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- Political Discussion / Debate
-- Ok so the bailout was rejected, or whatever
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| Originally posted by Shakka I think the arguments of socialism and free market interference are better directed towards unelected folks at the SEC who are banning short-selling and trying to suspend fair-value accounting to hide the truth from the general public in a (rather poor) attempt to support markets (with plenty of unintended consequences)...But I digress. |
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| Originally posted by Groundhog Boy I was being sarcastic, as drunk as I was the other night, that may not have come across. I was trying to come across like, sadly, most people that I've talked to about this issue, completely ignorant. It's honestly quite frustrating that this is the issue that everyone finally decided to get organized around. Where was everyone for the numerous other issues in this country that we should have been involved in? Now they decide to protest something that they completely don't understand (and changed drastically over the course of a few day)? |
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| Originally posted by Groundhog Boy Ding, ding, ding. I can't believe our solution to this problem is removal of mark-to-market. Isn't this whole problem from a lack of transparency? If they want to let them use their own evaluations, they should be required to provide the market pricing right next to it on the balance sheet. |
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| Originally posted by jerZ07002 Oh - i was surprised because we see eye-to-eye on many issues and it seemed like a huge about face. |
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| Originally posted by jerZ07002 to add to that, wasn't mark-to-market enacted by FASB from pressures to fix the accounting that allowed the enron era corporate schemes? |
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| Originally posted by Groundhog Boy Yes, and that's why our deregulatory GOP wants it switched back. While we're at it, the ratings agencies deserve a good chunk of this blame, too. Why aren't people picketing Moody's, Fitch and S&P? |
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| Originally posted by Shakka I found this to be an interesting article, with a bit of historical perspective. Hopefully this will allay some of the partisan rancor going on here and how what we are seeing is a recent phenomenon of socialism being invoked by the Bush administration. I think the arguments of socialism and free market interference are better directed towards unelected folks at the SEC who are banning short-selling and trying to suspend fair-value accounting to hide the truth from the general public in a (rather poor) attempt to support markets (with plenty of unintended consequences)...But I digress. |
Quick question to those more knowledgeable in this field - why can't we just bail out those millions subprime lenders who are losing their homes instead of bailing out the banks who's lending practices got us in this mess in the first place? If we bail out the lenders, is it possible the bank mess with better regulations (or at least with better enforcement of those regulations) would take care of themselves and therefore the market would eventually correct and take care of itself?
Or is it more complicated than that?
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| Originally posted by MisterOpus1 Quick question to those more knowledgeable in this field - why can't we just bail out those millions subprime lenders who are losing their homes instead of bailing out the banks who's lending practices got us in this mess in the first place? If we bail out the lenders, is it possible the bank mess with better regulations (or at least with better enforcement of those regulations) would take care of themselves and therefore the market would eventually correct and take care of itself? Or is it more complicated than that? |
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| Originally posted by MisterOpus1 Quick question to those more knowledgeable in this field - why can't we just bail out those millions subprime lenders who are losing their homes instead of bailing out the banks who's lending practices got us in this mess in the first place? If we bail out the lenders, is it possible the bank mess with better regulations (or at least with better enforcement of those regulations) would take care of themselves and therefore the market would eventually correct and take care of itself? Or is it more complicated than that? |
So what's happening now? I understand changes were made to the initial plan, and now a vote will supposedly be cast again this Friday?
What's happening now is the bill is unfortunately getting loaded up with pork and being "Christmas Treed" in an attempt to get more people on board to pass it. Politicians make me sick. This is probably one of the most important (if not the most important) pieces of legislation they'll ever vote on and they still have to play politics with it, despite promising us all that they would move swiftly and in a bipartisan manner.
