The argument against self-regulation.

[Supposn]

The argument against self-regulation.

Refer to
Glass-Steagall Act: The Senators And Economists Who Got It Right

The Glass-Steagall Act of 1933 defined the differences and prohibited the practice of commercial banks participating in enterprises that were the functions of investment banking, (not to be confused with their 1932 which had different purpose).

I do not pretend to understand the conflicts of interests and opportunities of fraud that’s possible when single entities have their feet within the doors of less risky forms of banking and the more risky investment and brokerage houses.
It is enough for me to appreciate that having just experience the 1929 Wall street crash and the significant deconstruction of much world’s economies, governments in 1933 were inclined to be more financially prudent and Wall Street “experts” were subject to diligent cross examination.

Within this same 1933 act, the federal deposit insurance corporation, (FDIC) was created. Due to the FDIC, confidence in USA banks recovered (and the reputation of the banking industry began being restored). The 1933 act’s purpose of limiting the acceptable risks for non-investment banks also decreased the risks of the FDIC to a similar extent.

Generally within any field, those regulated to some extent object to their regulators and the regulators’ mandates. The banking industry never ceased objecting to the intervention of “inexperienced” or “impractical” government bureaucrats. The regulated (in all fields) generally believe they can do it, (regardless of whatever “it” is), at lesser expense or time or in a superior manner.

Prior to the 2007 ‘credit crunch” Alan Greenspan, ex-chairman of the U.S. Federal Reserve Board wrote of his confidence in self regulation because CEO’s know what’s to their enterprise’s best interests. Mr. Greenspan is obviously both honorable and intelligent because he has since modified his opinion and embraced my belief in this matter.

CEO’s probably are to some degree more intelligent than most of us, but that’s only differences of degrees. We can all rationalize that what we believe is in our own best interests is also in our employer’s and our nation’s best interests. Having reached OUR rational conclusion, that’s what we advocate.

I greatly appreciate the Ying and Yang relationship of separation of powers and cross examinations within any human endeavors where subjective determinations are of critical importance.

Respectfully, Supposn

 

[Toronado3800]

We agree so much I consider this obvious.

The same human failings that make socialism an unrealistic system make self regultion unrealistic.

 

[Supposn]

We agree so much I consider this obvious.

The same human failings that make socialism an unrealistic system make self regultion unrealistic.

Toronado3800, your response is more concise and thus more eloquent than my message.
Respectfully, Supposn

 

[Toddsterpatriot]

The argument against self-regulation.

Refer to
Glass-Steagall Act: The Senators And Economists Who Got It Right

The Glass-Steagall Act of 1933 defined the differences and prohibited the practice of commercial banks participating in enterprises that were the functions of investment banking, (not to be confused with their 1932 which had different purpose).

I do not pretend to understand the conflicts of interests and opportunities of fraud that’s possible when single entities have their feet within the doors of less risky forms of banking and the more risky investment and brokerage houses.
It is enough for me to appreciate that having just experience the 1929 Wall street crash and the significant deconstruction of much world’s economies, governments in 1933 were inclined to be more financially prudent and Wall Street “experts” were subject to diligent cross examination.

Within this same 1933 act, the federal deposit insurance corporation, (FDIC) was created. Due to the FDIC, confidence in USA banks recovered (and the reputation of the banking industry began being restored). The 1933 act’s purpose of limiting the acceptable risks for non-investment banks also decreased the risks of the FDIC to a similar extent.

Generally within any field, those regulated to some extent object to their regulators and the regulators’ mandates. The banking industry never ceased objecting to the intervention of “inexperienced” or “impractical” government bureaucrats. The regulated (in all fields) generally believe they can do it, (regardless of whatever “it” is), at lesser expense or time or in a superior manner.

Prior to the 2007 ‘credit crunch” Alan Greenspan, ex-chairman of the U.S. Federal Reserve Board wrote of his confidence in self regulation because CEO’s know what’s to their enterprise’s best interests. Mr. Greenspan is obviously both honorable and intelligent because he has since modified his opinion and embraced my belief in this matter.

CEO’s probably are to some degree more intelligent than most of us, but that’s only differences of degrees. We can all rationalize that what we believe is in our own best interests is also in our employer’s and our nation’s best interests. Having reached OUR rational conclusion, that’s what we advocate.

