Unsurprisingly, deregulation is not to blame.
First, here are Charles Calomiris, professor of finance and economics at Columbia Business School and a scholar at the American Enterprise Institute, and Paul Wallison, a senior fellow at the American Enterprise Institute, and general counsel of the Treasury Department in the Reagan administration, writing in the the WSJ. From “Blame Fannie Mae and Congress For the Credit Mess”:
the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) — and their sponsors in Washington — are largely to blame for our current mess.
How did we get here? Let’s review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of “affordable housing.” They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse.
It is important to understand that, as GSEs, Fannie and Freddie were viewed in the capital markets as government-backed buyers (a belief that has now been reduced to fact). Thus they were able to borrow as much as they wanted for the purpose of buying mortgages and mortgage-backed securities. Their buying patterns and interests were followed closely in the markets. If Fannie and Freddie wanted subprime or Alt-A loans, the mortgage markets would produce them. By late 2004, Fannie and Freddie very much wanted subprime and Alt-A loans. Their accounting had just been revealed as fraudulent, and they were under pressure from Congress to demonstrate that they deserved their considerable privileges. Among other problems, economists at the Federal Reserve and Congressional Budget Office had begun to study them in detail, and found that — despite their subsidized borrowing rates — they did not significantly reduce mortgage interest rates. In the wake of Freddie’s 2003 accounting scandal, Fed Chairman Alan Greenspan became a powerful opponent, and began to call for stricter regulation of the GSEs and limitations on the growth of their highly profitable, but risky, retained portfolios.
(aside: Sdferr quoted that relevant bit here yesterday)
If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing? The answer was their affordable-housing mission. So it was that, beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to grow. Subprime and Alt-A originations in the U.S. rose from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period the quality of subprime loans also declined, going from fixed rate, long-term amortizing loans to loans with low down payments and low (but adjustable) initial rates, indicating that originators were scraping the bottom of the barrel to find product for buyers like the GSEs.
The strategy of presenting themselves to Congress as the champions of affordable housing appears to have worked. Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the “arrangement” with the GSEs at a committee hearing on GSE reform in 2003: “Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing.” The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure.
In light of the collapse of Fannie and Freddie, both John McCain and Barack Obama now criticize the risk-tolerant regulatory regime that produced the current crisis. But Sen. McCain’s criticisms are at least credible, since he has been pointing to systemic risks in the mortgage market and trying to do something about them for years. In contrast, Sen. Obama’s conversion as a financial reformer marks a reversal from his actions in previous years, when he did nothing to disturb the status quo. The first head of Mr. Obama’s vice-presidential search committee, Jim Johnson, a former chairman of Fannie Mae, was the one who announced Fannie’s original affordable-housing program in 1991 — just as Congress was taking up the first GSE regulatory legislation.
In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.
Now the Democrats are blaming the financial crisis on “deregulation.” This is a canard. There has indeed been deregulation in our economy — in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few — and this has produced much innovation and lower consumer prices. But the primary “deregulation” in the financial world in the last 30 years permitted banks to diversify their risks geographically and across different products, which is one of the things that has kept banks relatively stable in this storm.
As a result, U.S. commercial banks have been able to attract more than $100 billion of new capital in the past year to replace most of their subprime-related write-downs. Deregulation of branching restrictions and limitations on bank product offerings also made possible bank acquisition of Bear Stearns and Merrill Lynch, saving billions in likely resolution costs for taxpayers.
If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.
[my emphasis]
And here’s Betsy Newmark:
My husband has a link-filled tutorial for his MBA students to help them understand how we got into this mess and why it’s not a failure of the free market, but of government interference in the market. […] And no, it isn’t all the fault of Phil Gramm. As the National Review reminds those mystified by the Democrats’ demagoguery, the Gramm-Leach-Bliley bill is not the cause of today’s problems, but actually has helped the more diversified banks to weather this crisis and help bail out some of the institutions that have been melting down.
The Gramm-Leach-Bliley Act of 1999 passed the Senate with 90 votes (8 against, 1 absence: John McCain, who supported the legislation) and was signed into law by Bill Clinton. It had little to do with the issues at play in the current crisis: lending standards and the amount of debt banks can take on relative to their equity. The upshot of the Gramm legislation is that it allows financial services companies to diversify their lines of business: Commercial banks can engage in investment banking, banks can offer brokerage services, and you can have an IRA at the same place you have your checking account.
