I place the overwhelming majority of the blame on the financial institutions and the pols who supported them in getting laws changed that allowed them to make not only bad investments that were filled with risk but also ones they lied to their own customers about.

 

I'm not sure where President Clinton fits into that. You?

 

Fannie gets the vast majority of credit (blame) for this one. Congress - and mainly Dodd and Frank - should get the blame on this one. Someone else was in the mix in this. But he is no longer there...he got 'promoted'.

Fannie gets the vast majority of credit (blame) for this one. Congress - and mainly Dodd and Frank - should get the blame on this one. Someone else was in the mix in this. But he is no longer there...he got 'promoted'.

 

No argument from me. However, you cannot absolve any of the banks/insurance companies.

No argument from me. However, you cannot absolve any of the banks/insurance companies.

 

Mostly I can.

 

The government, in 1995, FORCED the large banks to abandon basic, safeguard banking principles and put them at the mercy of political wolves.

 

The Reinvented Community Reinvestment Act

 

"Unlike the original proposal, performance is to be judged in "the context" in which the institution being evaluated operates. Thus, the agencies would take into account the demographics and credit needs of an institution's service area and the banks' product offerings, business strategy, and condition. The introduction of "context" represents a retreat from objectivity and a return to regulatory discretion."

 

I think Clinton laid the foundation of the housing problem with this change.

 

Where Bush let the banks go crazy was with the hedge funds. The SEC became (and still is) very weak. And the derivative mess is a direct result of a rules change under Bush and the basic gambling that has occurred since then.

Low wages for the vast majority of people, higher prices and less choice of products and services (monopolies), higher concentrations of wealth and income that we have now. Home ownership rates in the single digits, long working hours in poor conditions with little or no vacation time. That's just a few concerns off the top of my head.

 

Why would working wages be lower and prices higher? Business owners can't make a profit off products consumers can't afford.

 

How do monopolies limit the variety of goods and services available to the consumer? Monopolies in a free market mean your business has provided a better product at a cheaper price for the consumer.

 

Home ownership in the single digits? Are we assuming consumers can't afford the expenses or is there no demand for self-ownership?

Mostly I can.

 

The government, in 1995, FORCED the large banks to abandon basic, safeguard banking principles and put them at the mercy of political wolves.

 

The Reinvented Community Reinvestment Act

 

"Unlike the original proposal, performance is to be judged in "the context" in which the institution being evaluated operates. Thus, the agencies would take into account the demographics and credit needs of an institution's service area and the banks' product offerings, business strategy, and condition. The introduction of "context" represents a retreat from objectivity and a return to regulatory discretion."

 

I think Clinton laid the foundation of the housing problem with this change.

 

Where Bush let the banks go crazy was with the hedge funds. The SEC became (and still is) very weak. And the derivative mess is a direct result of a rules change under Bush and the basic gambling that has occurred since then.

 

I have no problem with the "laid the foundation" comment. I question anyone though who thinks the banks and insurance companies didn't act foolishly and were 100% to blame for their own investments in CDOs/credit default swaps/etc.

2005 - Barney....there is no bubble....

 

I have no problem with the "laid the foundation" comment. I question anyone though who thinks the banks and insurance companies didn't act foolishly and were 100% to blame for their own investments in CDOs/credit default swaps/etc.

 

The government right at end of Clinton admin and start of Bush admin did weaken the laws to allow the instruments to come into play. And the institutions did get drunk and disorderly. Banking should be boring. They wanted to gamble with the derivatives. And the SEC is still letting them today.

The government right at end of Clinton admin and start of Bush admin did weaken the laws to allow the instruments to come into play. And the institutions did get drunk and disorderly. Banking should be boring. They wanted to gamble with the derivatives. And the SEC is still letting them today.

 

Agreed.

I have no problem with the "laid the foundation" comment. I question anyone though who thinks the banks and insurance companies didn't act foolishly and were 100% to blame for their own investments in CDOs/credit default swaps/etc.

 

Clyde, to answer your previous question I think Clinton is partially responsible for the housing bubble due to the changes in the CRA.

 

But two things that have not been mentioned. 1. Mark to market accounting standards, 2. The rating agencies that had to be approved by the government.

Don't think any lack of response by me on Thursday indicates lack of interest. I'll be on the road for much of the day and without my laptop for the weekend. The IPhone just isn't a good way to post a lot.

Clyde, to answer your previous question I think Clinton is partially responsible for the housing bubble due to the changes in the CRA.

 

But two things that have not been mentioned. 1. Mark to market accounting standards, 2. The rating agencies that had to be approved by the government.

 

I agree on all but IMO the institutions who played fast and loose are THE primary reason for the collapse and the resulting loss of faith in the economy.

I forgot one other thing. Artificially low interest rate set by the FED.

I forgot one other thing. Artificially low interest rate set by the FED.

 

I'm not an economics expert but I think the above is down the list as an "also...."

I agree on all but IMO the institutions who played fast and loose are THE primary reason for the collapse and the resulting loss of faith in the economy.

 

Not so sure I can place as much blame on the institutions as you are. That's probably because I was making mortgages in the early to mid 90's and saw first hand the pressure placed on institutions to make loans in high risk areas. Couple that with Fannie and Freddie entering the quality mortgage arena and bascially operating a major competitive advantage force banks to extend into lower quality mortgages. That was my experience.

Not so sure I can place as much blame on the institutions as you are. That's probably because I was making mortgages in the early to mid 90's and saw first hand the pressure placed on institutions to make loans in high risk areas. Couple that with Fannie and Freddie entering the quality mortgage arena and bascially operating a major competitive advantage force banks to extend into lower quality mortgages. That was my experience.

 

IMO the "loans to high risk areas" is much too low-level. The problems were way above you and your bros who were in the trenches. Lots of good reading out there on CDO/CDS/tranches/etc.