CDZ Video on the 2008 Mrtgage Market Collapse and How it was Fixed

[JimBowie1958]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

 

[Mac1958]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

 

[JimBowie1958]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

 

[iamwhatiseem]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

 

[Mac1958]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.

Please explain further.

 

[JimBowie1958]

I assume you mean Bush, not Obama.
.

It began as TARP with Bush and continued as Quantitative Easing under Obama. Most of the money given to Wall Street SuperBanks was under Obama by far.

Troubled Asset Relief Program - Wikipedia

The TARP program originally authorized expenditures of $700 billion. The Emergency Economic Stabilization Act of 2008 created the TARP program. The Dodd–Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, reduced the amount authorized to $475 billion. By October 11, 2012, the Congressional Budget Office (CBO) stated that total disbursements would be $431 billion, and estimated the total cost, including grants for mortgage programs that have not yet been made, would be $24 billion.[1]

On December 19, 2014, the U.S. Treasury sold its remaining holdings of Ally Financial, essentially ending the program. TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation.​

Quantitative easing - Wikipedia

The U.S. Federal Reserve System held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Federal Reserve started buying $600 billion in mortgage-backed securities.[25] By March 2009, it held $1.75 trillion of bank debt, mortgage-backed securities, and Treasury notes; this amount reached a peak of $2.1 trillion in June 2010. Further purchases were halted as the economy started to improve, but resumed in August 2010 when the Fed decided the economy was not growing robustly. After the halt in June, holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at $2.054 trillion. To maintain that level, the Fed bought $30 billion in two- to ten-year Treasury notes every month.[26]

In November 2010, the Fed announced a second round of quantitative easing, buying $600 billion of Treasury securities by the end of the second quarter of 2011.[27][28] The expression "QE2" became a ubiquitous nickname in 2010, used to refer to this second round of quantitative easing by US central banks.[29] Retrospectively, the round of quantitative easing preceding QE2 was called "QE1".[30][31]

A third round of quantitative easing, "QE3", was announced on 13 September 2012. In an 11–1 vote, the Federal Reserve decided to launch a new $40 billion per month, open-ended bond purchasing program of agency mortgage-backed securities. Additionally, the Federal Open Market Committee (FOMC) announced that it would likely maintain the federal funds rate near zero "at least through 2015".[32][33] According to NASDAQ.com, this is effectively a stimulus program that allows the Federal Reserve to relieve $40 billion per month of commercial housing market debt risk.[34] Because of its open-ended nature, QE3 has earned the popular nickname of "QE-Infinity".[35][better source needed] On 12 December 2012, the FOMC announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month.[36]

On 19 June 2013, Ben Bernanke announced a "tapering" of some of the Fed's QE policies contingent upon continued positive economic data. Specifically, he said that the Fed could scale back its bond purchases from $85 billion to $65 billion a month during the upcoming September 2013 policy meeting.[37][failed verification] He also suggested that the bond-buying program could wrap up by mid-2014.[38] While Bernanke did not announce an interest rate hike, he suggested that if inflation followed a 2% target rate and unemployment decreased to 6.5%, the Fed would likely start raising rates. The stock markets dropped by approximately 4.3% over the three trading days following Bernanke's announcement, with the Dow Jones dropping 659 points between 19 and 24 June, closing at 14,660 at the end of the day on 24 June.[39] On 18 September 2013, the Fed decided to hold off on scaling back its bond-buying program,[40] and announced in December 2013 that it would begin to taper its purchases in January 2014.[41] Purchases were halted on 29 October 2014[42] after accumulating $4.5 trillion in assets.​

 

[iamwhatiseem]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

Oh hell no.
All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

 

[JimBowie1958]

I am not faulting Obama or Bush, for this had to be done to undo the Gordian knot caused by the MBS-CDO-CDS nightmare.

The Derivatives market is by far the largest market on the planet and needs to be monitored by Federalis at Treasury, and I assume that now they are.

 

[JimBowie1958]

All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

It is in the interest of national security to break up the Too Big to Fail Banks, and therefor the President can do it by Executive Order.

 

[Indeependent]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

Oh hell no.
All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

So you agree that GW was the dumbest piece of shit that ever walked the earth.

 

[JimBowie1958]

So you agree that GW was the dumbest piece of shit that ever walked the earth.

Lol, I think that is the Democrat equivalent of 'Obama is a Kenyan Muslim'.

Bush was by no means a scholar, but he was a good manager, and I think he handled 9-11 and the 2008 Real Estate Crisis fairly well.

We just never took the final step to make sure this never happened again. And that is to break up the Too Big to Fail Banks.

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

Oh hell no.
All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money.

Nobody used taxpayer dollars for any "direct debt buyout" under Obama.

But the people who held the mortgages got it all. Including 100% of their profits.

Banks lost hundreds of billions of dollars on crappy mortgages.

 

[Leo123]

The little queer in the Congress and chairman of HFSC and his butt buddy at Fannie Mae screwed US over with bogus loan programs.

 

[FA_Q2]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

 

[Toddsterpatriot]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

 

[FA_Q2]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

 

[Mac1958]

The system was in collapse. Moral Hazard was unavoidable.

It should have taught us a lesson, but it clearly didn't.

 

[iamwhatiseem]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

What kind of shit are you talking about? Tens of $billions in profit.
After all said and done the balance of the buy backs was about $4.3 billion, or a 0.6 percent return. Counting in inflation the taxpayers lost money.
Nothing changes the FACT that 10 MILLION people lost their homes, TELL THEM THEY MADE A PROFIT MORON!.. while the central banks were not only protected from what would have been their $Billions in losses, they were bailed out...and allowed to keep the profits off of some of those very homes. THEN they were given $billions and $billions and $billions of leverage money so they could boost the markets.
AND... nothing changes the fact that the wealth gap grew at a faster pace and wider gap under Obama than any other time in history. While 10,000,000 people lost everything. The very people that caused then to lose everything made $millions in profits and bonuses in the same time period.

 

[Toddsterpatriot]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Why would that have been better?

Cascading bank failures are no good for anyone.