Why no "Banking Crisis" from 1935 to 1979

[EdwardBaiamonte]

Well, it is documented that F&F didn't guarantee the nonconforming paper....

this is utterly 1000% mistaken!!!!!!!! Fanny/Freddie had a government guarantee and so they got cheaper money than any other competitor and so had cheaper mortgages to offer!! This drove every single competitor into sub prime! Then, when there was no more prime business Fanny was all to happy to jump into subprime too.

Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS [mortgage-backed securities] sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, MD-based publisher that covers the home loan industry.

In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

 

[EdwardBaiamonte]

And if the repeal of Glass-Steegal wasn't a factor, then how come we had no collapse during the over 50 years since its inception?

so everything that happened after Glass, good or bad, was caused by Glass???????????????????? Are you a liberal or something??

But just a few years after it's repeal, we have a repeat of '29?

dear, 1929 was a monetary collapse while 2007 was a housing collapse; neither had anything to do with separating investment banking from deposit banking. You should ask deanie for further clarification

you should thank me. Oddball thinks you are stupid but he didn't take the time to point out why while I did!! Just remember , you don't have to be a liberal all your life,

 

[Oddball]

Well, it is documented that F&F didn't guarantee the nonconforming paper....

this is utterly 1000% mistaken!!!!!!!! Fanny/Freddie had a government guarantee and so they got cheaper money than any other competitor and so had cheaper mortgages to offer!! This drove every single competitor into sub prime! Then, when there was no more prime business Fanny was all to happy to jump into subprime too.

Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS [mortgage-backed securities] sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, MD-based publisher that covers the home loan industry.

In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

That's fine...Even so, they still would've been dragged down by the collapse of the housing value bubble either way.

Gotta humor the lolberals who still claim that F&F were completely out of the risky paper biz.

 

[Oddball]

Two quick notes here. First the Banking Act of 1933 was part of a package which included the Securities Act of 1933 and the Security Exchanges Act of 1934 (and eventually the Regulated Investment Company Act of 1940) that provided a consistent integrated framework for regulating financial markets. [I always wonder why everyone wants to call it "Glass--Steagall" instead of the Banking Act. I think using the sponsors name allows people to propose gutting it without the public figuring out what they are doing.]

Second, the financial collapse was the result both of a pattern of deregulation and the evolution of new products that were unregulated. These two factors created the "shadow banking" phenomena which was the root cause of the crash.

The repeal of Glass--Steagall decriminalized derrivitves, which will enventually turn this country into a third world nation.

Glass-Stegal had noting...zip, zero, zilch, NADA! to do with the runup of housing values to unsustainable levels.

You lolberal fruitcackes need a new jabbering point, because the Glass-Stegal dog don't hunt.

 

[Oddball]

Oddball thinks you are stupid but he didn't take the time to point out why while I did!!

Um, yes I did...But he's still too stupid to face the truth.

 

[Freemason9]

Non squitur.

Neither credit default swaps nor "deregulation" nor the repeal of Glass-Stegal were the driving forces behind the wildly overinflated housing bubble or its inevitable collapse.

The housing bubble was not the biggest reason for the collapse.

You are fucking high.

And if the repeal of Glass-Steegal wasn't a factor, then how come we had no collapse during the over 50 years since its inception? But just a few years after it's repeal, we have a repeat of '29?

Begging the question, non sequitur and post hoc ergo propter hoc all rolled into one....You hit the logical fallacy trifecta.

No, he's correct--the "housing bubble" wasn't a cause, it was an outcome. There were deeper, more fundamental things going on that popped the bubble and collapsed the economy.

 

[EdwardBaiamonte]

No, he's correct--the "housing bubble" wasn't a cause, it was an outcome. There were deeper, more fundamental things going on that popped the bubble and collapsed the economy.

too stupid!! then why is the illiterate liberal so afraid to tell us what the deeper things were?????????????? What does hisr fear and ignorance tell us???

 

[oldfart]

Second, the financial collapse was the result both of a pattern of deregulation and the evolution of new products that were unregulated. These two factors created the "shadow banking" phenomena which was the root cause of the crash.

A bit too innocent. Clinton's economic team deliberately sabotaged attempts to start outcry auctions for derivatives in order to line up golden parachutes for themselves. But these were not new products. CDSs are simply bond insurance and bond insurance goes back centuries as in the Bank of England in effect wrote CDSs for the crown in the late 1600s. What changed was volume and range of application.

I don't recall the B of E under William and Mary dealing with mezzanine tranches of CDO's.

 

[Billo_Really]

Second, the financial collapse was the result both of a pattern of deregulation and the evolution of new products that were unregulated. These two factors created the "shadow banking" phenomena which was the root cause of the crash.

Of course thats stupid because you can't have a huge huge bubble without the Fed printing the money to blow it up. Second, you had the GSE's buying or guaranteeing most of the mortgages. Third, you had much of federal and state government organized to get people into homes the free market said they could not afford, and lastly you had a history of home prices always going up.

