The argument against self-regulation.

[Supposn]

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

Cc:OddBall
& California Girl;

ToddsterPatriot, I’m a proponent of the Glass-Steagall Act but I do not believe it would have prevented the crisis.

I should have highlighted my opposition to the GSE’s handling non-federally insured mortgages. Those mortgages were a significant portion (if not the majority) of GSE Handled mortgage amounts that were and/or are “under water”.
Those under collateralized mortgages were and are the crux of our economic problems.

” 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”.

Respectfully, Supposn

 

[Supposn]

ts

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?

That's right; no income tax.

Respectfully, Supposn

 

[Toddsterpatriot]

ts

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?

That's right; no income tax.

Respectfully, Supposn

You have a source for that claim?
I have this......

Most agency bonds pay a semiannual fixed coupon and are sold in a variety of increments, though the minimum investment level is generally $10,000 for the first increment, and $5,000 increments thereafter. The tax status of agency bonds varies. Interest from bonds issued by Freddie Mac and Fannie Mae is fully taxable, while those issued by some other GSEs offer state and local tax exemptions. Capital gains and losses on the sale of agency bonds are taxed at the same short- and long-term rates (for bonds held for one year or less or for more than one year) as for stocks.

 

[Supposn]

ts

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?

That's right; no income tax.

Respectfully, Supposn

You have a source for that claim?
I have this......

Most agency bonds pay a semiannual fixed coupon and are sold in a variety of increments, though the minimum investment level is generally $10,000 for the first increment, and $5,000 increments thereafter. The tax status of agency bonds varies. Interest from bonds issued by Freddie Mac and Fannie Mae is fully taxable, while those issued by some other GSEs offer state and local tax exemptions. Capital gains and losses on the sale of agency bonds are taxed at the same short- and long-term rates (for bonds held for one year or less or for more than one year) as for stocks.

Where's your link address?

 

[Toddsterpatriot]

ts

That's right; no income tax.

Respectfully, Supposn

You have a source for that claim?
I have this......

Most agency bonds pay a semiannual fixed coupon and are sold in a variety of increments, though the minimum investment level is generally $10,000 for the first increment, and $5,000 increments thereafter. The tax status of agency bonds varies. Interest from bonds issued by Freddie Mac and Fannie Mae is fully taxable, while those issued by some other GSEs offer state and local tax exemptions. Capital gains and losses on the sale of agency bonds are taxed at the same short- and long-term rates (for bonds held for one year or less or for more than one year) as for stocks.

Where's your link address?

FINRA - Investor Information - Smart Bond Investing

Where's yours?

 

[Supposn]

You have a source for that claim?
I have this......

Most agency bonds pay a semiannual fixed coupon and are sold in a variety of increments, though the minimum investment level is generally $10,000 for the first increment, and $5,000 increments thereafter. The tax status of agency bonds varies. Interest from bonds issued by Freddie Mac and Fannie Mae is fully taxable, while those issued by some other GSEs offer state and local tax exemptions. Capital gains and losses on the sale of agency bonds are taxed at the same short- and long-term rates (for bonds held for one year or less or for more than one year) as for stocks.

Where's your link address?

FINRA - Investor Information - Smart Bond Investing

Where's yours?

ToddsterPatriot, I’ve been unable to find an IRS link explaining the tax liability due to these particular GSEs.

I did find a few links indicating that you’re correct and I’m incorrect.
When I have an opportunity, I expect to read an explanation published by the IRS (that’s an authoritative source); but I expect to again learn that you’re correct and I’m incorrect.

I had expected to find these particular GSEs have been granted tax waivers.
I continue to advocate that our government act as a democratic republic that will grant no special strokes for special folks; but I’m shocked that our government actually has done what I advocate.

It never occurred to me that the government might do the right thing.

Respectfully, Supposn

 

[editec]

SAElf regualtion?

Yeah, the MAFIA and the BANKSTERS just love that idea.

I mean look how well that worked out thus far.

Great idea!

 

[Quantum Windbag]

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

Suppose you tell me how Glass Steagall being repealed actually contributed to the problem we had.

 

[Quantum Windbag]

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.

There are actually quite a few reasons why it should, which is why the law was repealed.

 

[EdwardBaiamonte]

SAElf regualtion?

Yeah, the MAFIA and the BANKSTERS just love that idea.

I mean look how well that worked out thus far.

Great idea!

Look where??? How interesting that the liberal is so afraid to say where exactly??

 

[EdwardBaiamonte]

Suppose you tell me how Glass Steagall being repealed actually contributed to the problem we had.

he cant tell you because it did not contribute. Clinton still holds the position that is should have been repealed.