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| Originally posted by Shakka What's happening now is the bill is unfortunately getting loaded up with pork and being "Christmas Treed" in an attempt to get more people on board to pass it. Politicians make me sick. This is probably one of the most important (if not the most important) pieces of legislation they'll ever vote on and they still have to play politics with it, despite promising us all that they would move swiftly and in a bipartisan manner. |
Now, while the more I read about the "bailout" thing makes me think it's not such a good idea, how in the fuck can they just quietly pass a bill on domestic satellite surveillance that has almost the same pricetag without so much as a whisper?
wtf is this shit? I don't have any direct vested interest in anything that happens, though I know that like everyone else, I will be misted with shit once it really hits the fan. But come on, is this really immediately necessary?
LINK
Satellite-Surveillance Program to Begin Despite Privacy Concerns
By SIOBHAN GORMANArticle
The Department of Homeland Security will proceed with the first phase of a controversial satellite-surveillance program, even though an independent review found the department hasn't yet ensured the program will comply with privacy laws.
Congress provided partial funding for the program in a little-debated $634 billion spending measure that will fund the government until early March. For the past year, the Bush administration had been fighting Democratic lawmakers over the spy program, known as the National Applications Office.
The program is designed to provide federal, state and local officials with extensive access to spy-satellite imagery -- but no eavesdropping -- to assist with emergency response and other domestic-security needs, such as identifying where ports or border areas are vulnerable to terrorism.
Since the department proposed the program a year ago, several Democratic lawmakers have said that turning the spy lens on America could violate Americans' privacy and civil liberties unless adequate safeguards were required.
A new 60-page Government Accountability Office report said the department "lacks assurance that NAO operations will comply with applicable laws and privacy and civil liberties standards," according to a person familiar with the document. The report, which is unclassified but considered sensitive, hasn't been publicly released, but was described and quoted by several people who have read it.
The report cites gaps in privacy safeguards. The department, it found, lacks controls to prevent improper use of domestic-intelligence data by other agencies and provided insufficient assurance that requests for classified information will be fully reviewed to ensure it can be legally provided.
A senior homeland-security official took issue with the GAO's broad conclusion, saying the department has worked hard to include many layers of privacy protection. Program activities have "an unprecedented amount of legal review," he said, adding that the GAO is seeking a level of proof that can't be demonstrated until the program is launched.
Homeland Security spokeswoman Laura Keehner said department officials concluded that the program "complies with all existing laws" because the GAO report didn't say the program doesn't.
Addressing the gaps the agency cited, Ms. Keehner said current laws already govern the use of intelligence data and the department has an additional procedure to monitor its use. The department will also work with other intelligence agencies to "ensure that legal reviews and protection of classified information will be effective," she said.
In response to the GAO report, House Homeland Security Committee Chairman Bennie G. Thompson of Mississippi and other Democrats asked Congress to freeze the money for the program until after the November election so the next administration could examine it.
But the bill Congress approved, which President George W. Bush signed into law Tuesday, allows the department to launch a limited version, focused only on emergency response and scientific needs. The department must meet additional requirements before it can expand operations to include homeland-security and law-enforcement surveillance.
The restrictions were "the most we could have required without a complete prohibition," said Darek Newby, an aide to Democratic Rep. David Price of North Carolina, who heads the House homeland-security spending panel.
But California Rep. Jane Harman, who heads a homeland-security subcommittee on intelligence, said that even limited funding allows the department to launch the program, providing a platform to expand its surveillance whether or not privacy requirements are met.
"Having learned my lesson" with the National Security Agency's warrantless-surveillance program, she said, "I don't want to go there again unless and until the legal framework for the entire program is entirely spelled out."
Rep. Thompson vowed to fight expansion of the program until privacy issues are further addressed.
Write to Siobhan Gorman at [email protected]
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| Originally posted by Shakka What's happening now is the bill is unfortunately getting loaded up with pork and being "Christmas Treed" |
Fantastic!
