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regulation of the lending industry....

manu1959

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question to all the smart people here.....

for the past three years all i have heard is bush deregulated the lending industry and caused this crash.....

and

obama will regulate the the lending industry.....

now the dems have been in control of congress which writes all the legislation since 2006....

so....

can someone link me to:

A: the laws bush signed deregulating the banks and lending....

2: the laws obama signed regulating the banks and lending....

thank you for you help....
 

The Rabbi

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They can't.
Lack of regulation didn't cause the economic problem. Regulation won't prevent other problems later on.
The economic crisis is only an excuse for the big government types to push more control, which is all they are interested in.
 

editec

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question to all the smart people here.....

for the past three years all i have heard is bush deregulated the lending industry and caused this crash.....

and

obama will regulate the the lending industry.....

now the dems have been in control of congress which writes all the legislation since 2006....

so....

can someone link me to:

A: the laws bush signed deregulating the banks and lending....

2: the laws obama signed regulating the banks and lending....

thank you for you help....

Bush II AND Clinton AND Reagan administrations weakened the laws regarding banking.

This is a bypartisan disaster.

Lay down your partisan blinders, lad.
 

Toro

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question to all the smart people here.....

for the past three years all i have heard is bush deregulated the lending industry and caused this crash.....

and

obama will regulate the the lending industry.....

now the dems have been in control of congress which writes all the legislation since 2006....

so....

can someone link me to:

A: the laws bush signed deregulating the banks and lending....

2: the laws obama signed regulating the banks and lending....

thank you for you help....

I am not of the opinion that Bush caused this crash, though I do believe deregulation in general contributed to the crisis, of which the Republicans were the biggest proponents.

There are literally something like 60-70 examples around the world of deregulation contributing to or causing financial crises since WWII. That doesn't mean deregulation is necessarily bad - it often is very positive. But financial deregulation often creates excess credit, leading to a real estate bubble and an inevitable collapse.

You can point to several examples of how deregulation contributed to the crisis.

In 2004, the SEC waived capital requirement rules for the Big Five investment banks - Goldman, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. Up until then, banks had to maintain a leverage ratio of 12-15:1, i.e. $12 to $15 in debt for every $1 in equity. The banks made the argument that they knew how to police their business better than the regulators. So, along party lines, the SEC voted 3:2 to allow investment banks to increase their leverage. Firms then went to 30:1 or even 40:1, meaning that even if their assets fell by 3% or 4%, they were insolvent. That is exactly what happened when Bear Stearns and Lehman collapsed, and Merrill was forced into the arms of Bank of America. I am told that Morgan Stanley was technically insolvent as hedge funds and companies that requested their cash were told they couldn't get it. Goldman was days away from getting their lines pulled, meaning they wouldn't have been able to fund their operations in the repo market, and would have collapsed, which prompted the nationalization of AIG, as well as the creation of other government programs.

(This is the same criticism of Freddie and Fannie. Free market ideologues like to blame the GSEs for the crisis but there is little empirical evidence that GSE-lending led to this. What is fair game is that both Freddie and Fannie were leveraged to the hilt, like the investment banks, and were systemic risks to the entire system. They too imploded for the same reasons as the investment banks.)

Phil Gramm's 1999 Futures Modernization Act exempted some derivatives from the typical oversight of securities. (Signed by Clinton BTW.) This act shielded energy futures trading from scrutiny, called "the Enron clause" since Enron lobbied heavily for the exemption. (Fate loves irony.) It also exempted sellers of credit default swaps, or CDS. CDS is like insurance, where you pay a premium based on probability of default. In a typical insurance contract, the insurance company has to put aside reserves to cover future losses. How would you like it if you bought life insurance, you died and your wife couldn't get the money because it wasn't there? That's what happened with AIG. AIG was the biggest writer of CDS, insuring a wide variety of financial contracts and securities. But AIG did not have to put reserves aside, or if they did have to collateralize their obligations, it was very little. AIG was the lynchpin of the crisis because without their AAA-rating, many of these derivative structures could not have ever been created. And if the derivatives such as CDOs could never have been created, you would not have had massive demand for subprime mortgages. And if you did not have this massive demand for subprime mortgages, banks would have been under less pressure to lower lending standards. AIG was bailed out for a very good reason. The financial system was have collapsed if its obligations were not met.