I greatly appreciate the Ying and Yang relationship of separation of powers and cross examinations within any human endeavors where subjective determinations are of critical importance.

Respectfully, Supposn

It's true that Glass-Steagall would have prevented banks from writing bad mortgages.....wait, what?

It's also true that entities that were more regulated by government than banks (Fannie and Freddie) did better than banks during the crisis.....wait, what?

It's true that posting from Huffpost about economics makes you an object of ridicule.

 

[Wiseacre]

Glass Steagall sounds like a good idea to me, I see no reason why investment banking should be combined with the rest of it. In fact, I think they should be separate businesses with separate rules.

There's a difference between less regulation and no regulation. I suspect most on the right realize that no regulation is a bad thing, it comes down to the question of what is necessary and what isn't. And the degree of enforcement matters too, part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

 

[DSGE]

...part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

Like how?

 

[Oddball]

Glass Steagall sounds like a good idea to me, I see no reason why investment banking should be combined with the rest of it. In fact, I think they should be separate businesses with separate rules.

There's a difference between less regulation and no regulation. I suspect most on the right realize that no regulation is a bad thing, it comes down to the question of what is necessary and what isn't. And the degree of enforcement matters too, part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

 

[Wiseacre]

Glass Steagall sounds like a good idea to me, I see no reason why investment banking should be combined with the rest of it. In fact, I think they should be separate businesses with separate rules.

There's a difference between less regulation and no regulation. I suspect most on the right realize that no regulation is a bad thing, it comes down to the question of what is necessary and what isn't. And the degree of enforcement matters too, part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

Agree with everything you said. But if we had the investment banking side separate and distinct, maybe the credit crisis would not have been so bad. And dereg may not have been the cause, but had we done a better job of oversight and loosening up the req'ts to buy a house, maybe we wouldn't have had as many foreclosures.

 

[California Girl]

Glass Steagall sounds like a good idea to me, I see no reason why investment banking should be combined with the rest of it. In fact, I think they should be separate businesses with separate rules.

There's a difference between less regulation and no regulation. I suspect most on the right realize that no regulation is a bad thing, it comes down to the question of what is necessary and what isn't. And the degree of enforcement matters too, part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

Yep.

 

[EdwardBaiamonte]

We agree so much I consider this obvious.

The same human failings that make socialism an unrealistic system make self regultion unrealistic.

that of course is idiotic since you have human regulation in both socialism and capitalist self-regulation.

The huge huge difference is that you have a few regulators under Socialism and 300 million under capitalist regulation. Got it?

Under socialism you can one housing crisis that sinks the entire nation. Under capitalism a problem is localized, others see it, and the disease does not spread!!

 

[EdwardBaiamonte]

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

yes, the liberal would have you think that the USSR and Communist Red China had booming economies because they had lots of regulations

 

[Oddball]

Glass Steagall sounds like a good idea to me, I see no reason why investment banking should be combined with the rest of it. In fact, I think they should be separate businesses with separate rules.

There's a difference between less regulation and no regulation. I suspect most on the right realize that no regulation is a bad thing, it comes down to the question of what is necessary and what isn't. And the degree of enforcement matters too, part of the problem with the housing bubble and credit crisis was that the regulators didn't do their jobs.

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

Agree with everything you said. But if we had the investment banking side separate and distinct, maybe the credit crisis would not have been so bad.

Nonsense.

Look at US Bank, Wells Fargo and BoA (before the shotgun marriage with Merrill Lynch)...None of them required a bailout (in BoA's case, they wouldn't have needed it), yet were entirely free to have regular banking and investment services all under the same roof.

 

[EdwardBaiamonte]

Agree with everything you said. But if we had the investment banking side separate and distinct, maybe the credit crisis would not have been so bad.

no evidence of that at all. Deposit banks did not use funds to invest in housing; that aspect never changed when Glass Steagal was repealed. But, in retrospect the repeal allowed the banks to be too big to fail so in that sense the repeal made us worse off and we should correct it so as not to be so vulnerable in the future.

 

[Wiseacre]

Problem being that the deregulation of Glass-Stegall didn't create the sub-prime no-qualifying mortgage, mortgage-backed securities, Fannie & Freddy, the CRA, artificially low interest rates, etcetera.

But facing up to this fact blows a big fat hole in the leftist propaganda strawman that de-reg caused the economic meltdown.