^ LOL! That's great
These ones are real even.
http://www.economist.com/printedition/cover_index.cfm
Sorry if this was posted already. Good read on potential conflicts of interest if actually true (I don't honestly know what to believe at this point though I lean more towards believing that greedy bastards like this are the rule rather than the exception)
LINK
The unexpected rejection by the US Congress of the Bush Administration financial rescue plan, TARP on September 29 has opened up the spectre for the first time of a 1931-style domino wave of worldwide bank failures. That is already underway across the US banking spectrum with the failure, nationalization or forced liquidation in the past two weeks of Fannie Mae and Freddie Mac, of the giant Washington Mutual mortgage lender, of the nation�s fourth largest deposit bank, Wachovia. That was on top of a wave of smaller bank failures that began with IndyMac in the spring. For some it is appealing and more simple to grasp the magnitude of these titanic events in the US-centered financial world by assuming it is all part of a pre-planned grand conspiracy by the Money Masters, what in the 1920s in the USA was termed the Money Trust, to control the entire financial world.
As the details of the present crisis reveal, there are huge ideological fault lines making for chaos and a potential meltdown of the Laissez Faire financial system. That present system, which was built on the back of Wall Street financial and banking deregulation since 1987 when Alan Greenspan, a devout follower and close friend of radical individualist Ayn Rand, became Wall Street�s man at the Federal Reserve for almost 19 years, is over now with the failure of the Henry Paulson $700 billion bailout scheme. Governments worldwide now face no alternative but to begin the painful process of putting the financial genie back in the bottle and re-regulating an out-of-control financial system. The failure of the UK Government and the US Government to address that fundamental issue is behind the present crisis of confidence.
A brief look at history
The Great Depression in Germany in 1931 began with a seemingly minor event�the collapse of a bank in Vienna, Creditanstalt, that May. For readers interested in more on the remarkable parallels between that crisis and that of today, I recommend the treatment in my earlier volume, A Century of War: Anglo-American Oil Politics and the New World Order.
That Vienna bank collapse in turn was triggered by a political decision in Paris to sabotage an emerging German-Austrian economic cooperation agreement by pulling down the weakest link of the post-Versailles system, the Vienna Creditanstalt. In the process, Paris triggered a series of tragic events that led to the failure of the German banking system over a period of several weeks. The post-1919 Versailles System, much like the post-1999 US Securitization System, was built on a house of cards with no foundation. When one card was removed, the entire international financial edifice crumbled.
Then, in 1931, there was an inept Br�ning government in Germany, which believed severe austerity was the only solution, merely feeding unemployment lines to pay the Young Plan German reparations to the new Bank for International Settlements in Basle.
Then, in 1931 George Harrison, a Germano-phobe, was the inexperienced Governor of the powerful New York Federal Reserve. Harrison was a member of the anglophile Skull & Bones, the elite Yale University secret society which also included George H.W. Bush and George W. Bush as initiates. Harrison, who went on to coordinate the secret Manhattan Project on the development of the Atomic bomb under fellow Skull & Bones member, War Secretary Henry Stimson, believed the crisis had started not from abroad but with German bankers trying to make a profit at the expense of others.
Within weeks of rumor and jitters, the New York Bankers Trust, ironically today a part of Deutsche Bank, announced it would be forced to cut the credit line to Deutsche Bank and by July 1931 began to pull its deposits from all big Berlin banks. Harrison insisted the Reichsbank dramatically raise interest rates to stabilize things, only turning bad into worse as a credit crisis across the German economy ensued.
The Bank of England Governor, Montagu Norman, while somewhat more supportive of Luther argued that his friend Hjalmar Schacht was better suited to manage the crisis. On July 13, 1931, a major German bank, Darmst�dter-und Nationalbank (Danat) failed. That triggered a general a depositors� run on all German banks. The Br�ning government merged the Danat with a weakly capitalized Dresdner Bank, and made large state guarantees in an effort to calm matters. It didn�t.
New York Fed governor, Harrison, who was personally convinced it was a �German� problem, barked orders to Reichsbank chief Hans Luther on how to manage the crisis according to archival accounts. A foreign drain on Reichsbank gold reserves ensued.
