising constantly lenders had more and more security. It all made sense at the time.
Free trade has been one of the few areas that has contributed to economic strength. I'd suggest a book on economics for your nest birthday present.

Which regulating body covered the derivative industry, Rabbi?

 

[CrusaderFrank]

Commodities Modernization Act exempted derivatives from regulatory oversight.

In 2004, the SEC allowed the Big 5 Wall Street investment banks to increase leverage

The OCC overrode states laws to regulate abusive mortgage practices, allowing subprime mortgage brokers to market any shit they wanted.

There's more.

FYI, the CEO of Ameriquest - one of the biggest abusers of shit subprime mortgage products, a company that was sued by 30 states for lying about their mortgage products, and a company that collapsed - was appointed ambassador to Holland by the Bush administration.

But CRA still mandated that banks HAD to provide them with essentially sub-prime paper, right?

If the banks didn't have a willing patsy to buy the mortgages in the form of the American Taxpayer, they would not have done anywhere near the volume they did, which is what tanked the US hosing market

If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.

De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.

Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.

LOL.

Seriously? You don't believe your own eyes?

Who would you accept as a "Housing expert" Paul Krugman? Jamie Gorelick? Franklin Raines? Robert Rubin?

LOL.

 

[Toro]

LOL.

Seriously? You don't believe your own eyes?

Who would you accept as a "Housing expert" Paul Krugman? Jamie Gorelick? Franklin Raines? Robert Rubin?

LOL.

The only people whom I hear make this argument are ideologues who have a vested interest in explaining away why their ideology failed. No one else I know makes this argument. But if you find someone else who can prove your case - and no one has so far - please feel free to post it. I am more than interested in reading this evidence.

The evidence is in this thread.

http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html

It is a pretty simple argument, really. If you believe always and everywhere in the efficacy of the market, then the CRA should have caused the biggest increase in home prices in poor areas. But that did not happen. The biggest home prices were in places that have historically had housing bubbles - Arizona, California, Florida, etc., not in poor minority areas.

The other massive fact that seems to escape the ideologues is that the housing bubble was worldwide, with some places even worse than America. Please tell me how the CRA caused housing bubbles in Canada, Ireland, the UK, Spain, Portugal, Italy, South Africa, Singapore, China, Australia, etc.

 

[Neubarth]

The only people whom I hear make this argument are ideologues who have a vested interest in explaining away why their ideology failed. No one else I know makes this argument. But if you find someone else who can prove your case - and no one has so far - please feel free to post it. I am more than interested in reading this evidence.

The evidence is in this thread.

http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html

It is a pretty simple argument, really. If you believe always and everywhere in the efficacy of the market, then the CRA should have caused the biggest increase in home prices in poor areas. But that did not happen. The biggest home prices were in places that have historically had housing bubbles - Arizona, California, Florida, etc., not in poor minority areas.

The other massive fact that seems to escape the ideologues is that the housing bubble was worldwide, with some places even worse than America. Please tell me how the CRA caused housing bubbles in Canada, Ireland, the UK, Spain, Portugal, Italy, South Africa, Singapore, China, Australia, etc.

Well said, Toro. You are back to being a genius again.

 

[Truthmatters]

List of recessions in the United States - Wikipedia, the free encyclopedia

Take a look ath the history of recession in the US.

We had a recession every couple of years for decades until Glass Steagal was in place.

Then the economy became manageable.

When you have a constant Boom and Bust cycle the middle class is destroyed every five years or so.

The down times are killers to people who work for a living.

The down times are a GREAT OPPORTUNITY for the people who invest for a living.

There is an obvious reason that some factions dont want regulation.

They can pick up bargans and hang on to them until the boom and sell them high.

The vast majority loses everything and gets no where.

History is replete with the exmples of this.

The unfettered market creating "magic" for the people when "it takes care of itself" as they say has no historical examples to claim as it always leads to huge disparity between the rich and the rest of the population.

Did you actually read the link? Glass Steagal did not prevent recessions. No amount of regulation short of repealing capitalism can prevent recession.
And for every company that goes out of business because of poor planning and excess capacity there is a company that rises using the ill-deployed resources of the dead company. That is creative destruction.
Quit making class warfare.

Where in this post did I say that recessions would prevent recessions? How does a country opperate without a banking system? What if the industry is so mired in stupidity and greed that they crash entire banking system?

You fail to learn the lessons of history.

Learn the lessons because what you want will NEVER happen. The market will never be "let to take care of itself" Anyone who thinks it will is a fool.

 

[Care4all]

LOL.

Seriously? You don't believe your own eyes?

Who would you accept as a "Housing expert" Paul Krugman? Jamie Gorelick? Franklin Raines? Robert Rubin?

LOL.

The only people whom I hear make this argument are ideologues who have a vested interest in explaining away why their ideology failed. No one else I know makes this argument. But if you find someone else who can prove your case - and no one has so far - please feel free to post it. I am more than interested in reading this evidence.

The evidence is in this thread.

http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html

It is a pretty simple argument, really. If you believe always and everywhere in the efficacy of the market, then the CRA should have caused the biggest increase in home prices in poor areas. But that did not happen. The biggest home prices were in places that have historically had housing bubbles - Arizona, California, Florida, etc., not in poor minority areas.

The other massive fact that seems to escape the ideologues is that the housing bubble was worldwide, with some places even worse than America. Please tell me how the CRA caused housing bubbles in Canada, Ireland, the UK, Spain, Portugal, Italy, South Africa, Singapore, China, Australia, etc.

TOUCHE'
excellent points toro!