Financial Reform???

[BIG C]

Okay, I know there are some of you down there in the Second Sin City that are way smarter than me, so I'm asking someone with the smarts to explain to me (that's explain and not diss) this fucking bank bailout shit.....I'm just not seeing how giving these fuckups (i.e., the bank presidents who didn't handle it in the first place) a whole lot of money, and increasing the interest rates on lending is going to help people like you and me get out of this bind we're in.....Ummmmm, am I missing something???

[tkdbf]

I'm looking for the same answer BIG C. I fail to see any logic in it myself. Heck I don't see any logic in anything the current admin is doing.

[MrGiz]

I'm stealing the quote below from "WTF" , which he recently posted in the national "Diamonds & Tuxedos" Forum. It's crude....but one cannot argue with the wisdom....

Originally posted by WTF: ....
Fuc the poor if they can not afford a home. And fuc the rich if they have loaned money to the poor that could not afford a home.

Bailing out either was idiotic....

Perty Simple logic there!

Giz

[BIG C]

Well, I didn't see WTF's post, but from what I'm seeing here (and someone correct me if I'm in error), but the only ones that are getting fucked in all of this is us poor saps from the middle class.....The gov't has always set aside programs for the poor (and this administration is no different than any others in that aspect), and they've always given money to the extremely wealthy (like they're proposing to do with this current bank bailout).....I guess I just keep hoping that one day someone will wake up and see that this hasn't worked in the almost 236 years of our history so maybe it's time they try bailing out the middle class (you know, us hardworking pukes who try to do things the right way) and see how that works for awhile.....Lending institutions had the money and fucked it up and now I just don't agree with throwing more money on them will help resolve the situation.....Send me the goddamn $10m and I can help stimulate the economy and help domestic spending a lot better than the ones who are supposed to be doing it now.....At the very least I couldn't fuck it up any more than they have done.....

[tkdbf]

Originally Posted by MrGiz

I'm stealing the quote below from "WTF" , which he recently posted in the national "Diamonds & Tuxedos" Forum. It's crude....but one cannot argue with the wisdom....



Perty Simple logic there!

Giz

LOL! Can't argue with that logic. I'm not the poor man lending money I can't afford to pay back nor am I the banker poorly lending money to people that I shouldn't be. I'm the young man that busted his ass through college and continues to do so on the job so that I can provide a very good living for me and mine. For as far back as I can remember I was always taught that working hard to provide for yourself WITHIN your means is the correct way to live. It seems the idea that someone else should pick up your slack because you're too much of a lazy ass not willing to work hard for yourself has grown out of control. And now elected "officials" on both sides use that very mentality to gain more power over US. For the generations that already have the "lazy man" syndrome there is no hope, it is up to us as Americans to instill the need and desire to work hard and achieve something in life into future generations. It is our responsilibilty so that one day America will be again a great country of hard workers looking to better oneself rather than a country of lazy asses looking of a hand out.

[MrGiz]

TKDBF.... you underscore my mantra of the missing four (4) words in the Good Ole U.S.A. these days, which helped make it one of the most achieving societies of all time....

Person Responsibility & Self Reliance !!

Until... or unless the the population can re-establish those two simple qualities.... the Good Ole U.S.A. is done.... finished.... over!!

Giz

[tkdbf]

Thanks Giz. I just fear there are too few that see what this country really needs to move in the correct direction. I have an extreme respect for the generation that lived through the WWII era. They showed what it really means to be an American.

BTW, sorry BIG C I know I took your post a bit off topic. Hopefully someone can give us some insite on how the hell the bailout is really going to help anything get better.

[dilbert firestorm]

thank Bismarck for starting this bullshit 100 years ago.

[I B Hankering]

Let me begin by stating that I do not believe in Laissez Fare capitalism, and that I believe financial reform is an on going process: a tinker with but not overhaul philosophy.

In his Wealth of Nations, Adam Smith stated that it is the government’s responsibility to insure that every capitalist venture be allowed to compete equally in a free market system. As such, the government is always involved. Adam Smith would look at the banking system in the U.S. today (or its health insurance industry) and would liken it to a government supported monopoly. Banks too large to fail are too large, but Congress allowed—even encouraged—this imbalance.

Between 1813 and 1914, there were some 13 financial panics. Each financial crisis has had at its source a varied set of contributing factors. The Fed was created, 1913, to deal with the financial factors viewed as contributing to these panics. Likewise, the SEC was created in 1934 to deal with factors believed to have contributed to the stock market crash of 1929: notably, requiring investors to front at least 80% for a margin buy rather than the previously accepted 10%. Another important Depression Era innovation was the Glass Steagall Act of 1933 which forced banks to separate their investment businesses from their more traditional banking businesses, e.g., securing deposits and providing home and business loans, etc.