The rest is history, the tragic history of the greatest most destructive war of the 20th Century, with all the suffering that ensued. At that time in history, the American banking elite saw itself, despite a stock market crash and Great Depression in America, as standing at the dawn of a new American Century.
The decline of the American Century
Today, in 2008, some 77 years later, a German Finance Minister stands before the Bundestag announcing the end of that American Century. Today the German government encourages a fusion of Dresdner with Commerzbank. Today Deutsche Bank, which some years ago acquired Bankers Trust in New York in a merger wave, appears to be in a stronger position than its American counterparts as Wall Street investment banks, some more than 150 years old as the venerable Lehman Bros., simply vanish in a matter of days. The American financial Superpower crumbles before our eyes.
In March 2008 there were five giant Wall Street investment banks, banks which underwrote Mortgage-Backed Securities (MBS), corporate bonds, corporate stock issues. They were not deposit banks like Citibank or Bank of America; they were known as investment banks�Morgan Stanley, Merrill Lynch, Goldman Sachs, Lehman Brothers, Bear Stearns.
The business of taking deposits and lending by banks had been split during the Great Depression from the business of underwriting and selling stocks and bonds�investment banking�by an act of Congress, the Glass-Steagall Act of 1933. The law was passed amid the collapse of the banking system in the United States following the bursting of the Wall Street stock market bubble in October 1929.
That Glass-Steagall act was a prudent attempt by Congress to end the uncontrolled speculative excesses of the Roaring Twenties by New York finance. It established the Federal Deposit Insurance Corporation to guarantee personal bank deposits to a fixed sum that restored consumer confidence and ended the panic runs on bank deposits.
In November 1999, after millions spent lobbying Congress, the New York banks and Wall Street investment banks and insurance companies won a staggering victory. The US Congress voted to repeal that 1933 Glass-Steagall Act. President Bill Clinton proudly signed the repeal act with Sandford Weill, the chairman of Citigroup.
The man whose name is on that repeal bill was Texas Senator Phil Gramm, a devout advocate of ideological free market finance, finance free from any Government fetters. The major US banks had been seeking the repeal of Glass-Steagall since the 1980s. In 1987 the Congressional Research Service prepared a report which argued the case for preserving Glass-Steagall. The new Federal Reserve chairman, Alan Greenspan, just fresh from J.P. Morgan bank on Wall Street, in one of his first speeches to Congress in 1987 argued for repeal of Glass-Steagall.
The repeal allowed commercial banks such as Citigroup, then the largest US bank, to underwrite and trade new financial instruments such as Mortgage-Backed Securities (MBS) and Collateralized Debt Obligations (CDOs) and establish so-called structured investment vehicles, or SIVs, that bought those securities. Repeal of Glass-Steagall after 1999, in short, enabled the Securitization revolution so openly praised by Greenspan as the "revolution in finance." That revolution is today devouring its young.
That securitization process is at the heart of the present Financial Tsunami that is destroying the American credit structure. Citigroup played a major part in the repeal of Glass�Steagall in 1999. Citicorp had merged with Travelers Insurance company the year before, using a loophole in Glass-Steagall that allowed for temporary exemption. Alan Greenspan gave his personal blessing to the Citibank merger.
Phil Gramm, the original sponsor of the Glass-Steagall repeal bill that bears his name, went on to become the chief economic adviser to John McCain. Gramm also went on to become Vice Chairman of a sizeable Swiss bank, UBS Investment Bank, in the USA, a bank which has had no small share of troubles in the current Tsunami crisis.
Gramm as Senator in 2000 was one of five co-sponsors of the Commodity Futures Modernization Act of 2000. A provision of the bill was referred to as the �Enron loophole� because the it was later applied to Enron to allow them unregulated speculation in energy futures, a key factor in the Enron scandal and collapse. The Commodity Futures Modernization Act, as I described in my earlier piece in May, Perhaps 60% of Today�s Oil Price is Pure Speculation, allowed investment bank Goldman Sachs (coincidentally the former bank of Treasury Secretary Paulson), to make a literal killing in manipulating oil futures prices up to $147 a barrel this summer.