Agree with everything you said. But if we had the investment banking side separate and distinct, maybe the credit crisis would not have been so bad.

Nonsense.

Look at US Bank, Wells Fargo and BoA (before the shotgun marriage with Merrill Lynch)...None of them required a bailout (in BoA's case, they wouldn't have needed it), yet were entirely free to have regular banking and investment services all under the same roof.

You guys are ahead of me on this, I don't mind learning a little something if I have to look dumb in the first place. Sure those guys didn't need a bailout, they could and did continue to have everything under the same roof. But - we still had and have a credit crisis anyway. I am suggesting that had they separated the investments out, along with everyone else, they might not have been so quick to leverage the amounts that they did, using the other side of the business as a backstop.

I just think doing away with G/S was not a smart move, that's all.

 

[Oddball]

Agree with everything you said. But if we had the investment banking side separate and distinct, maybe the credit crisis would not have been so bad.

Nonsense.

Look at US Bank, Wells Fargo and BoA (before the shotgun marriage with Merrill Lynch)...None of them required a bailout (in BoA's case, they wouldn't have needed it), yet were entirely free to have regular banking and investment services all under the same roof.

You guys are ahead of me on this, I don't mind learning a little something if I have to look dumb in the first place. Sure those guys didn't need a bailout, they could and did continue to have everything under the same roof. But - we still had and have a credit crisis anyway. I am suggesting that had they separated the investments out, along with everyone else, they might not have been so quick to leverage the amounts that they did, using the other side of the business as a backstop.

I just think doing away with G/S was not a smart move, that's all.

What I'm suggesting is that there will be bad actors in any marketplace.

I named three that were responsible - there are untold numbers more if you count local and regional banks...But the ones who got bailed out were the ones that took the big risks...They all should've failed, had their assets liquidated to those who were willing to take on that kind of risk, and the market should've been left to correct itself.

 

[EdwardBaiamonte]

They all should've failed, had their assets liquidated to those who were willing to take on that kind of risk, and the market should've been left to correct itself.

thats a big risk to take. Most thought it would have caused a world wide depression. Besides, most went bankrupt anyway and shareholders lost everything!! Most that survive are zombie banks.

 

[Supposn]

The argument against self-regulation.

Refer to
Glass-Steagall Act: The Senators And Economists Who Got It Right

The Glass-Steagall Act of 1933 defined the differences and prohibited the practice of commercial banks participating in enterprises that were the functions of investment banking, (not to be confused with their 1932 which had different purpose).

I do not pretend to understand the conflicts of interests and opportunities of fraud that’s possible when single entities have their feet within the doors of less risky forms of banking and the more risky investment and brokerage houses.
It is enough for me to appreciate that having just experience the 1929 Wall street crash and the significant deconstruction of much world’s economies, governments in 1933 were inclined to be more financially prudent and Wall Street “experts” were subject to diligent cross examination.

Within this same 1933 act, the federal deposit insurance corporation, (FDIC) was created. Due to the FDIC, confidence in USA banks recovered (and the reputation of the banking industry began being restored). The 1933 act’s purpose of limiting the acceptable risks for non-investment banks also decreased the risks of the FDIC to a similar extent.

Generally within any field, those regulated to some extent object to their regulators and the regulators’ mandates. The banking industry never ceased objecting to the intervention of “inexperienced” or “impractical” government bureaucrats. The regulated (in all fields) generally believe they can do it, (regardless of whatever “it” is), at lesser expense or time or in a superior manner.

Prior to the 2007 ‘credit crunch” Alan Greenspan, ex-chairman of the U.S. Federal Reserve Board wrote of his confidence in self regulation because CEO’s know what’s to their enterprise’s best interests. Mr. Greenspan is obviously both honorable and intelligent because he has since modified his opinion and embraced my belief in this matter.

CEO’s probably are to some degree more intelligent than most of us, but that’s only differences of degrees. We can all rationalize that what we believe is in our own best interests is also in our employer’s and our nation’s best interests. Having reached OUR rational conclusion, that’s what we advocate.

I greatly appreciate the Ying and Yang relationship of separation of powers and cross examinations within any human endeavors where subjective determinations are of critical importance.

Respectfully, Supposn

It's true that Glass-Steagall would have prevented banks from writing bad mortgages.....wait, what?