Regulators chose not to enforce many regulations on the books. Not enforcing current regulations is de facto deregulation. The Fed in particular turned a blind eye to egregious lending practices in the subprime market. Greenspan made several speeches praising mortgage "innovation" and actively dissuaded regulators within the Fed from limiting their application. The OCC invoked a 19th century law to override the states' abilities to enforce anti-predatory lending laws, making it easier for companies such as Ameriquest and Countrywide to jam shit down borrowers.

There are more, but I have to hop.
 
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Ravi

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Bank deregulation has been the fault of both Democrats and Republicans and I believe your OP is misleading on who claims who is to blame...for the past three years all i have heard is bush deregulated the lending industry and caused this crash...Bush didn't cause the crash, however he did miss the warning signs.

One thing that can be blamed on Bush/Republicans is that they took away the power of the states to enforce predatory lending laws on federal banks in their states.
 

Gadawg73

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They can't.
Lack of regulation didn't cause the economic problem. Regulation won't prevent other problems later on.
The economic crisis is only an excuse for the big government types to push more control, which is all they are interested in.

1.Gramm Leach Bliley Act or better known as the Financial Services Modernization Act. This Republican sponsored Act repealed Glass Stegall Act which had prohibited any one financial institution from acting in any combination of investment bank, commercial bank and an insurance company.
The banking industry had been seeking the repeal of Glass Stegall since the 1970s.
Gramm Leach Bliley passed with 53 votes in the Senate and 44 Democrats opposed.
This Act directly caused the sub prime mortgage crisis. Nobel Prize winners in economics call Republican Phil Gramm "the father of the financial crisis".
Another fact that you do not know Rabbi, but you should as you claimed that you were more educated than me,is that Gramm Bliley Act explicitly EXEMPTED security based derivative swap agreements from ANY regulation by the SEC. That horrible Republican backed exemption amended the Securities ACt of 1933 which protected consumers.
This is what your Republican homies did Rabbi, this is the Republican wording in Gramm Bliley:
"The SEC Commission is prohibited from promulgating, interpreting or enforcing rules, or issuing orders of general applicability, or measures against fraud, manipulation or insider trading with respect to any security based swap agreement".
And you claim that "lack of regulation didn't cause the problem".
Next time Rabbi come here with something, anything, to back up your claims. Your knowledge in this area is seriously lacking. You claim you are more educated than me in a previous post. I have a BBA with a minor in Finance and Tax Accounting as one of my degrees. However, this stuff is so easy a 5th grader can figure it out.
Unless their mind is clouded with partisan ideology.
 
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Gadawg73

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Rabbi is correct on this point and I believe it to be the most important point.
Regulation is not the solution in most instances. Big government regulations, as proposed by the Obama administration with corporate limits in compensation and size in the financial markets, are as big, or bigger problem, than regulation.
Too much regulation, a favorite tool of Democrats, freezes investment, the LIFEBLOOD of all financial institutions.
However, "big governemnt types" have no party affiliation when it comes to politics, especially financial campaign contributions.
 

editec

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If but ONLY the SEC had done it's job, this meltdown would not have occured to the degree it has.

Yes, there were bad real estate loans.

But they in and of themselves would not have melted down the economy.

That took the dereviatives gambling and that demanded that the government NOT in ANY WAY regulate that activity.

So it was a combination of regulations IGNORED (by Bush II admin) and regulations that did not exist (that happened on Clinton's watch...I think) to get us into THIS mess.
 
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CrusaderFrank

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CRA requirements backed by Fannie and Freddie hunger for the bad paper caused the crash.

Banks HAVE to comply with CRA or they can't do business and since they had a willing patsy in the US taxpayer as the ultimate recourse in FNMA And Freddie, yeah, sure, well issue all the bad paper you want.
 