Paulson�s impressive interest conflicts
The actions of Treasury Secretary Paulson since the first outbreak of the Financial Tsunami in August of 2007 have been directed with one apparent guiding aim�to save the obscene gains of his Wall Street and banking cronies. In the process he has taken steps which suggest more than a mild possible conflict of interest. Paulson, who had been chairman of Goldman Sachs from the time of the 1999 Glass-Steagall repeal to his appointment in 2006 as Treasury head, had been one of the most involved Wall Street players in the new securitization revolution of Greenspan. Naming him to head the Government agency now responsible for cleaning up the mess left by Wall Street greed and stupidity was tantamount to putting the wolf in charge of guarding the hen house as some see it.
Paulson showed where his interests lay. He is by law is the chairman of something called the President's Working Group on Financial Markets, the Government�s financial crisis management group that also includes Fed Chairman Bernanke, the Securities & Exchange Commission head, and the head of the Commodity Futures Exchange Commission (CFTC). That is the reason Paulson, the ex-Wall Street Goldman Sachs banker, is always the person announcing new emergency decisions since last August.
Two weeks ago, for example, Paulson announced the Government would make an unprecedented $85 billion nationalization rescue of an insurance group, AIG. True AIG is the world�s largest insurer and has a huge global involvement in financial markets.
AIG�s former Chairman, Hank Greenberg�a close friend of Henry Kissinger, a former Director of the New York Fed, former Vice Chairman of the elite New York Council on Foreign Relations and of David Rockefeller�s select Trilateral Commission, Trustee Emeritus of Rockefeller University�was for more than forty years Chairman of AIG. His AIG career ended in March 2005 when AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism and legal action for cooking the books, in a prosecution brought by Eliot Spitzer, then Attorney General of New York State.
In mid September, in between other dramatic failures including Lehman Bros., and the bailout of Fannie Mae and Freddie Mac, Paulson announced that the US Treasury, as agent for the United States Government, was to bailout the troubled AIG with a staggering $85 billion. The announcement came a day after Paulson announced the Government would let the 150-year old investment bank, Lehman Brothers, fail without Government aid. Why AIG and not Lehman?
What has since emerged are details of a meeting at the New York Federal Reserve bank chaired by Paulson, to discuss the risk of letting AIG fail. There was only one active Wall Street banker present at the meeting�Lloyd Blankfein, chairman of Paulson�s old firm, Goldman Sachs.
Blankfein later claimed he was present at the fateful meeting not to protect his firm�s interests but to �safeguard the entire financial system.� His claim was put in doubt when it later emerged that Blankfein�s Goldman Sachs was AIG�s largest trading partner and stood to lose $20 billion in a bankruptcy of AIG. Were Goldman Sachs to go down with AIG, Secretary Paulson would have reportedly lost $700 million in Goldman Sachs stock options he had, an interesting fact.
That is a tiny glimpse into the man who crafted the largest bailout in US or world financial history some days ago, the failed TARP�Troubled Asset Relief Program�a proposed $700 billion financial stabilization scheme which, in Paulson�s original version would have allowed him or his Treasury successor to use $700 billion, with no oversight or accountability, to buy bad or worthless assets from financial institutions he deems worthy of help.
As respected economist, Nouriel Roubini pointed out, in almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990�s, nationalize the troubled banks, take over their management and assets, and inject public capital to recapitalize the banks to allow them to continue doing business, lending to normal clients. In the Swedish case, the Government held the assets, mostly real estate, for several years until the economy again improved at which point they could sell them onto the market and the banks could gradially buy the state ownership shares back into private hands. In the Swedish case the end cost to taxpayers was estimated to have been almost nil. The state never did as Paulson proposed, to buy the toxic waste of the banks, leaving them to get off free from their follies of securitization and speculation abuses.