What we have here is a case of what economist Paul H. Rubin calls “folk economics† value-laden myths that do not reflect financial realities.
It is not at all clear what, if anything, Gramm’s legislation has to do with the current difficulties in the market, other than the fact that Democrats instinctively recoil when they hear the word “deregulation.â€Â
Gramm-Leach-Bliley did not create securitization and collateralized debt obligations. It did not change the rules for banks’ leverage ratios. If anything, Gramm-Leach-Bliley mitigated some risks by allowing financial companies to diversify their businesses, and it is the most diversified firms that are best weathering the storm. Which makes sense: An investment portfolio is more stable the more diversified it is. The firms that have spectacularly imploded have mostly been non-diversified commercial banks, like Countrywide, or pure investment banks, like Lehman Brothers. But the broadly diversified megabanks are enduring  taking a hit from housing, sure, but they have other lines of business to sustain them. And we should not forget: Without the Gramm-Leach-Bliley reforms, Bank of America would have been legally forbidden to take over Merrill Lynch  very possibly leaving taxpayers on the hook for that one, too. Morgan would not have been able to buy Bear Stearns without Gramm’s reforms.
[…]
Just as with the surge in Iraq, McCain has a strong argument that he was the one, not Obama or the Democrats, who was on the forefront of seeing what the problem was and pushing for a way out. And it was the Democrats who were blocking a sensible reform that would have reduced the mess we’re in today.
This is true, and as Betsy and others (including many commenters here) have pointed out, McCain should be be hitting these points.
That he is not as of yet leads one to a couple of potential conclusions: 1) the McCain campaign wants to keep away from finger pointing for now until a plan is in place, approved by Congress, to keep the entire system from failing — at which point he can then go on the offensive against systemic corruption (for all his populist talk, which may be pandering to the low information voter as way to keep up with emerging Democrat mythology and take some bite out of it, it is important to remember that Phil Gramm is McCain’s go-to advisor — and he is most certainly not fooled by what happened here); or 2) McCain is so caught up in his Maverick, reaching-across-the-aisle self-image that he is willing to brush aside systemic corruption in order to proceed from a place of bipartisan collegiality — all so he can sustain his own personal mythology as a non-partisan uniter.
The first tack makes sense, provided a resolution can be reached. The second makes little sense, and will do nothing to dispel the media spin already beginning to cocoon Congressional Democrats. In fact, if anything, such a tack, taken in the long term, will strengthen the Democrats claims of a Republican failure — when we know the opposite to be true.
I noted the other day that a party whose standard bearer has shown a willingness to actually delay troop withdraws so that he can take credit for speeding them up, might be willing to watch the financial crisis reach meltdown stage if they believe they can pin the blame on Republicans and gain power.
Power, after all, is the end game — and many Dems, it seems, may be willing to let the system implode with the hope that they’ll have free reign to rebuild the system anew from amid the rubble. A socialist’s wet dream, really, and one that is beginning to blot the sheets of an increasing number of liberal Dems who, as they look around, see that the press is willing to perpetuate their fables about deregulation and “corporate corruption” — without bothering to acknowledge that congressional corruption, the vast majority of it tied to Democrats, along with politically-charged social engineering policies that created fundamental changes in the way credit was allocated, is what lies at the heart of the current mess, and that, even further, the Democrats blocked reforms that may have prevented the meltdown.
(h/t Terry H and Jules Crittenden)
****
update: As much of the mainstream press gears up to lay this crisis on the doorstep of McCain(!) — one of the people who actually publicly warned about the eventuality we’re now seeing tear at the heart of our economy — while shielding the Democrats who have demonstrably benefited (Dodd and Obama chief among them), FOXNews airs its version of the story.
I have a real problem with the idea of SecTreas being totally unaccountable for his decisions on who to bail out. Transparency is direly needed.
I think most of what McCain has done so far falls under the heading of creating daylight between him and Bush mostly. George Will can pee all over himself at the darnedest things. I have a friend who has a cat like that.
mojo, one reason SecTreas wanted and needs that clause is so we don’t have outfits like ACORN tying up the whole thing in the courts until nothing gets done in time.
Remember the critical levees that didn’t get built around NO because the Sierra Club got a court injunction?
The Left will never let the truth get in the way of Teh Narrative.