It's also true that entities that were more regulated by government than banks (Fannie and Freddie) did better than banks during the crisis.....wait, what?

It's true that posting from Huffpost about economics makes you an object of ridicule.

ToddsterPatriot, the reputation of valid facts and arguments may suffer due to their source, but the characteristic of their validity is their logical truth (regardless of who argues their case).

When lawyers cannot refute the facts or the logic, their best alternative is to attack the messenger.

The government sponsored entity, (GSE) as first established did assist expediting the federal insured mortgages.

During Johnson’s administration private investors were permitted to participate within the government sponsored entities, (GSEs). These are the entities that were enabled to increase the pools of funds available for federally insured mortgages by selling bundles of mortgages to investors such as financial institutions; that worked out fine.
Later a Democratic majority congress which included significant numbers of agreeing Republicans passed an act enabling GSEs to handle non-federally insured mortgages. President Nixon signed that bill and thus he, (more than any other individual) permitted that bill to become federal law.

[In this case I’m not accusing anyone of duplicity. It’s always easier to believe that what’s to our own best advantage is equally to the nation’s best advantage]. Leaders of our greatest financial institutions believed this was a win-win for both private investors and the nation’s economy. The bill was problematic. The axiom of “no free lunch” wasn’t fully recognized in this act or because profits were perceived and the axiom’s application within this act wasn’t fully appreciated].
 

GSE prospectuses presented to investors state no legal requirement for federal financial backing of GSE’s, but influential persons at the highest levels of USA’s federal government and commercial entities winked and assured the entire world this undeclared support was actually the case. They explained that government support is evidenced by interest earned from GSE’s not being subject to income taxes. These persons creditability and influence was confirmed when the federal government did indeed put federal credit at risk to cover losses due to mortgage defaults. The federal government put itself on the hook for non-federally guaranteed loans.

The government did not direct financial institutions to make insufficiently collateralized loans. Banks better rewarded mortgage brokers who brought them higher interest loans for property of over stated value sold to purchasers with insufficient incomes. It became the accepted policy of no need for diligent government regulation because it was to private entities’ best interests to conduct their businesses in financially sound manners. From the financial institutions’ view point they were doing exactly that. The qualities of mortgages were of no consequences to the lenders if they could immediately sell them to the GSEs.

I’m less mistrustful of explicitly drafted government laws and regulations created and enacted in the sunshine and publicly viewed. I greatly dread any (government or non-government) bureaucratic discretion of policy that directly or indirectly affect me and mine and create or perpetuate inequities that evolve from the exercising of such discretion.

Respectfully, Supposn

 

[Toddsterpatriot]

The argument against self-regulation.

Refer to
Glass-Steagall Act: The Senators And Economists Who Got It Right

The Glass-Steagall Act of 1933 defined the differences and prohibited the practice of commercial banks participating in enterprises that were the functions of investment banking, (not to be confused with their 1932 which had different purpose).

I do not pretend to understand the conflicts of interests and opportunities of fraud that’s possible when single entities have their feet within the doors of less risky forms of banking and the more risky investment and brokerage houses.
It is enough for me to appreciate that having just experience the 1929 Wall street crash and the significant deconstruction of much world’s economies, governments in 1933 were inclined to be more financially prudent and Wall Street “experts” were subject to diligent cross examination.

Within this same 1933 act, the federal deposit insurance corporation, (FDIC) was created. Due to the FDIC, confidence in USA banks recovered (and the reputation of the banking industry began being restored). The 1933 act’s purpose of limiting the acceptable risks for non-investment banks also decreased the risks of the FDIC to a similar extent.

Generally within any field, those regulated to some extent object to their regulators and the regulators’ mandates. The banking industry never ceased objecting to the intervention of “inexperienced” or “impractical” government bureaucrats. The regulated (in all fields) generally believe they can do it, (regardless of whatever “it” is), at lesser expense or time or in a superior manner.

Prior to the 2007 ‘credit crunch” Alan Greenspan, ex-chairman of the U.S. Federal Reserve Board wrote of his confidence in self regulation because CEO’s know what’s to their enterprise’s best interests. Mr. Greenspan is obviously both honorable and intelligent because he has since modified his opinion and embraced my belief in this matter.

