Republicans On Wrong Course On Financial Regulation Bill - It Will Show In November!

[Gunny]

Where in this post are you proving that Wall street would receive one red cent from the government?

They would be paying into a fund themselves to insure their own welfare, thus saving the taxpayers from having to bail them out.

How is that bad? How is that an implication of a government bailout?

HOW is it BAD? I'll tell you...Once the Fed gets their claws upon anything? It sets precident for them to do ANYTHING they like...or aren't you into Historical FACT?

The Government should stay OUT of it. Let them FAIL. The Free Market will replace the failure in due course with others that will do it better...or don't *YOU* trust the market?

"Too Big To Fail*?

Would that INCLUDE the Government that continues to GROW at the Nation's detriment? [And BY their own design...and purpose]?

[And the MARKET *IS* the people].

Your post is crap.

You know T, that's exactly what they said in the 1920's, and that worked out pretty damn well, didn't it?

The FDIC served as a stopgap to prevent another depression pretty damn well for 70 years. Now these financial firms are essentially serving as banks, so the Government is trying to make sure they don't fail by making them insure themselves.

How in God's name you see this as a bad thing is beyond me. Keep on spinning though.

Exactly what they said in the 1930's. Good thing Nazi Germany worked out pretty damned well, huh?

 

[EriktheRed]

Exactly what they said in the 1930's. Good thing Nazi Germany worked out pretty damned well, huh?

You're comparing this to what happened in Germany in the 1930s????


God, I thought you were more sane than that.

 

[Gunny]

Exactly what they said in the 1930's. Good thing Nazi Germany worked out pretty damned well, huh?

You're comparing this to what happened in Germany in the 1930s????


God, I thought you were more sane than that.

I never thought you were smarter than you just proved though.

 

[Toro]

I would prefer they not be allowed to become too big to fail, but I highly doubt that is going to happen. Why? Because Wall Street doesn't want it to happen.

As for Geithner's argument, we already expect the government to step up and bail out Wall Street because, you know, they already did.

I remember conversations we used to have back in the day on whether or not the government would step in and bail out Freddie and Fannie if they ever got into trouble. I never imagined that they would step in to bail out pretty much all of Wall Street. The idea that there isn't already moral hazard is utterly bizarre. Take the moral hazard argument of 2007 and multiple it by 100.

I have no idea why Goldman bonds are, or were on Friday, trading at 170 over Treasuries. Its essentially risk free debt backed by the US government.

Who gives a shit. Old-Fashioned economics. If a compant fucks up and falls out of favour by their practices? LET THEM FAIL. Nature abhores a vacuum. It will level out naturally.

Government needs to let it happen and stay the Hell out of it regardless. To get involved upsets that vbalance...and isn't that WHY we are here? *By Government interference*? Sure...it's OK to say *YES*

Its hard to believe that anyone who understands the interconnectedness of the global financial system would say this. Lehman failed and it almost brought down the global economy. Courts are still adjudicating 145,000 derivatives contracts to which Lehman was a counterparty. And Lehman was small potatoes compared to the likes of Morgan, Goldman, Citi and AIG.

People are fools to believe that the government wouldn't step in if we have another similar crisis. There is zero doubt in my mind that Great Depression 2.0 would have happened had the government not backstopped the financial system. What we went through is a cakewalk to what could have happened. Creating a $50 billion fund from the levies on the biggest banks will at least put a cushion between the banks and the taxpayers.

 

[American Horse]

The housing collapse happened when mortgages were moved from Freddie/Fannie to Wall Street, where they were literally given away, bundled and then sold as "securities". You guys can't pretend to be ignorant anymore. This is now known to be the facts. It all started with Republican deregulation early in Bush's first term.

Trying to blame it on Barney Frank doesn't work anymore. We know the truth.

Would you explain the bolded sentence please? On the face of it that seems a ridiculous statement.

I'm certain that those "bundled" mortgages were not discounted, much less "given away"

Pardon my ignorance, but please enlighten me. What's your source for making that statement?

 

[CrusaderFrank]

Republicans making a big mistake with their failure to support the general outline of the "Dodd" Financial Regulation bill. The American people want no more AIG's, Bear Stearns, Lehman Brothers,etc.. Ordinary Americans want the Federal Government to step in early with these types of companies and stop their growth, break them up or do whatever is needed to see these businesses don't hurt the economy and cost jobs. The Republicans have not given any persuasive reason to mainstream America to oppose this bill. Their rationale that this bill will encourage financial businesses to be recklass in pursuit of profits because they know the Federal Government will rescue them if they get into trouble is bogus and ordinary Americans can see this because if the Federal government steps into a financial business's life that almost certainly means that financial business's stock price will take a giant hit and no executive of a financial business wants that.