I would go with No. 2, but Obama is already out there saying “McCain is blaming me for this!” and I have no idea what he’s talking about. Has anyone asked him?
It’s been awhile since I’ve read something this wholly stupid.
Innovative airlines? Since when is bankruptcy and shit customer service innovative?
Securities industry? Lay-offs and bail-outs are innovative?
Trucking? Mexican trucks, Si Senor!
Long-distance rates, as in the last three shitty Bell companies? More massive layoffs and copper wire mentality!
Deregulation made the takeover of Bear Stearns possible? No Sir! We tax-payers’ $30-billion dollars made that possible.
Douchenozzle mania is running wild on Absurd Ave.!!!
If anyone knows douchenozzle mania, it is thor.
I had a thought about this whole mess the other day — about the appropriate response to those politicians who got us all into this mess.
Sadly, short of evidence that they took actual bribes, I don’t think there’s a whole hell of a lot we should do. The absolute worst thing we could do is try to turn the policies they pushed into retroactive crimes.
Now, opposing them, making them fight for their offices? That’s all to the good. It’s unlikely to happen, though, because — regardless of party — those involved tend to be in safe seats.
I think maybe shit-for-brains doesn’t enjoy the low-cost shipping, flying, and long-distance services that the rest of us have enjoyed over the past decade or so. This may go a long way towards explaining why he seems so angry in general.
The federal gov’t should not be in the housing biz.
See not being a weepy spilt milk person myself I mostly just think that whoever has the better plan to keep the economy growing going forward is my amigo. A growing economy is the only solution for dealing with this sort of thing. So we need to drill our own energies and we need to keep the tax burden low and we need to make America a happy place to work and invest. Baracky hates drilling and he wants everyone to not climb the corporate ladder and change lightbulbs instead and he wants to raise taxes and start a war against carbon dioxide and something about having lots of lawsuits so womens get paid more cause of their boobies and also socialize healthcare and raise payroll taxes and end global poverty. McCain is much more sensible and not as angry.
Tell me where I missed the purpose of these corporations… because I thought they were supposed to provide low and competitively priced services so as to build and protect their market shares.
Duuuuuh!
My long distance has gotten so cheap that the phone company I use doesn’t even bother to charge me by the minute for it anymore. I can get stuff shipped from Amazon so cheaply that it doesn’t pay to get in my car and buy it locally. Deregulation did that. I can fly to London more cheaply today than I could in 1981, the first time I went…and those were big, fat 1981 dollars, too.
If you want to pay more for that stuff, Thor, have at it.
The federal gov’t should not be in the housing biz.
But it worked out so well before.
See Southwest and Jet Blue and perhaps NetJets.
Subprime mortgages sure were. Ask Penny Pritzker. I believe you can find her at O! campaign headquarters.
I thought you were a post racial fellow, except for when you’re slinging slurs at people. Do you mean to say spic truckers, thor?
Only morons are still paying for long distance by the call. Meanwhile, the biggest of the Baby Bells, Verizon, has put $10 billion into fiber to the curb, currently marketed as FIOS. I know because I’ve taken home my share of that loot. Copper wire mentality my ass. They’ve set the new standard.
My eggrolls what I like are on sale for two packages for $7.
SDN: I understand the reason, but I still don’t like it. Non-transparency is the big reason this shit went down – Frankie Raines’ cute little bag of accounting tricks wouldn’t have flown if he’d had anybody paying attention to something besides how big their cut was.
And Jamie Gorelick? I mean, WTF? How does a notorious Clinton-admin lawyer for DOJ somehow become qualified to be on the FM/FM board? Did Hilly and Billy park her in a nice little sinecure where she could wet her beak while she waited for the next Clinton administration? Oh, boy, there was a great idea, huh?
Barney Frank? KLINK! Every-fucking-body else who covered up and profited from the looting? KLINK!
Yeah, I’m a little steamed. Can you tell?
Thor is wasting his time here. He should be a business prof at Columbia, or a treasury dept general counsel. Celine and some real estate investments w/ trust fund money have made him like a financial whiz.
oh hey.
Jeez. You wait and see… when teh NPR reports this Baracky is sure gonna have an awkward time esplaining hisself. Baracky remained silent. Damn.
My eggrolls what I like are on sale for two packages for $7.
O! will surely address the woeful state of eggroll deregulation once safe in the White House. Help is on the way, Hap.
