by sammielee24 61 Replies latest jw friends
That's a very childish statement. Dismantling the res publica has led to a concentration of economic power. Its power should be extended to undo the wreckages of decades of neoliberalism.
The res publica has led to the greatest concentration of economic power and coercive power within its institutions and among its acolytes in human history.
BTS
Here's my cut and paste
http://www.huffingtonpost.com/david-fiderer/emtimeem-rewrote-history_b_168503.html
CNBC's David Faber confirmed that the problems all occurred during the Bush Administration. "There was a precipitous drop in [residential mortgage] lending standards that took place in this country... from 2003 until 2006," Faber told Charlie Rose. "Wall Street [] became a much larger player in those securitization markets, beginning in 2003 right through 2006. They did not apply the same lending standards that did Fannie Mae and Freddie Mac to originators, and that is where the balance shifted significantly..."
Why was there a drop in lending standards? Several reasons:
The rating agencies stopped performing independent analysis of mortgage pools. In March 2001, Standard & Poor's started rating real state investments without first going through the analytic review process. As reported by Bloomberg, S&P and Moody's would rely on each other's analysis and "substituted theoretical mathematic assumptions for the experience and judgment of their own analysts. Regulators found that Moody's and S&P also didn't have enough people and didn't adequately monitor the thousands of fixed-income securities they were grading AAA."
Then, in August 2004, reports Bloomberg, Moody's took another step to subvert the independent ratings process. It removed the diversification criteria used for rating collateralized debt obligations, or CDOs. Subprime mortgage CDOs, of which about 3/4 were rated AAA, took off.
The investment community's reliance on AAA ratings cannot be overestimated. Although bankers and regulators are obligated to do independent analyses, they still tend to reference the agencies' opinions as a benchmark. Trillions of dollars of AAA securities were held by banks and others in the belief that they would pay out at close to par.
In 2003 the Bush Administration opened the floodgates to predatory lenders.
"Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye...[though] the Office of the Comptroller of the Currency (OCC)."In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules...But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks.""Predatory Lenders' Partner in Crime," By Eliot Spitzer, The Washington Post, February 14, 2008
As for unregulated mortgage lenders, Greenspan ignored his duty to provide regulatory oversight. In the aftermath of the S&L crisis, unregulated lenders were becoming a major force in mortgage lending, so in 1994 the Democratic congress passed the Home Ownership and Equity Protection Act (HOEPA) directing the Federal Reserve protect the public against predatory lenders. Greenspan, warned repeatedly about the problem, refused to do anything.
How did the drop in lending standards play out?
Fraud and predatory lending took off. The primary participants of the fraud, the mortgage brokers and mortgage lenders, were not subject to any real regulatory oversight. Consumers went to mortgage brokers, who got bigger upfront fees from steering their customers to subprime mortgages. The loans were issued by mortgage lenders like Countrywide Financial, which then packaged and sold the loans to investment banks. Because there were no protections against predatory lending, consumers got mortgage loans that they could not afford to repay. Loans had teaser rates of 3% for the first two or three years, before the monthly payments doubled or tripled.
Banks relied on AAA ratings and credit default swaps. The subprime mortgage pools were sliced and diced into mortgage securities that were sold to various investors. About 80% of the securities were rated AAA by S&P or Moody's, and a huge chunk of those securities were held by American and European banks. Why? Bankers thought if a bond is rated AAA, they could always sell it at something close to par. Also, residential home values had held up fairly well during the Great Depression. Finally, because of rules related to regulatory capital, the mortgage bonds received a lower weighting on mortgage securities than on ordinary corporate loans.
The real estate bubble burst and bond prices collapsed. Most subprime mortgages were extended for 80% of the appraised value, but many home buyers in California and elsewhere financed 100% of their home purchase.
Because so many people were buying homes they could not afford, market discipline was lost. California, Florida, Nevada and Arizona experienced a real estate bubble. When the bubble collapsed, almost everyone who bought a home in those markets from 2005 onward saw their home equity wiped out.
Three years after private label mortgage securities took off, they started collapsing. Because of the non-standard documentation, the suspicion of underlying fraud, and the difficulty in restructuring the loans with the borrowers, the securities became very difficult to value and market for them dried up.
How did this steady deterioration suddenly become a global financial meltdown? The two-word answer is Hank Paulson.
9/12 Changed Everything. On September 12, 2008, just as Lehman entered into final negotiations to find a buyer, Hank Paulson announced that the government would not backstop Lehman's solvency. What was the difference between Lehman and Bear Sterns, or between Lehman and the other banks? The prices of mortgage securities had declined since the Bear Stearns bailout, so the level of government support for Lehman would have been higher. Also, Lehman's fiscal quarter ended one month earlier than the other banks, so the magnitude of its problems was disclosed before those of other banks.