Latter, new regulations were created to deal with the Savings and Loan fiasco occurring in the 1980s and to deal with ruinous, leveraged buyouts initiated by Ivan Boesky and ‘Junk Bond King’ Michael Milken also during the ‘80s.

While many, e.g., including the POTUS, are currently declaiming financial institutions for our current economic crisis, Congress also played a role. And I keep thinking . . . wasn’t he a Senator?

“The Community Reinvestment Act of 1977, passed during the Carter administration, followed similar laws passed to reduce discrimination in the credit and housing markets including the Fair Housing Act of 1968, the Equal Credit Opportunity Act of 1974 and the Home Mortgage Disclosure Act of 1975 (HMDA). The Fair Housing Act and the Equal Credit Opportunity Act prohibit discrimination on the basis of race, sex, or other personal characteristics.

“Although minor amendments were made directly to the Community Reinvestment Act concerning the consideration of minority and female owned institutions & partnerships during evaluations first established in 1991, other portions of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 indirectly affected the CRA practices at the time in requiring Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing.[4]

“In October 2000, to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of ‘MyCommunityMortgage" loans.[49][50] In November 2000 Fannie Mae announced that the Department of Housing and Urban Development ("HUD") would soon require it to dedicate 50% of its business to low- and moderate-income families.’ [My emphasis] It stated that since 1997 Fannie Mae had done nearly $7 billion in CRA business with depository institutions, but its goal was $20 billion.[51] In 2001 Fannie Mae announced that it had acquired $10 billion in specially-targeted Community Reinvestment Act (CRA) loans more than one and a half years ahead of schedule, and announced its goal to finance over $500 billion in CRA business by 2010, about one third of loans anticipated to be financed by Fannie Mae during that period.[52]

“The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which repealed restrictions on interstate banking, listed the Community Reinvestment Act ratings received by the out-of-state bank as a consideration when determining whether to allow interstate branches.[53][54]

“According to Bernanke, a surge in bank merger and acquisition activities followed the passing of the act [my emphasis to underscore congress’s role in creating ‘banks too large to fail’], and advocacy groups increasingly used the public comment process to protest bank applications on Community Reinvestment Act grounds. When applications were highly contested, federal agencies held public hearings to allow public comment on the bank's lending record. In response many institutions established separate business units and subsidiary corporations to facilitate CRA-related lending. Local and regional public-private partnerships and multi-bank loan consortia were formed to expand and manage such CRA-related lending.” (http://en.wikipedia.org/wiki/Community_Reinvestment_Act)

Fannie Mae and Freddie Mac acted on Congress’s mandate, and soon many ‘high risk’ (subprime) mortgage loans were made to people who probably could not afford to pay the loans back. New financial ploys such as ‘balloon notes’, ‘mortgage-backed securities (MBS)’ and ‘collateralized debt obligations (CDO)’ were created in order to meet the provisions of the congressional mandate. Financial institutions merely found new ways to capitalize on the new congressional requirements: its human nature to make a dollar when the opportunity presents itself. (http://www.bestsyndication.com/?q=20080921_what_caused_subpri me_disaster.htm)

Furthermore, in 1999, a Republican Congress passed the Gramm-Leach-Bliley Act, and Clinton signed it into law, and this essentially repealed the Glass Steagall Act. “Subprime loans were sometimes made to people with poor credit. Banks required a smaller down payment and didn’t ask for income verification. To make up for the poor credit and lack of documentation, banks would offer borrowers a low initial interest rate that would adjust upward several years in the future.” Such balloon notes, while initially affordable to new homeowners, eventually became an unsustainable financial burden, and many homeowners defaulted on their mortgage payments. (http://www.bestsyndication.com/?q=20080921_what_caused_subpri me_disaster.htm

Another complication stemming from the desire to provide affordable housing to low income buyers, was that it created a housing bubble, wherein the price of real estate increased beyond its real worth. Hence, people who probably couldn’t afford a moderate mortgage were required to shoulder an outrageous mortgage because of this real estate bubble. (In addition to poor legislation, it should also be remembered that exorbitant fuel costs have recently had a direct impact on U.S. consumer costs, U.S. industry and the U.S. job market further compounding the financial woes of those most at risk.)