Verizon ain’t the biggest, doh-doh. And yes, without Verizon, who Wall Street shit all over when they announced their investment in fiber FIOS rollout, ATT and Comcast (as ISP) would still be soaking in annual price increases without one iota of investment in improved service.
Too bad Verizon isn’t emblematic of de-regulation and industry wide innovation, but, rather, the shining exception to the typical profit margin piggies.
Which reminds me, how’s Bernie Ebbers doing?
oh. They say two packages for $7 but you can just get one for 3.50 if you want. That twofer thing is just trickery.
I haven’t paid for long distance in years. I have not had a land line in years. If my cell service gets much cheaper, they will be paying me to use it.
It’s too bad that this affordable housing push didn’t really make houses affordable. Instead it drove the price of houses through the roof and made lousy mortgages easy to get. If you get a house you can’t pay for with a mortgage you can’t service, that isn’t affordable. That’s just a stupid way to rent while destroying your credit.
like you wouldn’t eat two.
Verizon ain’t the biggest, doh-doh. And yes, without Verizon, who Wall Street shit all over when they announced their investment in fiber FIOS rollout, ATT and Comcast (as ISP) would still be soaking in annual price increases without one iota of investment in improved service.
Fucking Verizon, getting in the way of Thor’s narrative. Bastids.
At this point I’d have to pick #2; how come McCain the Politican gave up so easily in 2005 when he had the chance to Reform the Freddie-Fannie mortage industry. Sen. Reach Across the Aisle knew it was a dire situation yet he could not get one of his dear friends across the aisle to come up with a vitally important bi-partisan plan to address the problem.
To make matters worse McCain the Politician is attemtping to place blame on Bush and Cox and Wallstreet, of course Obama because he is the opponent…he blames everyone else except his dear friends in Congress who created and encouraged this mess.
I’m still voting for McCain, the other candidate is out of the question however I don’t believe McCain will Reform his dear friends in his corrupt Congress. He had the chance and blew it off. And Gov Palin, whom I do believe is a reformer, unfortunately won’t have any power as VP.
I guess I could believe McCain would reform had he actually reformed COngress however all he is talking about is reforming Wallstreet; I cannot help but consider McCain the Politican is a wanker. One thing going for McCain the Politician is that his opponent is a bigger wanker.
The trick is to always include a couple of half-truths in your litany of falsehoods. Then you can tie everyone down on niggling details, while ignoring the point of the thread.
I learned the fundamentals from reading Jeff. I learned the practical aspects from his trolls. I offer my thanks to all.
thor is just a raw broccoli fart. Open a window and pay no mind.
I know. These are the best eggrolls ever. I make myself have them just twice a week. No more. Unless I get hungry.
Tell me where I missed the purpose of these corporations… because I thought they were supposed to provide low and competitively priced services so as to build and protect their market shares.
Yup – you do miss the purpose. Badly.
The purpose of all corporations in a market economy is to maximize profit. Nothing more nothing less. Market share, competitiveness, pricing, etc are dependent on this core principle, not the other way around.
Now apply this to your examples of deregulation and you will see why you are blinded to those that have suceeded.
You’re welcome, squid.
By the way, the Republican party is a big Sak’s 5th Ave. tote bag of diseased corpuscles, mashed bone meal, Jesus jackals, toad farts and blood warts.
The telephone companies we speak of can’t maximize profits, they’re public utilities, you dumb dick.
…the Republican party is a big Sak’s 5th Ave. tote bag of diseased corpuscles, mashed bone meal, Jesus jackals, toad farts and blood warts.
You Wall Street experts need to ease up on the technical jargon, some of us cudlips have a hard time keeping up.
AT&T, Comcast, and Verizon are all publicly traded.
Happyfeet, are they frozen eggrolls? I’m interested in specific details.
I’d much rather talk about eggrolls than this giant mess, which makes me want to cover the windows and crawl into bed with the blanket over my head and my 401k statement as far from me as possible.
Local telco competition, which unless I’m mistaken is pretty widespread these days, eliminates any “public utility” aspect that might still be deemed applicable to publicly traded corporations.
Thor.
AT&T, Verizon, Comcast are not public utilities. They do come under the purview of state PUCs for services offered within those jurisdictions. Typically for local telephony services. For inter-state services they come under the jusridiction of the FCC, but the FCC does not set rates or cap profitability for wireless, data or other broadband services as is the case for a typical public utility.