Now though we know that it contributed to making some too big to fail; so some method should be devised to break them up or make them less interdependent.

 

[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. ...........................................

Suppose you tell me how Glass Steagall being repealed actually contributed to the problem we had.

Quantum Windbag, I’m opposed to additional risk inherent to collusion between investment banking and other types of banks.

The FDIC insures their client banks accounts but the insurance does not cover some bank products or the banks themselves. Banks are required to inform their clients that they accept those products at their own risks. Congress passed the1933 Glass-Steagall Act because they believed any lesser “fire walls” would be insufficient. I believe the act’s prohibition of savings or commerce banks participating in investment banking activities is logical and prudent.

The existence of an FDIC insured bank participating as investment bank too large to be permitted to fail is beyond imprudence and contrary to the public interest; it’s a potential economic disaster.

Respectfully, Supposn

 

[uscitizen]

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!!

Ohh the disease has spread thru over leveraging.

 

[expat_panama]

...tell me how Glass Steagall being repealed actually contributed to the problem we had.

...an FDIC insured bank participating as investment bank too large to be permitted to fail is beyond imprudence and contrary to the public interest...

That's it in a nutshell, the regulators blame the crisis on deregulation and the deregulators blame regulation. Both are only partly right, but it's easiest to prove that the '99 G.S. repeal was not the cause.

First, the bulk of Glass Steagall was never repealed to begin with because banks are still forbidden to use equities as assets. Second, the investment banks that failed (Bear Sterns, Lehman, Merrill Lynch) were not commercial banks so we had no 1930 replay. Third, the failures didn't cause the housing/stock crash but rather resulted from it. Finally, the banking industry has long since stabilized while employment continues to flounder.

Bottom line here is that this whole left vs. right food fight is not only a scam, it's a distraction from something much bigger going on with the human race.

 

[editec]

Traffic lights?

Who need 'em?

We can self regulate!

 

[expat_panama]

Traffic lights? Who need 'em? We can self regulate!

Good analogy.

The thing is that most intersections do not have traffic lights because self regulation is in fact best in most cases. People think the reason for traffic lights is to save lives. It's not, installing them usually increases deaths. They're installed for the purpose of speeding up traffic.

We still need them though, but only as the exception when the need is super clear.

 

[KissMy]

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.

We had this. We had regulated banking & unregulated shadow banking. All the money flowed into the shadow banking side because it allowed more leverage & paid better returns. This made the shadow banking system risky, dominate & systemic. It should have been allowed to fail. The Fed still has $2.2 Trillion worth of worthless Shadow bank paper on its balance sheet. We have not been paid back for bailing out this system.

Leverage is simple. Take a rich retired person who has amassed a lifetime of wealth & assets that is 25 times more than the average citizens. They leverage all that 40 to one on a bet & lose. They just lost 40 times more than their life's work or 1,000 times more than the average citizens life's work. Now 1,000 other peoples life savings & assets have go to pay for that one idiots bad bet.

 

[Toddsterpatriot]

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.

We had this. We had regulated banking & unregulated shadow banking. All the money flowed into the shadow banking side because it allowed more leverage & paid better returns. This made the shadow banking system risky, dominate & systemic. It should have been allowed to fail. The Fed still has $2.2 Trillion worth of worthless Shadow bank paper on its balance sheet. We have not been paid back for bailing out this system.

Leverage is simple. Take a rich retired person who has amassed a lifetime of wealth & assets that is 25 times more than the average citizens. They leverage all that 40 to one on a bet & lose. They just lost 40 times more than their life's work or 1,000 times more than the average citizens life's work. Now 1,000 other peoples life savings & assets have go to pay for that one idiots bad bet.

Worthless Shadow bank paper?
You mean US Treasuries and government insured MBS?
The bank portion of TARP was repaid at a profit to the Treasury.

 

[expat_panama]

...Leverage is simple. Take a rich retired person who has amassed a lifetime of wealth & assets that is 25 times more than the average citizens. They leverage all that 40 to one on a bet & lose. They just lost 40 times more than their life's work or 1,000 times more than the average citizens life's work. Now 1,000 other peoples life savings & assets have go to pay for that one idiots bad bet.

This is exactly what's wrong these days.

Wait, not that silly 'leverage' nonsense you were spewing. What's wrong is that this is what too many otherwise intelligent people are actually believing.

 

[KissMy]

Clinton started pressuring the banks & got the GSE's steamrolling on the MBS then the banks decided to take a huge bite of the poision MBS apple. This was Clintons plan all along. "By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings."

The table shows mortgage-backed security issuances over time.