Paulson�s plan, the one essentially rejected on September 29 by the House of Representatives, would have done nothing to recapitalize the troubled banks. That recapitalization could cost an added hundreds of billions on top of the $700 billion toxic waste disposal.
Serious conservative banker friends I know who went through the Scandinavian crisis of the 1990�s are scratching their head trying to imagine how crass the Paulson TARP scheme was. That crass and politically obvious bailout of Wall Street by the taxpayers, what some refer to as �Bankers� Socialism�socialize the costs of failure onto the public, and privatize the profits to the bankers�is a major factor behind the defeat of the TARP compromise version.
But there is an added element. John McCain decided to boost his flagging Presidential campaign by trying to profile himself as a �political Maverick� one who opposes the powerful Washington vested interests. He flew into Washington days before the TARP was to be approved by a panicked Congress and conspired with a handful of influential Republican Senate friends, including Banking Committee ranking member, Senator Shelby, to oppose the Paulson TARP. What emerged, with McCain�s backing, was a political power play that may well have brought the United States financial system to its knees, and McCain�s Presidential hopes with it.
Power and greed are the only visible juice driving the decision-makers in Washington today. Acting in the long-range US national interest seems to have gotten lost in the scramble. As I wrote last November in my Financial Tsunami five part series on the background to today�s crisis, all this could be foreseen. It is what happens when elected Governments abandon their public trust or responsibility to a cabal of private financial interests. It will be interesting to see if anyone in Washington realizes that lesson. Whatever next comes out of Washington, however, one thing is clear, as reflected in what German Finance Minister Peer Steinbr�ck told the Bundestag. This is the end of the world as we knew it. The American financial Superpower is gone. The only important question will be what and how will the alternative be.
F. William Engdahl is author of A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press Ltd.) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (www.globalresearch.ca). He may be contacted through his website, www.engdahl.oilgeopolitics.net.
The Economic Crisis Explained in Stick Figures
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| Originally posted by Shakka I believe the points in that video may account for about 1/3 of the cause of the problem. And Josh, the point to you is that the seeds were laid long before George Bush got into office, but you're apparently too young and too blinded by hate for the right to know anything prior to 2000. |
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| Originally posted by josh4 I'm not blinded by anything. I'll start seriously considering your arguments when you have the adequate sources to back them up. Its funny watching you guys. Whenever something like this happens your camp all scramble to spin it without sacrificing your views or whatever. This usually means quoting biased blogs without displaying the source and questionable videos that get removed from youtube. Show me a WSJ article that supports your theory (whatever that is). |
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| Originally posted by josh4 I'm not blinded by anything. I'll start seriously considering your arguments when you have the adequate sources to back them up. Its funny watching you guys. Whenever something like this happens your camp all scramble to spin it without sacrificing your views or whatever. This usually means quoting biased blogs without displaying the source and questionable videos that get removed from youtube. Show me a WSJ article that supports your theory (whatever that is). |
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| WSJ: September 30, 1999 Fannie Mae Eases Credit To Aid Mortgage Lending By STEVEN A. HOLMES In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped. Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent. In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings. In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups. The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants. |
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| Originally posted by jerZ07002 i love the attachment of 115 billion in tax breaks. What a fucking joke! Congress keeps digging the hole deeper and deeper. there needs to be rules about how much content can go into a bill and what can be attached. a bill that has the primary goal of dealing with a certain issue shouldn't have an unrelated rider provision. it's getting sickening. |