The Republican's stance on this bill makes them look like they are looking out for big financial institutions and their owners interest not the American peoples interests. Republicans have huge momentum going into these mid-term elections, their stance makes ordinary Americans wonder if I support the Republicans am I supporting Bush like Republicans that got us into this recession mess in the first place, Republicans better change their tune quickly on this issue or it will costs a significant number of votes in November. This last two and a half years with this recession has been a nightmare for the American people, the American people want meaningful financial regulation reform they want to see these financial industry problems don't happen again.

Some of these Republican positions on this bill are clearly indefensible. The vast majority of swap (insurance) contracts should be done through exchanges or clearinghouses so if the issuer of a swap defaults, the clearinghouse can pay the debt so there is no ripple financial effect. Many businesses use these swap contracts for extremely important business reason that is to hedge against possible negative events occurring to their business operation - they shouldn't be overpaying for this insurance protection - listing these swap contracts on exchanges will make their prices transparent helping ordinary businesses to get a fair deal. In addition, listing these contracts on exchanges will allow regulators and experts to analyze this market and to sound the alarm if an issuer of these swap contracts is taking on too much risk - so the country can avoid AIG scenarios!

Support a bill that was written by the same asshole that helped along the housing collapse????

Are you fucken high???

The housing collapse happened when mortgages were moved from Freddie/Fannie to Wall Street, where they were literally given away, bundled and then sold as "securities". You guys can't pretend to be ignorant anymore. This is now known to be the facts. It all started with Republican deregulation early in Bush's first term.

Trying to blame it on Barney Frank doesn't work anymore. We know the truth.

CRA regulated that banks HAD to make crappy loans and Fannie and Freddie guaranteed that there was a patsy willing to buy them.

That's what happened

 

[Old Rocks]

I would prefer they not be allowed to become too big to fail, but I highly doubt that is going to happen. Why? Because Wall Street doesn't want it to happen.

As for Geithner's argument, we already expect the government to step up and bail out Wall Street because, you know, they already did.

I remember conversations we used to have back in the day on whether or not the government would step in and bail out Freddie and Fannie if they ever got into trouble. I never imagined that they would step in to bail out pretty much all of Wall Street. The idea that there isn't already moral hazard is utterly bizarre. Take the moral hazard argument of 2007 and multiple it by 100.

I have no idea why Goldman bonds are, or were on Friday, trading at 170 over Treasuries. Its essentially risk free debt backed by the US government.

Who gives a shit. Old-Fashioned economics. If a compant fucks up and falls out of favour by their practices? LET THEM FAIL. Nature abhores a vacuum. It will level out naturally.

Government needs to let it happen and stay the Hell out of it regardless. To get involved upsets that vbalance...and isn't that WHY we are here? *By Government interference*? Sure...it's OK to say *YES*

Its hard to believe that anyone who understands the interconnectedness of the global financial system would say this. Lehman failed and it almost brought down the global economy. Courts are still adjudicating 145,000 derivatives contracts to which Lehman was a counterparty. And Lehman was small potatoes compared to the likes of Morgan, Goldman, Citi and AIG.

People are fools to believe that the government wouldn't step in if we have another similar crisis. There is zero doubt in my mind that Great Depression 2.0 would have happened had the government not backstopped the financial system. What we went through is a cakewalk to what could have happened. Creating a $50 billion fund from the levies on the biggest banks will at least put a cushion between the banks and the taxpayers.

There are a few people on this board which provide sanity and information. Toro is certainly one of them. I look forward to his posts, even if I disagree with parts of them, simply because I always learn something from them.

Not only that, they are examples of civility, something I could learn

 

[American Horse]

[1]I would prefer they not be allowed to become too big to fail, but I highly doubt that is going to happen. Why? Because Wall Street doesn't want it to happen.

<SNIP>

[2] I remember conversations we used to have back in the day on whether or not the government would step in and bail out Freddie and Fannie if they ever got into trouble. I never imagined that they would step in to bail out pretty much all of Wall Street. The idea that there isn't already moral hazard is utterly bizarre.