In 2000, a Republican Congress passed the Commodity Futures Modernization Act and Clinton signed into law on December 21, 2000. “The purpose was to allow new financial products called swaps to be unregulated. Neither the SEC nor the Commodity Futures Trading Commission (CFTC) would be able to regulate them.” (http://www.bestsyndication.com/?q=20080921_what_caused_subpri me_disaster.htm

“For subprime loans, the Fed recently calculated that by mid-2008 (before the fall's crisis), 10% of fixed rate subprime loans were seriously delinquent and 30% of variable rate mortgages were. The Fed predicts subprime defaults could go as high as 25% if housing prices really fall. Loans made in later years will probably be worse -- like 50%.” (http://www.walletpop.com/blog/2008/12/16/another-crisis-down-to-faulty-default-rates/)

Whereas certain changes should be made, such as reinstating the provisions of the Glass Steagall Act and reversing the bank mergers permitted under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, most regulatory requirements seem to be in place and simply using the regulations in place should suffice. Yet, in the end, I am curiously amused at the recent call to arms to reform Wall Street and then hear that SEC employees were much busier watching Internet porn than they were watching Bernie Madoff and Mark Stanford. I am similarly amused by this administration’s hypocritical call for even more regulation in light of the fact that current laws and monitoring has reveled Goldman Sachs’ double-dealing. After all, Goldman Sachs’ wrong doings were not reveled by future regulatory requirements, but by regulations already in place. Again, some tinkering should be done, but if this administration approaches financial reform in a manner similar to that it did with health care, we, as taxpayers, should have more cause for worry than for reassurance.

[BIG C]

ummmmmm, okay.....

[MrGiz]

In other words.... tell the Federal Government to stay the phuck out of our business!

I have some sympathy for the poor... but the country was not founded upon entitlement programs. Nobody is "entitled" to own a home unless they can pay for it themselves! Nobody ever "gave" me a house... fuck 'em!!

The greedy bastards who took advantage of the "feel-good" policies enacted by the worthless, vote hungry idiots in Congress and loaned government backed (our) money to people they "knew" couldn't afford it should have red-hott pokers shoved up their ass! The Congressional idiots who enacted the policies which led to the whole fiasco should be in the same red-hott poker line.... along with the other idiots who continue to vote their useless asses back into office!

Personal Responsibility & Self Reliance!!

Let's face it.... it's over!! Try to save as much of your shit as you can!!

http://lp.org

Giz

[Outdoorsman]

Let's face it.... it's over!! Try to save as much of your shit as you can!!

Mr. Giz

That says it all for me. I really wanted to write a long drawn out rant on governmnetal controls, but decided since my staff is already starting my car everyday for the next two weeks (see posts in Socialism), just figured I would refrain on this one and just say this:

Governments will continue to do what governments do - fix problems by limiting our choices, by taking away our freedoms, to include the freedom to fail. Does anyone think a light bulb was invented the first time Edison attempted, he learned from his failures. We are no different, the government tries to prevent economic disaster like 1929, but in doing so they limit our choices. Now Uncle Sam is taking over the banking industry and again our choices will be fewer making me less free tomorrow than I am today. So, my point is enjoy today because tomorrow you will be that much less free, today is the day with the most liberties for the rest of your life.

So, I for one am going to celebrate and have Nikki help me feel better, I really need to put her number on speed dial, any one know how to do that? She can certainly make me forget all about financial reform!!

[dilbert firestorm]

Originally Posted by I B Hankering

Let me begin by stating that I do not believe in Laissez Fare capitalism, and that I believe financial reform is an on going process: a tinker with but not overhaul philosophy.

In his Wealth of Nations, Adam Smith stated that it is the government’s responsibility to insure that every capitalist venture be allowed to compete equally in a free market system. As such, the government is always involved. Adam Smith would look at the banking system in the U.S. today (or its health insurance industry) and would liken it to a government supported monopoly. Banks too large to fail are too large, but Congress allowed—even encouraged—this imbalance.
-- snip snip --

this is a good informative post. you ought write this up as an Wall street Journal article or letter to the Editor.

[guest051312]

Big C. It's fairly simple why we had to bailout the banks, if too many of them fail at one time we have a total collapse of the world economy. All the big banks are vested all over the world and intertwined to tons of other financial issues. Right now Greece is about to go under if not bailed out by the EU. if they do go down it will have a disaster effect on Europe and then us.
Hankering, you must work in some form of finance job.
Like everyone has said, the little guy always gets screwed, the poverty level is going up not down and the rich just get richer.

[MrGiz]

Originally Posted by rpmsouth

.... the little guy always gets screwed, the poverty level is going up not down and the rich just get richer.

- Is that really a fair statement , on it's own?
- Is it possible for a person to get rich through his/her own hard work.... and not from "screwing the little guy"?
- Are the rich, necessarily "taking" anything away from the poor little guy?
- Is it just because there are rich people getting richer , that there are poor people getting poorer? Is there always a direct corelation?
- Is it not fair for a person to become rich?

Just wondering....

Giz