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| Who Caused the Economic Crisis? FactCheck.org October 1, 2008 A MoveOn.org Political Action ad plays the partisan blame game with the economic crisis, charging that John McCain�s friend and former economic adviser Phil Gramm �stripped safeguards that would have protected us.� The claim is bogus. Gramm�s legislation had broad bipartisan support and was signed into law by President Clinton. Moreover, the bill had nothing to do with causing the crisis, and economists � not to mention President Clinton � praise it for having softened the crisis. A McCain-Palin ad, in turn, blames Democrats for the mess. The ad says that the crisis �didn�t have to happen,� because legislation McCain cosponsored would have tightened regulations on Fannie Mae and Freddie Mac. But, the ad says, Obama "was notably silent" while Democrats killed the bill. That�s oversimplified. Republicans, who controlled the Senate at the time, did not bring the bill forward for a vote. And it�s unclear how much the legislation would have helped, as McCain signed on just two months before the housing bubble popped. In fact, there�s ample blame to go around. Experts have cited everyone from home buyers to Wall Street, mortgage brokers to Alan Greenspan. Analysis As Congress wrestled with a $700 billion rescue for Wall Street's financial crisis, partisans on both sides got busy � pointing fingers. MoveOn.org Political Action on Sept. 25 released a 60-second TV ad called "My Friends� Mess," blaming Sen. John McCain and Republican allies who supported banking deregulation. The McCain-Palin campaign released its own 30-second TV spot Sept. 30, saying "Obama was notably silent" while Democrats blocked reforms leaving taxpayers "on the hook for billions." Both ads were to run nationally. And both ads are far wide of the mark. MoveOn.org Ad: "My Friends' Mess" MoveOn.org Ad, "My Friends" Narrator: We all know the economy is in crisis, but who's responsible? McCain: My friends. My friends. My friends. Narrator: John McCain's friend Phil Gramm wrote the bill that deregulated the banking industry, and stripped the safeguards that would have protected us. McCain asked Gramm to help write his economic plan. John McCain's friend Rick Davis lobbied for Fannie and Freddie for years, "defending" them against stricter regulation. And now? He runs McCain's presidential campaign. And John McCain himself? He's stood by "deregulation" time and time again. McCain: I think the deregulation was probably helpful to the growth of our economy. Narrator: And now that the markets are in meltdown? John McCain's friend George Bush wants hardworking Americans to write the biggest blank check in history, bailing out the Wall Street firms and the Washington lobbyists who got us into this mess. Main Street giving Wall Street $700 billion and getting nothing in return? It's outrageous. Americans shouldn't have to foot the bill for mistakes that John McCain and his friends made. Narrator: MoveOn.org Political Action is responsible for the content of this advertisement. Blame the Republicans! The MoveOn.org Political Action ad blames a banking deregulation bill sponsored by former Sen. Phil Gramm, a friend and one-time adviser to McCain's campaign. It claims the bill "stripped safeguards that would have protected us." That claim is bunk. When we contacted MoveOn.org spokesman Trevor Fitzgibbons to ask just what "safeguards" the ad was talking about, he came up with not one single example. The only support offered for the ad's claim is one line in one newspaper article that reported the bill "is now being blamed" for the crisis, without saying who is doing the blaming or on what grounds. The bill in question is the Gramm-Leach-Bliley Act, which was passed in 1999 and repealed portions of the Glass-Steagall Act, a piece of legislation from the era of the Great Depression that imposed a number of regulations on financial institutions. It's true that Gramm authored the act, but what became law was a widely accepted bipartisan compromise. The measure passed the House 362 - 57, with 155 Democrats voting for the bill. The Senate passed the bill by a vote of 90 - 8. Among the Democrats voting for the bill: Obama's running mate, Joe Biden. The bill was signed into law by President Clinton, a Democrat. If this bill really had "stripped the safeguards that would have protected us," then both parties share the blame, not just "John McCain's friend." The truth is, however, the Gramm-Leach-Bliley Act had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been. Last year the liberal writer Robert Kuttner, in a piece in The American Prospect, argued that "this old-fashioned panic is a child of deregulation." But even he didn't lay the blame primarily on Gramm-Leach-Bliley. Instead, he described "serial bouts of financial deregulation" going back to the 1970s. And he laid blame on policies of the Federal Reserve Board under Alan Greenspan, saying "the Fed has become the chief enabler of a dangerously speculative economy." What Gramm-Leach-Bliley did was to allow commercial banks to get into investment banking. Commercial banks are the type that accept deposits and make loans such as mortgages; investment banks accept money for investment into stocks and commodities. In 1998, regulators had allowed Citicorp, a commercial bank, to acquire Traveler's Group, an insurance company that was partly involved in investment banking, to form Citigroup. That was seen as a signal that Glass-Steagall was a dead letter as a practical matter, and Gramm-Leach-Bliley made its repeal formal. But it had little to do with mortgages. Actually, deregulated banks were not the major culprits in the current debacle. Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall. Observers as diverse as former Clinton Treasury official and current Berkeley economist Brad DeLong and George Mason University's Tyler Cowen, a libertarian, have praised Gramm-Leach-Bliley has having softened the crisis. The deregulation allowed Bank of America and J.P. Morgan Chase to acquire Merrill Lynch and Bear Stearns. And Goldman Sachs and Morgan Stanley have now converted themselves into unified banks to better ride out the storm. That idea is also endorsed by former President Clinton himself, who, in an interview with Maria Bartiromo published in the Sept. 24 issue of Business Week, said he had no regrets about signing the repeal of Glass-Steagall: Bill Clinton (Sept. 24): Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill. ...You know, Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence. But I can't blame [the Republicans]. This wasn't something they forced me into. No, Blame the Democrats! McCain-Palin 2008 Ad: "Rein" McCain Ad, "Rein" Narrator: John McCain fought to rein in Fannie and Freddie. The Post says: McCain "pushed for stronger regulation"..."while Mr. Obama was notably silent." But, Democrats blocked the reforms. Loans soared. Then, the bubble burst. And, taxpayers are on the hook for billions. Bill Clinton knows who is responsible. Clinton: I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac. Narrator: You're right, Mr. President. It didn't have to happen. McCain: I'm John McCain and I approve this message. The McCain-Palin campaign fired back with an ad laying blame on Democrats and Obama. Titled "Rein," it highlights McCain's 2006 attempt to "rein in Fannie and Freddie." The ad accurately quotes the Washington Post as saying "Washington failed to rein in" the two government-sponsored entities, the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), both of which ran into trouble by underwriting too many risky home mortgages to buyers who have been unable to repay them. The ad then blames Democrats for blocking McCain's reforms. As evidence, it even offers a snippet of an interview in which former President Clinton agrees that "the responsibility that the Democrats have" might lie in resisting his own efforts to "tighten up a little on Fannie Mae and Freddie Mac." We're then told that the crisis "didn't have to happen." It's true that key Democrats opposed the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have established a single, independent regulatory body with jurisdiction over Fannie and Freddie � a move that the Government Accountability Office had recommended in a 2004 report. Current House Banking Committee chairman Rep. Barney Frank of Massachusetts opposed legislation to reorganize oversight in 2000 (when Clinton was still president), 2003 and 2004, saying of the 2000 legislation that concern about Fannie and Freddie was "overblown." Just last summer, Senate Banking Committee chairman Chris Dodd called a Bush proposal for an independent agency to regulate the two entities "ill-advised." But saying that Democrats killed the 2005 bill "while Mr. Obama was notably silent" oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it. By the time McCain signed on to the legislation, it was too late to prevent the crisis anyway. McCain added his name on May 25, 2006, when the housing bubble had already nearly peaked. Standard & Poor's Case-Schiller Home Price Index, which measures residential housing prices in 20 metropolitan regions and then constructs a composite index for the entire United States, shows that housing prices began falling in July 2006, barely two months later. The Real Deal So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault: * The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap. * Home buyers, who took advantage of easy credit to bid up the prices of homes excessively. * Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses. * Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes. * The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families. * Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates. * Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages. * Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral. * The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market. * An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic. * Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up. The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult. http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html |
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