Derivatives caused the crisis

[Chris]

McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.

 

[CrimsonWhite]

McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.

Link?

 

[Truthmatters]

Hmmm Ill have to look into this.

wouldnt put it past him .

He was all over the Enron mess too , his wife was on the board of Enron during it too.

 

[AllieBaba]

I love the smell of desperation.

 

[Truthmatters]

RealClearPolitics - Articles - McCain and the Meltdown

 

[Truthmatters]

I love the smell of desperation.

Telll me what you know about Phil Gramm and Enron?

 

[Truthmatters]

You see that bill that the SEC blamed was called Gramm Leach Bilely, do you know why it was called that?

 

[dilloduck]

You see that bill that the SEC blamed was called Gramm Leach Bilely, do you know why it was called that?

It was a catchy phrase some ad firm came up with ???

 

[Chris]

Warren Buffett, the billionaire investor and long-time chairman of Berkshire Hathaway Inc. (BRK.A), is a man who speaks his mind. I'm not sure whether he's always been that way, or whether it is his exceptional wealth or his age -- or both -- that emboldens him to cut through Wall Street B.S. like a hot knife and expose the bloody truth about the foibles of modern finance.

Whatever the case, his comments on derivatives, in particular, have been always been especially enlightening -- and entertaining -- because they expose this supposed risk-sharing panacea for the house of cards it has become. In Derivatives Cause 'Mass Destruction', the Wall Street Journal reports on the 'Oracle of Omaha's' latest thoughts on the subject.

Earlier Saturday, Mr. Buffet repeated his warning on the dangers of derivatives, saying that excessive borrowing by traders, investors and corporations will eventually lead to significant dislocation in the financial markets.

In fielding a question about derivatives, which he once referred to as "financial weapons of mass destruction," Mr. Buffett told shareholders that he expects derivatives and borrowing, or leverage, would inevitably end in huge losses for many financial participants.

"The introduction of derivatives has totally made any regulation of margin requirements a joke," said Mr. Buffett, referring to the U.S. government's rules limiting the amount of borrowed money an investor can apply to each trade. "I believe we may not know where exactly the danger begins and at what point it becomes a super danger. We don't know when it will end precisely, but...at some point some very unpleasant things will happen in markets."

Buffett On Derivatives: 'A Fool's Game' - Seeking Alpha

 

[Truthmatters]

Phil Gramm is an evil bastard.

 

[Alpha1]

Save the spin and the bullshit...nothing changes these facts....

White House warns of GSE risks

The notion that the U.S. government would bail out Fannie Mae and Freddie Mac if they ran into financial trouble "creates a source of systemic risk for our financial system," a top White House economic adviser warned Thursday. (Gregory Mankiw, chairman of the administration's Council of Economic Advisers)

Mankiw's remarks to the Conference of State Bank Supervisors come as the administration and lawmakers push to overhaul the regulatory framework for Fannie Mae and Freddie Mac, which earlier this year admitted to understating its profit by $4.5 billion.
Adding to the uneasiness, Fannie Mae on Oct. 29 reported a $1.2 billion accounting error but said the mistake would have no impact on its income statement. --- CBS.MarketWatch, 11/6/2003


Treasury Secretary John Snow urged Congress to restrain Fannie Mae and Freddie Mac,
giving the Bush administration's blessing to efforts to create a new regulator with broad power over the huge mortgage companies.----AP, April 8, 2005

Nothing will change the fact that in 2003 and again 2005, Bush Admin. warned that Freddy and Fanny were gong to cause trouble if we did not create some regulator with broad power over the huge mortgage companies.

 

[Truthmatters]

And the fact that they did nothing to stop this mess even though they had total control of the US government should tell you something fart man.

 

[dilloduck]

And the fact that they did nothing to stop this mess even though they had total control of the US government should tell you something fart man.

The fact that you pay no attentions to the numerous posts that prove otherwise tells me something about you.
You are a simpleton partisan hack who can comprehend nothing beyond liberals--good
conservatives---bad.
It's simply not that black and white,especially when it comes to the economy but no worries. You have a lot of company here. We''ll all be screaming it's somebody else's fault as we go down the tubes.

 

[Truthmatters]

Its because they dont prove otherwise Dillo.

That post is a white house spin piece.

The white house has lied to the American people for years now.

 

[dilloduck]

Its because they dont prove otherwise Dillo.

That post is a white house spin piece.

The white house has lied to the American people for years now.

You ARE a spin piece. You couldn't look at both sides of an issue without breaking your neck . How are all you other conspiracy theories coming along ?

 

[Truthmatters]

Have you any Idea who the SEC is?

 

[user_name_guest]

And the fact that they did nothing to stop this mess even though they had total control of the US government should tell you something fart man.

Like the first time the bailout didn't pass. They had total control. SHhhh. It doesn't matter who has control. Why would Bush call for it four-five years ago? Did he see it coming? Should he have lied about the seriousness of not reigning Fannie Mae and Freddie Mac to avoid a financial disaster years later? Should he have gone to banks and force poor people into getting loans they didn't pay? Did he use ACORN to win 2000 and 2004 election? Is the bad loans the WMD = weapons of mass deception that they were looking for in Iraq?

Please, if you really believe in improving America, you wouldn't be part of the monopoly control in Washington. Republican and Democrat hacks are the problem, not the solution. You fall into one half of the monopoly. It is better being outside. So you can see that both parties are failures and only look at the election ahead. If this housing collapse was a conspiracy theory, the forces behind it looked ahead at this election year (2008). The bailout to Wall Street is basically a reward well done. Good job Wall Street. When the economy is bad, Democrats win. It worked in 1920s. It can work anywhere.

 

[editec]

I think that dereivative aren't necessarily a bad thing.

However the banks were playing a game of NAKED derivatives with other people's money and they lost.

FYI NAKED derivatives are nothing more than a BET between disinterested parties about the outcome of a bond issue.

I am informed that the NAKED derivative problem dwarfs the REAL dereivative problem that happened because the market did a 180.

Naked dereivatives are ANOTHER EXAMPLE of what happens when we deregualte the banking industry,

The lure of potenital profits is so compelling that the bankers go from making REAL inestments that serve the market, to making nothing more than BETS which serve the market not a wit.

Oh yeah! -- one more point.

Most of the naked derivative problem had NOTHING to do with the real estate mortgage backed bonds

A LOT of those naked dereivatives were bets on CORPORATE BOND outcomes.

But since the economy is flatlining for the corporations, too, those BETS by our banks and investment companies are looking mighty silly in retrospect.

 

[Charlotte Stant]

Ummm...can you explain to me whether there is compelling evidence that Mankiw got Bush's ear? And whether it was the minority democrats in 2005 who heroically got the majority party to ignore their President's appointee, Snow?

Don't get me wrong. Clinton did not veto the abolition of Glass-Stegall, and the Democrats have been fiscally irresponsible - so they are guilty too. But it is really straining my credulity to see you claim that the Party that started the two wars and kept the diabolical Greenspan's foot on the cheap money lever where the real interest rate was 1 percent or less, was in fact against the bubble their policies gave rise to.

Please, some facts.