CEO’s probably are to some degree more intelligent than most of us, but that’s only differences of degrees. We can all rationalize that what we believe is in our own best interests is also in our employer’s and our nation’s best interests. Having reached OUR rational conclusion, that’s what we advocate.

I greatly appreciate the Ying and Yang relationship of separation of powers and cross examinations within any human endeavors where subjective determinations are of critical importance.

Respectfully, Supposn

It's true that Glass-Steagall would have prevented banks from writing bad mortgages.....wait, what?

It's also true that entities that were more regulated by government than banks (Fannie and Freddie) did better than banks during the crisis.....wait, what?

It's true that posting from Huffpost about economics makes you an object of ridicule.

ToddsterPatriot, the reputation of valid facts and arguments may suffer due to their source, but the characteristic of their validity is their logical truth (regardless of who argues their case).

When lawyers cannot refute the facts or the logic, their best alternative is to attack the messenger.

The government sponsored entity, (GSE) as first established did assist expediting the federal insured mortgages.

During Johnson’s administration private investors were permitted to participate within the government sponsored entities, (GSEs). These are the entities that were enabled to increase the pools of funds available for federally insured mortgages by selling bundles of mortgages to investors such as financial institutions; that worked out fine.
Later a Democratic majority congress which included significant numbers of agreeing Republicans passed an act enabling GSEs to handle non-federally insured mortgages. President Nixon signed that bill and thus he, (more than any other individual) permitted that bill to become federal law.

[In this case I’m not accusing anyone of duplicity. It’s always easier to believe that what’s to our own best advantage is equally to the nation’s best advantage]. Leaders of our greatest financial institutions believed this was a win-win for both private investors and the nation’s economy. The bill was problematic. The axiom of “no free lunch” wasn’t fully recognized in this act or because profits were perceived and the axiom’s application within this act wasn’t fully appreciated].
 

GSE prospectuses presented to investors state no legal requirement for federal financial backing of GSE’s, but influential persons at the highest levels of USA’s federal government and commercial entities winked and assured the entire world this undeclared support was actually the case. They explained that government support is evidenced by interest earned from GSE’s not being subject to income taxes. These persons creditability and influence was confirmed when the federal government did indeed put federal credit at risk to cover losses due to mortgage defaults. The federal government put itself on the hook for non-federally guaranteed loans.

The government did not direct financial institutions to make insufficiently collateralized loans. Banks better rewarded mortgage brokers who brought them higher interest loans for property of over stated value sold to purchasers with insufficient incomes. It became the accepted policy of no need for diligent government regulation because it was to private entities’ best interests to conduct their businesses in financially sound manners. From the financial institutions’ view point they were doing exactly that. The qualities of mortgages were of no consequences to the lenders if they could immediately sell them to the GSEs.

I’m less mistrustful of explicitly drafted government laws and regulations created and enacted in the sunshine and publicly viewed. I greatly dread any (government or non-government) bureaucratic discretion of policy that directly or indirectly affect me and mine and create or perpetuate inequities that evolve from the exercising of such discretion.

Respectfully, Supposn

Did you imagine some portion of your post proved that Glass-Steagall would have prevented the crisis?

 

[Toddsterpatriot]

They explained that government support is evidenced by interest earned from GSE’s not being subject to income taxes.



Interest earned on GSE bonds is exempt from income tax?
Or did you mean something else?

 

[dilloduck]

Nonsense.

Look at US Bank, Wells Fargo and BoA (before the shotgun marriage with Merrill Lynch)...None of them required a bailout (in BoA's case, they wouldn't have needed it), yet were entirely free to have regular banking and investment services all under the same roof.

You guys are ahead of me on this, I don't mind learning a little something if I have to look dumb in the first place. Sure those guys didn't need a bailout, they could and did continue to have everything under the same roof. But - we still had and have a credit crisis anyway. I am suggesting that had they separated the investments out, along with everyone else, they might not have been so quick to leverage the amounts that they did, using the other side of the business as a backstop.

I just think doing away with G/S was not a smart move, that's all.

What I'm suggesting is that there will be bad actors in any marketplace.

I named three that were responsible - there are untold numbers more if you count local and regional banks...But the ones who got bailed out were the ones that took the big risks...They all should've failed, had their assets liquidated to those who were willing to take on that kind of risk, and the market should've been left to correct itself.

"Too big to fail" should scare the shit out of Americans. It's right up there with too influential to convict.