Paulson's refusal to support Lehman was extraordinarily reckless, because there was no transparency in the financial markets, given that vast amounts of money tied up in hedge funds and credit default swaps. Markets became destabilized right after Lehman declared bankruptcy on September 15, 2008.
Lehman suddenly defaulted on 900,000 derivatives, hedge fund assets were frozen, and countless hedged positions suddenly became unhedged. Nobody knew who was solvent and who was not. The different capital markets started freezing up in succession: the interbank lending market, money market funds, the commercial paper market. Banks cut back on extending trade letters of credit, thereby slowing down shipping and the trade of raw materials around the world, and further pushing down commodity prices. Global trade declined for the first time since World War II.
Paulson's TARP bait and switch. To stabilize the markets, Congress forked over $700 billion to Paulson, who then gave the banks another sucker punch on November 12, one week after Obama was elected. Paulson said he would not apply TARP funds to help abate the foreclosure crisis, and the prices of mortgage securities plunged further, effectively forcing the largest banks into insolvency.
Madam Speaker, today we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits. Many have already argued for the need to update our financial laws. I would just add that I agree on the need for reform but oppose this approach.
Deregulation of the financial sector is no myth?
Government regulations present the greatest threat to privacy and consumers' loss of control over their own personal information. In the private sector, individuals protect their financial privacy as an integral part of the market process by providing information they regard as private only to entities they trust will maintain a degree of privacy of which they approve. Individuals avoid privacy violators by `opting out' and doing business only with such privacy-respecting companies.
I guess we need more not less transparency. Glasnost was a great tool to bring authoritarian systems down.
From the SEC chairman himself... after the fact of course.
"As the markets grew larger and more complex—in scope and in products offered—the Commission failed to keep pace. As the markets needed more transparency, the SEC allowed opacity to reign. As an overheated market needed a strong referee to rein in dangerously risky behavior, the Commission too often remained on the sidelines.
As this Committee examines the record, I believe it will find a lack of transparency, a lack of enforcement, and a lack of resources all played key roles."
EPA, FDA cuts impact enforcement
EPA not Enforcing Clean Air Act
EPA not enforcing E-waste rules
FDA not enforcing Medical Device standards
These banking conglomerates like Citibank and BoA because of the deregulation grew "too big to fail". All those mergers would've been illegal before. They were able to misrepresent the risk in the sub-prime mortgage backed securities because of a lack of or no regulation. Because of deregulation they were able to leverage themselves far beyond what they could before.
100% reserve? How will the banks loan out money, or pay interest if they have to keep 100% of deposits on hand? Why even have a bank? I might as well keep my money stuffed in my mattress. There were still bubbles, booms, and busts when there was a gold standard, and even before fractional banking.
No matter how BTS spins...it's a Bush Depression. Plain and simple. He dragged the entire country into a phony war that has cost trillions in debt and lives for ?. His administration ponied up to no bid contracts for buddies for billions. He reduced funding for almost every single government agency so not only were they short of staffing but his administration turned a blind eye to every slick handshake they saw. Greed is good was their mantra. Auditors that warned about Madoff were so afraid to come forward for fear of their lives from other equally as powerful people in this country that they slipped anonymous warnings in envelopes and passed them on. Bush Depression through and through...and through. sammieswife.
Do you think a patchwork of regulation at this stage is going to hold the beast together?
Bush was right: this sucker is going down.
No matter how BTS spins...it's a Bush Depression. Plain and simple.
I agree to a point. I think it's a failed ideology from Reagan on. Huge spending, tax cuts on the top, deregulation, bust the Unions, gut the middle class. Bush just continued the same tired formula, only he added war on two fronts.
> This is not a recession. It is the end of capitalism . deregulation.
Now that is something I can agree with.
Yes, this is going to be a hard time. But we WILL come out of it and we will come out of it stronger than when we went into it.
This is NOT the end of the world. (I only say that because a Replubican was not elected President).
Rich Lowry argues that Obama's cushion of having inherited the recession grows smaller, each day.
Obama still has a political cushion on the economy because he inherited such a mess - but, from now on, that cushion diminishes by the day. The ever-accelerating pace of the news cycle, plus Obama's overexposure and the size of the stimulus package (and the rapidity with which it passed) all mean he'll probably take ownership of the economy too quickly for comfort.
In an astonishing about-face, he's already talking about cutting the deficit he was desperately urging Congress to increase less than two weeks ago. The idea is that once the Keynesian stimulus has worked its magic, it can be rolled back up as the economy recovers, jolted back to life by highway re-paving projects and upgrades to federal buildings.
http://www.nypost.com/seven/02242009/postopinion/opedcolumnists/its_his_economy_now_156633.htm
David Sirota, from Open Left, speaking of 'Fiscal Conservatives'...
I'm really starting to believe that many politicians don't know even the most basic stuff about economics.
http://www.openleft.com/showDiary.do;jsessionid=CB0DE44FFC395A8FAB82DE2C49348ECD?diaryId=11727