[3] Take the moral hazard argument of 2007 and multiple it by 100.

[4] I have no idea why Goldman bonds are, or were on Friday, trading at 170 over Treasuries. Its essentially risk free debt backed by the US government.

[1] Neither does Congress and the President. They want these large firms under their thumb, because they make such wonderful whipping boys, and sources of money and power.

[2] That was because, in the analysis we made in those &#8220;arguments&#8221; we failed to take into account the obvious, that Fannie & Freddie, to unload the mortgages they held, which would become increasingly tainted by sub-prime instruments, would be sold through-out the market; first to clear the books of F&F so that more of the same could be cleared from the books of the mortgage lenders, and second because they offered higher potential earnings because of inherent higher risk that they would permeate the financial markets in all their permutations.

[3] I&#8217;m just curious, why would that be the case now, unless you are referring to more of the same, in i.e. commercial real-estate or unfunded pension funds?

[4] Couldn&#8217;t that be explained by the possibility that many investors looking for a much higher yield see Goldman&#8217;s position being vastly improved in the foreseeable future by the impending passage of the Dodd bill, even as Reed calls for a test (cloture) vote on the bill on Monday April 25?

Here are excerpts from an excellent critique of the Dodd Bill in the WSJ today by Peter J. Wallison (Taxpayers and the Dodd Bill), which puts into perspective some the issues we have been discussing in this thread:

President Obama: &#8220; ... nobody should be fooled in this debate."
Who is actually fooling the taxpayers about bailouts? . . .
the $50 billion resolution fund is not cost-free to the taxpayers. . . .

For example, the bill authorizes the Federal Deposit Insurance Corporation to borrow from the Treasury "up to 90 percent of the fair value of assets" of any company the FDIC is resolving. Yet one institution alone&#8212;Citigroup&#8212;has assets currently valued at about $1.8 trillion. The potential costs . . . would be spectacularly higher than $50 billion . . . the $50 billion in the resolution fund is a political number&#8212;a fraction of what the FDIC is authorized to borrow and spend. . . . The Dodd bill has one answer. It says that the FDIC "may make additional payments," over and above what a claimant might be entitled to in bankruptcy, if these payments are necessary "to minimize losses" to the FDIC "from the orderly liquidation" of the failing firm. . . .

[The FDIC] would be able to borrow huge sums so that it could make more generous payments to creditors than they would receive in a bankruptcy. Generous payments to creditors would certainly make unwinding a firm "orderly"&#8212;but it would also encourage lending to the too-big-to-fail financial institutions while disadvantaging smaller, less favored institutions. This in itself will have a profound and destructive effect on competition.

Another possible purpose for the FDIC's borrowing power is to enable the agency to provide what it calls "open bank assistance." Here, instead of liquidating a failed bank, the agency keeps it in operation by paying off its creditors and avoiding the disruption a bank closing might entail.

The FDIC . . . is authorized to borrow against the assets of the failed firm because eventually, in theory, the assets could be sold to repay the Treasury. However, the FDIC's operation of the failed firm could easily be unsuccessful, with losses quickly diminishing the value of its assets.

If that happens, the FDIC would have to impose an additional assessment on the financial industry&#8212;again adversely affecting the solvency and stability of those firms and causing the loss in employment, tax revenue and competitive position outlined above. Or the taxpayers would have to bear the loss, which could be enormous. Congress, accordingly, by passing the Dodd bill, will be courting serious taxpayer costs in the event of another financial panic. . . .

These are only a few [issues in] this 1,400-page bill, which Senate Democrats are seeking to rush to judgment with a cloture vote today. Does anyone really know what's in this bill, or what other unintended consequences will flow from its adoption?

In a CBO footnote on the Dodd Bill: the 50-Billion fund would be tax deductible as a business expense to the firms, so the taxes lost will be made up by tax-payers.
The expenses will also produce loss of revenue from income and payroll taxes [meaning loss of jobs in the industry because of the size of the fund] as US financial firms are priced out of foreign markets.

 

[Vanquish]

Exactly what they said in the 1930's. Good thing Nazi Germany worked out pretty damned well, huh?

You're comparing this to what happened in Germany in the 1930s????


God, I thought you were more sane than that.

I never thought you were smarter than you just proved though.

Apparently you want to spit on the memories of everyone who died in WWII fighting the Nazis. To throw around comparisons to the Nazis denigrates the effort to fight them.