I would rather be the dumb dick than the anus.
As for the airlines, someone has already pointed out the existence of low cost carriers who wouldn’t have been here if it wasn’t for deregulation.
Financial services. I do love trading stocks online for $7.99 at the numerous discount stock and commodity brokerages or even at a Kiosk at my bank. Beats picking up the phone and calling my dipshit stock broker at Merril or AG Edwards or Prudential like I used to. Not to mention all those bucket shop cold calls at dinner time that went away.
I like that UPS and Fed Ex can get a package from here to Timbuktu in 48 hrs.
I like that I can buy my power supply from 25 different providers in Texas, by simply clicking a mouse.
I like getting highspeed internet and broadband for less than $15/month.
I like getting wifi at my coffee shop or hotel lobby.
I like the fact that my garbage company takes away recycling and does a once a quarter hazmat disposal for my community. The last one we had? Fired by the water district and contract put out to bid.
As a consumer, I like competition.
Competition isn’t deregulation, B-school flunkie.
@ #40: And if that statement had anything to do with the issue, I’d still ignore it.
So neither telephone companies nor electric companies can maximize profits?
thor: “Competition isn’t deregulation, B-school flunkie.”
But deregulation usually leads to competition…
See? The mashed bone meal is the half-truth.
Rob Crawford: “So neither telephone companies nor electric companies can maximize profits?”
The honest answer is that it will come down to cases and how you define the entities above. Depending on where you are, the entity you know as “the electric company” maybe a generator and distributor of electricity, or simply a middleman, buying energy from producers either under long-term contract or on the spot-market.
sure md – these are my eggrolls. I get the chicken and the pork. Best eggrolls ever – just bake them like 10-15 min longer than it says so they are happy and crispy and have a nice color. Also they give you a little sauce and I take that and add brown mustard and a little other sweet and sour sauce. Sauce is key.
So. Threadjacked again, I see. Carry on.
Competition isn’t deregulation, B-school flunkie
But an anus is still an anus. Awww sucks for you.
Big companies have always loved regulation. Why…? Because the big boys have the $$ to influence our congresscritters and get them to regulate the game their way. This leads to LESS competition Mr. Thor.
So…folks have finally figured out that the Keynesian experiment is an abject failure, right?
Well… I mean everyone but those corrupt bastards in D.C.
We’re all Keynesians now. So bend over.
Don’t you have some small chipmunks to fry or something, thor?
how come McCain the Politican gave up so easily in 2005 when he had the chance to Reform the Freddie-Fannie mortage industry.
And why did Bush give up in 2003? Why didn’t they beat the drums hard, loud, 24/7. Why didn’t they occupy the capitol like they did for the drill thing, only this time for real?
That’s what I want to know. I confess that I don’t pay close attention to financial stuff, but they should have beat the drums loud enough for the disinterested like me to notice.
Most telecommunications are regulated through the FCC. State Utility Boards are limited with interstate commerce. Gas, water, and electricity are regulated at the state level for a lot of things, and the rate of return on equity, is set by the orders of those state utility commissions.
See NARUC. http://www.naruc.org/
However, none of that goes to the financial services mess, which seems to be the problem of the overseers (Congress) battening onto the two quasi-private entities and bleeding them to profit themselves, friends, and family; and manipulating them to provide various constituent groups with favors. Old-fashioned graft and corruption at work, the pile of money wastoo big to ignore.
Remindsme of something Bill Mauldin wrote* about soldiers in Italy who were short of cold weather clothing. There was enough to go to the frontline units, but the rear area troops pilfered too much; the pile was so big, you see, that no one thought that taking a jacket or a pair of boots would cause any harm. Multiply that by too many people thinking that way and you got a big problem in short order.
*Up Front, I think.
So last night I switch on “Coast-to-Coast AM,” and within five minutes I hear one guy ranting that corporations had just taken over the government, and then another guy asserting that we were witnessing a socialist takeover of the economy by the government.
And then a woman calls in and states in no uncertain terms that it was the desire to provide “affordable housing” to the underprivileged what wrought this. George Noory cut her off (corrected her) as if she were some psychopathic liar. Which, when you take into account that C2C is a platform for whackos and nutcases, makes you wonder why Noory would suddenly get all scrupulous about “the facts.”
