WSJ - TARP: Billions in Loans in Doubt

[Norm0931]

Thank jesus Jame6.8. It's nice to finally see someone else who realizes that the Clinton "wonder years" were what caused the financial crisis. When you force banks to give home loans to people who can't afford it you are begging for trouble. It blows me away how all these people fail to see that things were so "great" under Clinton because he had the market dolling out loads and loads of credit.

 

[JGRuby]

It amazes me that just because they say you can borrow 500,000$ that you should - I fgured out what I could afford before I went looking for a house - not how much I could borrow against a house. A lot of people dont realize that things happen and if you are already stretched beyond your means just making rent that you are one incident from losing it. Things happen.

James Ruby

 

[Scott]

It amazes me that just because they say you can borrow 500,000$ that you should - I fgured out what I could afford before I went looking for a house - not how much I could borrow against a house. A lot of people dont realize that things happen and if you are already stretched beyond your means just making rent that you are one incident from losing it. Things happen.

James Ruby

Agree 100%........ Very good advice but completely ignored......



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[Burt Gummer]

In 1999, Clinton (as a puppet; all US Presidents in the last 60 years are puppets for corp/banking interests) allowed the repeal of the Glass-Steagall Act which allowed bankers to do what they do. The banksters now run it all and have the USA as their bubblegum.

 

[juandelaselva]

Without wanting to sound pessimistic, the current situation highlights that we are in an almost impossible situation. I think I can make several statements that are highly defensible individually, but seem contradictory. I do not know if there are people in power who appreciate this... that is, the need to find a mechanism going forward that balances these contradictions.

It is possible that our "collective multi-polar discussions" can lead to this outcome; it fact, it is possible or even likely that no individual can possibly understand the underlying complexity, and that a messy discussion will work much better in resolving things than can any individual wisdom. But, we could easily mess things up in quite a grand way.

To be a little more specific, here are some statements that I believe are certainly true, but appear contradictory:

(1) If Bernanke and Paulson had not acted aggressively in late 2008, the global banking system would have collapsed, and life would have become chaotic and worse for virtually all of us.

(2) It is dangerous for Congress to cede such extraordinary powers to the Fed.

(3) The type of liquidity crisis that emerged in the international payment system could not have been resolved through a public, democratic, dialog.

(4) The Fed action did (a) concentrate power, thereby setting us up for a potentially bigger crisis in the future, and (b) financially reward people and institutions who have utterly failed.

The list of such statements could go on and on.

Here is the crux of the matter, stated in a somewhat mathematical way: in order to prevent the collapse of the international financial system, aggressive top-down action was required in late 2008; however, such a system cannot in the long run be managed in a top-down manner. We need to find a way to decentralize management of the system, "atomize" its parts, enhance communication among the parts, but assure that this communication does not lead to undue correlation. (i.e., herd behavior).

This is arguably the collective message of the disparate voices in the article by Bloomberg last November . There are a growing number of people around the world who appreciate this, but implementation will require that existing governments (US in particular) and existing organizations (eg. IMF) cede power (not likely, based on a keen understanding of human nature); since institutions tend to want to increase power rather than cede it, and because global political dynamics are so complex, it is hard to visualize how this happens without being preceded by a crisis.

Thoughts?

 

[timac]

To hear today's Democrats, you'd think all this started in the last couple years. But the crisis began much earlier. The Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas.
Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans.

Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies.
Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was.

In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.

Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.
That's how the contagion began.

 

[JGRuby]

Obama didn't. But neither did GW.
Actually, this mess started under Clinton. The first Credit Default Swap was made by JPMorgan/Chase in the '90s.

Terri Duhon | Oral Histories | FRONTLINE | PBS

Then when Glass-Steagall was repealed, it changed the industry, and Clinton did nothing to monitor, much less regulate the expansion. The result was the trading of CDOs and CDSs exploded without monitoring or regulation.

The expansion of the subprime mortgage market in 1995, the driver of the sale of CDSs, and Credit Default Obligations took place under Clinton when he, and B. frank, and C. Dodd insisted that fannie and freddie buy a much higher percentage of subprime.
Then when the financial markets expanded/changed, Clinton did NOTHING to expand the SEC, Commerce Dept., or The Treasury Dept.
Therefore he built no infrastructure with the personnel, and/or budgets, to monitor the expanded activities of the banks and insurance agencies covering loans.

Then, with the help of Schumer and Dodd, tied the whole mess into the expanded CRA.
Community Reinvestment Act - Wikipedia, the free encyclopedia


Clinton's appointment of Franklin Raines at FannieMae added to the problem, as Raines was lying through his teeth every time he testified before Congress, and Barney Frank carried Raines' water with the financial committee EVERY SINGLE TIME.
Even when Armando Falcon, Clinton and Bush's watchdog, was telling Congress that Fannie and Freddie were putting the entire financial system at risk.
The Whistleblower They Ignored | The Nation


From what I am reading here, you are the only one doing that JG.

That may be all true but the bill has GW's name on it as he is teh president that signed it. So how is that my own history - what other president has thier name on it. On top of that he had almost eight years to fix it before it got as bad as it did - so if nothing else old GW was complacent and not doing his job.

James Ruby

 

[Cougfan2]

I love it when people try to pass off a political thread unrelated to firearms or 2A rights by posting it in another forum.

Thread closed.