Now you know your ABCs too.

The government never told the banks to abandon (or compromise) standard banking practices in order to determine the credit worthiness of loan applicants.

 

[EdwardBaiamonte]

The government never told the banks to abandon (or compromise) standard banking practices in order to determine the credit worthiness of loan applicants.

dear you are not bright enough to be here so why are you here??

when the libturds were printing money like crazy it didn't matter to banks or home buyers if they were honest or accurate because home prices were going up so in the event of default on the mortgage the bank and the home buyer still made money when the property sold!

Too complicated for you?? If so just ask more questions.

When libturds undermine the currency they undermine the nation!!

 

[Oddball]

The housing bubble was not the biggest reason for the collapse.

You are fucking high.

And if the repeal of Glass-Steegal wasn't a factor, then how come we had no collapse during the over 50 years since its inception? But just a few years after it's repeal, we have a repeat of '29?

Begging the question, non sequitur and post hoc ergo propter hoc all rolled into one....You hit the logical fallacy trifecta.

No, he's correct--the "housing bubble" wasn't a cause, it was an outcome. There were deeper, more fundamental things going on that popped the bubble and collapsed the economy.

ORLY?

Why don't you 'splain to the class what were these marvelously nondescript "deeper, more fundamental things" that were going on?

 

[william the wie]

Second, the financial collapse was the result both of a pattern of deregulation and the evolution of new products that were unregulated. These two factors created the "shadow banking" phenomena which was the root cause of the crash.

A bit too innocent. Clinton's economic team deliberately sabotaged attempts to start outcry auctions for derivatives in order to line up golden parachutes for themselves. But these were not new products. CDSs are simply bond insurance and bond insurance goes back centuries as in the Bank of England in effect wrote CDSs for the crown in the late 1600s. What changed was volume and range of application.

I don't recall the B of E under William and Mary dealing with mezzanine tranches of CDO's.

Everything starts out small and as the word tranche testifies, the French development of mezzanine shares, got added into the mix later. But yeah the sell of bonds for less than 100 lb. ster. was common by the Napoleonic era, sometimes much less, and those mezzanine shares were guaranteed by BOE shareholders.

 

[william the wie]

You are fucking high.


Begging the question, non sequitur and post hoc ergo propter hoc all rolled into one....You hit the logical fallacy trifecta.

No, he's correct--the "housing bubble" wasn't a cause, it was an outcome. There were deeper, more fundamental things going on that popped the bubble and collapsed the economy.

ORLY?

Why don't you 'splain to the class what were these marvelously nondescript "deeper, more fundamental things" that were going on?

The banks were losing their asses selling products they didn't understand to people who understood the products less than they did for at least 40 years prior to the meltdown?

That the banksters didn't realize precisely how the London and Tokyo money markets operated vs. New York and neither they nor their regulators understood the New York market sufficiently either?

"F.I.A.S.C.O." is a great read if you have a cast iron stomach. (Fixed Income Asset Shooting Club at Morgan Stanley in the 1990s) It does shed a lot of light on how clueless the masters of the universe were and how regulators bent the law to generate extra profits.

 

[Oddball]

No, he's correct--the "housing bubble" wasn't a cause, it was an outcome. There were deeper, more fundamental things going on that popped the bubble and collapsed the economy.

ORLY?

Why don't you 'splain to the class what were these marvelously nondescript "deeper, more fundamental things" that were going on?

The banks were losing their asses selling products they didn't understand to people who understood the products less than they did for at least 40 years prior to the meltdown?

That the banksters didn't realize precisely how the London and Tokyo money markets operated vs. New York and neither they nor their regulators understood the New York market sufficiently either?

"F.I.A.S.C.O." is a great read if you have a cast iron stomach. (Fixed Income Asset Shooting Club at Morgan Stanley in the 1990s) It does shed a lot of light on how clueless the masters of the universe were and how regulators bent the law to generate extra profits.

None of that caused the buying frenzy in real estate.

 

[EdwardBaiamonte]

ORLY?

Why don't you 'splain to the class what were these marvelously nondescript "deeper, more fundamental things" that were going on?

The banks were losing their asses selling products they didn't understand to people who understood the products less than they did for at least 40 years prior to the meltdown?

That the banksters didn't realize precisely how the London and Tokyo money markets operated vs. New York and neither they nor their regulators understood the New York market sufficiently either?

"F.I.A.S.C.O." is a great read if you have a cast iron stomach. (Fixed Income Asset Shooting Club at Morgan Stanley in the 1990s) It does shed a lot of light on how clueless the masters of the universe were and how regulators bent the law to generate extra profits.

None of that caused the buying frenzy in real estate.

yes the frenzy would have been 100% impossible without the Fed printing the money to blow up the bubble and Fan/Fred buying and guaranteeing the mortgage bubble.

Liberals love to parrot Marx and blame the banksters as if business can make intelligent choices in an environment totally distorted by numerous liberal interventions and as if bankruptcies are not part of the creative destruction in capitalism.