Of course, his show’s mission is to promote the contrafactual over the interesting, so…
Vernon Smith’sVernon Smith’s (Nobel Prize recipient) take on the Clinton Housing Bubble, WSJ, December 18, 2007. Snagged from CafeHayek’s Russ Roberts, who also has an interesting take on the current market seizure.
This current financial crisis is lame so far. If we’re gonna do this we should do it right to where it’s all definitional of our generation that we lived through this and all. Otherwise it’s just news. I’m so over news.
WASHINGTON (AP) – Federal Reserve Chairman Ben Bernanke bluntly warned reluctant lawmakers Tuesday they risk a recession with higher unemployment and increased home foreclosures unless they act on the Bush administration’s $700 billion plan to bail out the financial industry
We have a Fed Reserve full of whiners!
Let me get this straight: a few days ago the world was coming to an end, the stock market was down big two days in a row before it rebounded, then we were told we are facing the greatest meltdown since the Great Depression, now, today, we’re risking a recession?
These guys are total fuckin’ clowns.
Federal Resarve Chairman Zechariah Bernanke bluntly warned reluckant lawmakers Tuesday they risk a recesshun wif higher unemployment an’ increased home fo’eclosures unless they ack on th’ Bush administrashun’s $700 billion plan t’bail out th’ financial indestry We haf a Fed Resarve full of whiners! Let me git this hyar straight: a few days ago th’ wo’ld was a-comin’ t’an ind, th’ stock market was down trimenjus two days in a row befo’e it reboun’ed, then we were told we is facin’ th’ greatess meltdown on account o’ th’ Great Depresshun, now, today, we’re rihideg a recesshun? These guys is total fuckin’ clowns.
That’s right, whore. You’re doing good.
Is your real name Sarah? Last name Palin, by chance? You have the same accent.
Thet’s right, who’e. Yo’’re doin’ fine. Is yer real name Sareeh? Last name Palin, by chance? Yo’ haf th’ same accent.
Only in Washington, could GSEs like Fannie and Freddie not only suffer mismanagement but basically not fulfill their intended purpose; that job being driving down mortgage rates for ordinary folks. After receiving a slap on the wrist and a wink and a nod from their congressional patrons, they increased the percentages of sub-prime-slime being purchased-all so those same patrons could demagogue the GSE’s provision of low cost housing to Americans; and by the way, based on the campaign contributions of the GSEs who was who’s patron! Through their ardor to purchase this paper, and ultimately push their portfolio’s exposure towards the 50% level of exposure to this financial miasma, they inadvertently created a demand for a product that the markets, left to their own devices, would NEVER choose to supply.
Now the same scalawags who have supported the GSEs over the years, benefited from their contributory largesse, and blocked previous attempts to either regulate or scale back the operation of these corporations are shocked, Shocked! that there were no safeguards in place to prevent this; how typically and predictably hypocritical of the legislators, mostly Democrats, to obfuscate their culpability by trumpeting their Outrage!
And the kicker to this all is that they are going to hold the bailout bill, already an over-archingly socialist-but unfortunately necessary-measure, hostage to a series of demands that would make any old school socialist smile.
I’ll admit that Mav has some conditions of his own that he wants to see reflected in the bailout bill, such as executive compensation limits; that’s one I am fundamentally opposed to. But Obama and his congressional allies, the ones that are mostly responsible for this dilemma, have a laundry list of demands; and as always, they proclaim that any of these are deal breakers! Among the demands: They want to change the nature of contract law by giving bankruptcy judges the ability to arbitrarily change the terms of mortgages for people facing foreclosure. Not only would this forever change our contract law, it would actually work counter to the intent of the whole bailout. Instead of freeing up credit for use by ordinary Americans, banks would necessarily be more careful about loans and have much more dear preconditions; skin in the game-so to speak-making it sooooo much harder to default without suffering a personal loss.
In the end, Congress is clueless. The hard core Republicans want to do nothing and let the chip fall where they may. The Democrats, as usual, want to turn a trying national episode into a political opportunity and load up the necessary bailout measure with a far left wish list of measures that they’ve been unable to pass legitimately. I believe that the best measure is to simply suck it up, pony up the necessary cash, and have an oversight board such as the one Mav suggested; staffed by Democrats, Republicans, and independents…
We’ll get through this crisis as we always have, but we have the usual choices; the easy way or the hard way. I’m not so sure the left doesn’t want the hard way, as a crisis they can use as a pretext to advance their political ideals…
Socialist but necessary. I love it, you ignorant fuck. We are not only subprime, we all all insolvent now. Happy, Rethugs?