You should be ashamed of posting such things. It shows an unwillingness to try and achieve some reasoned, logical discussion...just insult others and push them away.

 

[Chris]

what astounds me is libtards always saying Republicans fucked it up,, but then of course it's libtards who set the rules in Michigan, California, New Yawk, and New Jersey, Ohio,, and on and on.. Who runs Texas???

A complete idiot....

 

[elvis]

what astounds me is libtards always saying Republicans fucked it up,, but then of course it's libtards who set the rules in Michigan, California, New Yawk, and New Jersey, Ohio,, and on and on.. Who runs Texas???

A complete idiot....

Really? When did they put you in charge?

 

[Avatar4321]

what astounds me is libtards always saying Republicans fucked it up,, but then of course it's libtards who set the rules in Michigan, California, New Yawk, and New Jersey, Ohio,, and on and on.. Who runs Texas???

A complete idiot....

No, No, No! Barack Obama is the President. Not a Governor.

 

[Cuyo]

what astounds me is libtards always saying Republicans fucked it up,, but then of course it's libtards who set the rules in Michigan, California, New Yawk, and New Jersey, Ohio,, and on and on.. Who runs Texas???

A complete idiot....

No, No, No! Barack Obama is the President. Not a Governor.

Oh snap, another BA-DUM, TSSSHHH!

You guys are SOOO FUNNY! See, see what she did there? Someone said "[the guy who runs texas, Rick Perry is] A complete idiot," and she, well, warped that person's words to insinuate that Barack Obama is a complete idiot!

Wow, how did Hee-haw let you get away, you funny, funny girl?

 

[Toro]

[3] Take the moral hazard argument of 2007 and multiple it by 100.

[3] I’m just curious, why would that be the case now, unless you are referring to more of the same, in i.e. commercial real-estate or unfunded pension funds?

Up until 2007, there was this idea in the market of the "Greenspan Put" whereby if the market got in trouble, the Fed would act to bail out the market. At the time, it was understood that the Fed would cut interest rates low and keep them there to flood the financial system with liquidity. I don't think it was understood that they would bail out pretty much every large financial institution in the country, and take unprecedented steps to guarantee financial liabilities equivalent to the country's entire GDP. (And the one firm they didn't bail out - Lehman - created enormous havoc in the financial markets and the economy.) Now, with all the government bailouts, do we really believe that the government wouldn't do the same thing in the future?

Don't get the wrong idea. I hate these bailouts. I would like to see the market work and see the failures get taken out. But IMHO, we were we facing a Hobson's choice, one of which was awful and the other of which was catastrophic. The anger at the bailouts is justified, but I truly believe we would have repeated the 1930s had we not undertaken the actions we did.

 

[Chris]

The Senate Republicans have now backed down on their filabuster.

Even they could not stop this needed reform of the financial system.

 

[Avatar4321]

The Senate Republicans have now backed down on their filabuster.

Even they could not stop this needed reform of the financial system.

Tell me Chris, what law/regulation could you possibly pass to ensure people are honest in their dealings?

 

[Vanquish]

The Senate Republicans have now backed down on their filabuster.

Even they could not stop this needed reform of the financial system.

Tell me Chris, what law/regulation could you possibly pass to ensure people are honest in their dealings?

Honesty is something that CAN be mandated, quantified, and sued over.

Fraud, misprepresentation, bad faith, withholding information, lack of disclaimers, lack of informed consent...it's all in the bag of tricks for legislators.

Really, all some of these companies would have had to do would have been to get informed consent when peddling these securities. What do I mean? Just tell the people you're selling X,Y, Z investment to that your firm is betting that investment will tank, but they're free to buy it and think it's going to go up. Honestly, having been a stockbroker, I can tell you most people's eyes would glaze over and they'd give the consent without listening.

But then it's on their conscience

 

[PubliusInfinitum]

Honesty is something that CAN be mandated, quantified, and sued over.

ROFLMNAO... Now THAT is some SWEET IRONY... A self-proclaimed Centrist, calling for MANDATED HONESTY!

A LEFTIST...

ROFL... that's RICH!

 

[Old Rocks]

While you may not be able to mandate honesty, you can punish dishonesty, punish it to the point where the smarter people will avoid committing the worst of it.

That will require not only punishing the deed, but seizing assets gained from said fraud.