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Claudette

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If but ONLY the SEC had done it's job, this meltdown would not have occured to the degree it has.

Yes, there were bad real estate loans.

But they in and of themselves would not have melted down the economy.

That took the dereviatives gambling and that demanded that the government NOT in ANY WAY regulate that activity.

So it was a combination of regulations IGNORED (by Bush II admin) and regulations that did not exist (that happened on Clinton's watch...I think) to get us into THIS mess.


Couldn't agree more. Both parties played a hand in this catastrophe.

Hindsight is always 20/20.

There are plenty of regulations in the books. Its just to bad those in oversite took their eye off the ball. If they had been doing the job they were supposed to be doing, the meltdown probably wouldn't have had a chance to happen.
 

The Rabbi

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They can't.
Lack of regulation didn't cause the economic problem. Regulation won't prevent other problems later on.
The economic crisis is only an excuse for the big government types to push more control, which is all they are interested in.

1.Gramm Leach Bliley Act or better known as the Financial Services Modernization Act. This Republican sponsored Act repealed Glass Stegall Act which had prohibited any one financial institution from acting in any combination of investment bank, commercial bank and an insurance company.
The banking industry had been seeking the repeal of Glass Stegall since the 1970s.
Gramm Leach Bliley passed with 53 votes in the Senate and 44 Democrats opposed.
This Act directly caused the sub prime mortgage crisis. Nobel Prize winners in economics call Republican Phil Gramm "the father of the financial crisis".
Another fact that you do not know Rabbi, but you should as you claimed that you were more educated than me,is that Gramm Bliley Act explicitly EXEMPTED security based derivative swap agreements from ANY regulation by the SEC. That horrible Republican backed exemption amended the Securities ACt of 1933 which protected consumers.
This is what your Republican homies did Rabbi, this is the Republican wording in Gramm Bliley:
"The SEC Commission is prohibited from promulgating, interpreting or enforcing rules, or issuing orders of general applicability, or measures against fraud, manipulation or insider trading with respect to any security based swap agreement".
And you claim that "lack of regulation didn't cause the problem".
Next time Rabbi come here with something, anything, to back up your claims. Your knowledge in this area is seriously lacking. You claim you are more educated than me in a previous post. I have a BBA with a minor in Finance and Tax Accounting as one of my degrees. However, this stuff is so easy a 5th grader can figure it out.
Unless their mind is clouded with partisan ideology.

Ya know, people would take you more seriously if you could read.
Look at the post I responded to. Manu1959 asked for lists of legislation Bush signed and legislation Obama signed.
I say they can't provide such a list because Bush didnt sign any deregulation legislation.
You respond with a paragraph about Gramm-Bliley which was enacted in 1999. Bush took office in 2001. That means Bill Clinton signed the bill into law, 12 Nov, 1999.

Clearly I can read and you cannot. You would have a lot of trouble proving repeal of Glass Steagell caused this crisis, 10 years later.
IOW, you've been pwned, s0n.
 

Gadawg73

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CRA requirements backed by Fannie and Freddie hunger for the bad paper caused the crash.

Banks HAVE to comply with CRA or they can't do business and since they had a willing patsy in the US taxpayer as the ultimate recourse in FNMA And Freddie, yeah, sure, well issue all the bad paper you want.

You are right Frank.
But that made up about 7-9% of all of the $ involved in the banking mess.
CRA had NOTHING to do with 600K mortgages and 140 million dollar speculative land deals with fraudulent AAA bond ratings.
CRA was small loans for poor folks. How does a poor person get a AAA backed $600K loan FRank?
Small potatoes. Do not belief the myths.
 

kwc57

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Anyone who actually believes that the banking industry has had any kind of major deregulation or is in need of more regulation has no idea of the reality of banking regulation. I've been in the banking industry since 1979 and can tell you that banking is one of the most heavily regulated industries in the United States. Don't believe me? Go to this site and start clicking links.