Let me get this straight: a few days ago the world was coming to an end, the stock market was down big two days in a row before it rebounded, then we were told we are facing the greatest meltdown since the Great Depression, now, today, we’re risking a recession?
These guys are total fuckin’ clowns.
Shut up and fuck that chicken.
I’ll bet whomever that’s addressed to would have a better idea of what he’d said to offend you, if you’d name names.
Cynn: “Socialist but necessary. I love it, you ignorant fuck. We are not only subprime, we all all insolvent now. Happy, Rethugs?”
What’s this “we” business, princess?
Joys of careful planning, asset allocation and a good credit union.
All I have to worry about it the currency tanking – and if that happens, the rest of the world is along for the sleigh-ride anyway.
http://www.huffingtonpost.com/
Hoho.
http://www.talkingpointsmemo.com/images/2008-09-22_hoa_davis.jpg
Thread kill warning!!!! Do not click this link! You will not like what you see, might even cry!
Thread kill warnin’! Fry mah hide!! Fry mah hide!! Fry mah hide!! Fry mah hide! Do not click this hyar link! Fry mah hide! Yo’ will not like whut yo’ see, might even cry! Fry mah hide!
Wat da hale, I wach’n me Fox’n Freyns an stick’n mah hot gal Sayrah wif dah good’n morn’n skunk rod and dat thor alrelly jaw’n!
[…] The media push to drive all of the responsibility for the sub-prime mess onto the shoulders of the Republicans seems for the moment to be working. Sen. Sherrod Brown was on NPR yesterday stating that the crisis was created by greedy Wall Street bankers and Republicans who deregulated the finance industry. His depiction was too much even for Terry Gross, who stated, “Spoken like a loyal Democrat.” To which Brown answered, with a certain lack of vocal conviction, “Well, it’s true.” After claiming that the Bush administration had never tried to do anything about the situation. […]
Silly rabbit. You can’t troll a troll.
If our understanding of the ongoing financial market meltdown is to be reduced to fondling “media narratives” of whatever stripe, no matter what political bias from which they may originate, we have then summarily given up any claim to the pursuit of the truth of the matter. So much the worse for us then in our attempts to evaluate the tentative decisions of our government and any subsequent efforts we may wish to make to influence them (presumably in what we will conceive as our interests). Bugger all, we may as well say. We just don’t care enough to want to know. We are content to play in the dilatory high school meme-space of idiotic and obviously ignorant journalists.
[…] I noted in an update last evening would be the case, the media today is pushing the story that the firm owned by […]
Just for the record, here is Sen. Chris Dodd’s version of the illiquid asset buyup program.
Well are we all “giddy” now that thanks to Carter.. Clinton.. Barney.. Chris Dud.. Maxine Waters.. Schmuckie Schumer and the Loon Left Fringe we the Majority of Tax payers got FUCKED in order to cover theor Sorry asses and the ones who had no business giving nor getting those LOANS/// \ Big Nannt Fascism is HEWRE!!!
SDN – the Sierra Club had nothing to do with the Army Corp of Engineers not building the levees to the standards set in the plans. The sierra Club got involved (postK)when they started cutting down trees to extend the levees and some of those trees were well outside of the work being performed. Unnecessary work especially since the firm was paid based on the trees removed. So you were getting screwed as a taxpayer. Think. Plus we needed our levees fixed not more waste.
[…] Yet more attempts to explain the current financial crisis [UPDATED] […]
Barack Obama’s little shop of economic horrors
Barack Obama named Clinton’s Treasury Secretary Larry Summers as his top economic adviser at the White House as head of the National Economic Council.
Larry Summers is one of the people most responsible for the failure of the banking system. He was a strong advocate of scrapping Glass-Steagall. He did this under the encouragement of Former President Bill Clinton who received large contributions from Wall Street. Repeal of this regulatory act led to the repeal of more banking regulations and the spiral into the crisis we are now in. He has named a flaming liberal, Melody Barnes, as director of the White House Domestic Policy Council. These people will be working closely with Barney Frank, Maxine Waters and other Congressional democrats who are culpable in the economic crisis we face today. This is very much like putting the inmates in charge of the asylum.