BANKING REGULATIONS: REG: A B C D E F H I J K L M N O P Q R S T U X Y Z AA BB CC DD EE
 

The Rabbi

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Anyone who actually believes that the banking industry has had any kind of major deregulation or is in need of more regulation has no idea of the reality of banking regulation. I've been in the banking industry since 1979 and can tell you that banking is one of the most heavily regulated industries in the United States. Don't believe me? Go to this site and start clicking links.

BANKING REGULATIONS: REG: A B C D E F H I J K L M N O P Q R S T U X Y Z AA BB CC DD EE

Wow, an informed opinion. You will get neg repped for sure.

Yes, it is one of the msot heavily regulated. I have never seen a business where the seller must disclose to the buyer how much money he is making on the deal. Even the gun business, also heavily regulated, doesn't require that. Yet.
Less regulation did not contribute to the problem.
More regulation would not have prevented the problem.
 

Toro

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Rabbi is correct on this point and I believe it to be the most important point.
Regulation is not the solution in most instances. Big government regulations, as proposed by the Obama administration with corporate limits in compensation and size in the financial markets, are as big, or bigger problem, than regulation.
Too much regulation, a favorite tool of Democrats, freezes investment, the LIFEBLOOD of all financial institutions.
However, "big governemnt types" have no party affiliation when it comes to politics, especially financial campaign contributions.

Some regulation is good, some is not. Regulating pay is dumb IMHO.

One of the best things the government can do is facilitate the flow of information. Making more information available allows markets to work better. Markets usually provide the best outcome, and by forcing the disclosure of more information, governments can facilitate the better functioning of markets as individuals are able to make better decisions.
 

The Rabbi

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Yes. I have no problem with regulations about disclosing information. My problem comes when gov't wants to dictate what should be private arrangements between buyer and seller.
 

Granny

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People have been screwed all the way around. Paulson, Bernake and Geitner ALL knew what was going on when it was going on. And Barney Frank has been the patron saint of Fannie and Freddie from the get-go. There's plenty of blame to go around. What needs to be considered is the character of those who made the decisions. Like the folks at Enron, they did exactly what they wanted to do despite protests and warnings to the contrary. Not all bankers, brokers, investment advisers, etc. are dishonest bastards but the ones who are make it bad for everyone.

The business of giving huge loans to people who have very little income because they had a right to own their own home was a dumb-ass idea from it's inception. Yes, they have a right to own their own home - but they also have the RESPONSIBILITY and OBLIGATION to work for that house just like everybody else.
 

Gadawg73

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Anyone who actually believes that the banking industry has had any kind of major deregulation or is in need of more regulation has no idea of the reality of banking regulation. I've been in the banking industry since 1979 and can tell you that banking is one of the most heavily regulated industries in the United States. Don't believe me? Go to this site and start clicking links.

BANKING REGULATIONS: REG: A B C D E F H I J K L M N O P Q R S T U X Y Z AA BB CC DD EE

Wow, an informed opinion. You will get neg repped for sure.

Yes, it is one of the msot heavily regulated. I have never seen a business where the seller must disclose to the buyer how much money he is making on the deal. Even the gun business, also heavily regulated, doesn't require that. Yet.
Less regulation did not contribute to the problem.
More regulation would not have prevented the problem.

"a business where the seller must disclose to the buyer how much money he is making on the deal"
That is called a CONTRACT. In banking the $ made is interest or fees which are in the CONTRACT.
Do you borrow $ from a bank Rabbi without knowing how much the interest is that the bank is profiting off of you?
Geeez guys, come on.
 

CrusaderFrank

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Anyone who actually believes that the banking industry has had any kind of major deregulation or is in need of more regulation has no idea of the reality of banking regulation. I've been in the banking industry since 1979 and can tell you that banking is one of the most heavily regulated industries in the United States. Don't believe me? Go to this site and start clicking links.

BANKING REGULATIONS: REG: A B C D E F H I J K L M N O P Q R S T U X Y Z AA BB CC DD EE

Next on MythBusters: Banking Deregulation
 

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