Finding the culprit

saltwn · #1 (**permalink**) 10-10-2008, 12:14 PM

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In 1931, the Pecora Commission was established by the U.S. Senate to study the causes of the crash. The U.S. Congress passed the Glass-Steagall Act in 1933, which mandated a separation between commercial banks, which take deposits and extend loans, and investment banks, which underwrite, issue, and distribute stocks, bonds, and other securities.

After the experience of the 1929 crash, stock markets around the world instituted measures to temporarily suspend trading in the event of rapid declines, claiming that they would prevent such panic sales. The one-day crash of Black Monday, October 19, 1987, however, was even more severe than the crash of 1929, when the Dow Jones Industrial Average fell a full 22.6%.[20] (The markets quickly recovered, posting the largest one-day increase since 1932 only two days later.)

Here's what was done after the great depression to protect us:

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The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and included banking reforms, some of which were designed to control speculation.[1] Some provisions such as Regulation Q, which allowed the Federal Reserve to regulate interest rates in savings accounts, were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm-Leach-Bliley Act, which passed in Congress with a 343-86 vote in the House of Representatives, before being sent to conference committee; the final bipartisan bill (Senate: 90-8-1, House: 362-57-15) was signed by President Bill Clinton.[2][3]
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And here's what was done to bring us to where we are today:

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The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102

, 113 Stat. 1338, enacted November 12, 1999, is an Act of the United States Congress which repealed part of the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.

The Gramm-Leach-Bliley Act (GLBA) allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers Group, an insurance company, and in 1998 formed the conglomerate Citigroup, a corporation combining banking and insurance underwriting services. Other major mergers in the financial sector had already taken place such as the Smith-Barney, Shearson, Primerica and Travelers Insurance Corporation combination in the mid-1990s. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act by combining insurance and securities companies, if not for a temporary waiver process [1]

. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the financial services industry.

Might I remind you that Phil Gramm is still one of McCain's economic advisers.
I won't say he did this thing single handedly. But while propaganda was pushed on us daily to look at abortion and flag burning and turn our attention to war, we were getting screwed by this.
Getting screwed without your consent while being doped is a crime of the highest magnitude and lowest morality.
Lady's and Gentlemen, I would give you George Bushes 1 and 2, Ronald Reagan, Bill Clinton, and the congress especially Phill Gramm's heads in a bucket to throw to the hogs if I could.

cnredd · #2 (**permalink**) 10-10-2008, 12:28 PM

Video: Subprime loans “affirmative action” - Andrew Cuomo

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Another lengthy video attempts to highlight the beginnings of the subprime loan disaster, and it’s well worth watching. Andrew Cuomo, then Bill Clinton’s HUD Secretary, held a press conference on April 6, 1998, explaining a settlement reached with a major bank on a lending discrimination case based presumably on the CRA. Cuomo brags about how “this administration will enforce the law”, but he also makes a very telling admission about the $2.1 billion in subprime loans that the bank would offer as a result of the settlement:

YouTube - ASTONISHING VIDEO EVIDENCE FOUND!!! the Clinton administration admitting their policy of "BANK AFFIRMATIVE ACTION". Secretary Cuomo admits they forced banks to make BAD LOANS. And Obama's tie to all of it!!!

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They would not have qualifed but for the affirmative action on the part of the bank, yes.

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He then admits that there would be “higher risk”, and a higher default rate, on the loans the Clinton administration forced this bank to make. He also admits that the action forced this bank to lower its standards on loan qualification as a remedy to supposed discriminatory action in the past by relying on income and equity requirements. Cuomo describes everything wrong with subprime lending and reveals the government’s efforts to distort private lending markets to force “fairness” in outcomes.

The financial world did not collapse because of 15,000 loans from this one settlement, but this case did not exist in isolation. Cuomo held this press conference as a warning to all lenders that the Clinton administration intended to enforce the CRA broadly with all lenders, and in fact he explicitly stated this. When that didn’t free up credit as quickly as Clinton desired, he and Congress mandated Fannie Mae and Freddie Mac to purchase more subprime paper — which Cuomo baldly admitted was riskier and would have a higher rate of failures — and to turn them into mortgage-backed securities, which they marketed as low-risk investments based on implicit government backing.

This did what the heavy-handed enforcement of the CRA could not: it made lenders enthusiastic about subprime lending. Why? They could make short-term profit on every mortgage regardless of the borrower’s ability to repay, because Fannie and Freddie would buy them anyway. With the risk removed from lending, subprime loans became quick-buck rackets for all lenders, predatory or not.

The second half of the video relates what we already know about Barack Obama. He sued Citibank to force more subprime lending, and his ACORN partners did the same elsewhere, initiating actions like the one Cuomo heralds here as a great breakthrough in affirmative-action lending. Obama bears responsibility at the edges for the beginning of this disaster, and more for his inaction while in the Senate as Alan Greenspan warned them of the coming collapse. Most of this falls on the Clinton administration and Congress in 1998-2000, who set this brush fire alight and then kept the firefighters at OFHEO at bay by calling them racists.

saltwn · #3 (**permalink**) 10-10-2008, 12:42 PM

Quote:

Originally Posted by cnredd

Video: Subprime loans “affirmative action” - Andrew Cuomo

YouTube - ASTONISHING VIDEO EVIDENCE FOUND!!! the Clinton administration admitting their policy of "BANK AFFIRMATIVE ACTION". Secretary Cuomo admits they forced banks to make BAD LOANS. And Obama's tie to all of it!!!

That maybe exacerbates an already bad outlook. The fundamental laws that were changed to allow this are the point here. I knew they were doing a lot of stuff in the eighties about labor laws and other traditional stuff; I always suspected laws were changed to allow risky ventures with tax payer money. I finally ran across this proof and it has me boiling.
I always wanted to assume (like everyone else wanted to) that our leaders had our best interst at heart. Hah!

Adept1 · #4 (**permalink**) 10-10-2008, 12:50 PM

The stock markets collapses and recovers......has its ups and downs etc......this is totally inevitable. The problems happen when the government attempts to control the natural forces of the market. Similar to "trying to control the weather", you cannot defeat mother nature. She will reassert herself in a much stronger method. Free enterprise regulates itself.....the law of supply and demand is so powerful that it can NOT be overcome even by regulation. Every time the government interferes they will later have to interfere again to correct the "new" problem that THEY created.

Prime example........."anti-gouging" laws......when a supply is tight how else can you regulate how soon it will be wasted away if you do NOT raise the price. Last 3 rolls of toilet paper in town and you can't "auction them". Keep in mind that you were the one with the foresight to stockpile and paid for them and furnished the place to store them. Actually if you think about it ALL auctions should be illegal using the anti gauge laws.

Adept1 · #5 (**permalink**) 10-10-2008, 12:54 PM

The great depression.......Stock market collapses all over the world..........2 years later the world recovered......The US government enacted many laws and "programs" that then KEPT us in recession for another 10 years and then it took a WORLD WAR to pull us out. Are we realy stupid enough to repeat this history.

Those that don't know history are doomed to repeat it.
Those that don't know history correctly...are simply doomed.

saltwn · #6 (**permalink**) 10-10-2008, 01:03 PM

Quote:

Originally Posted by Adept1

The stock markets collapses and recovers......has its ups and downs etc......this is totally inevitable. The problems happen when the government attempts to control the natural forces of the market. Similar to "trying to control the weather", you cannot defeat mother nature. She will reassert herself in a much stronger method. Free enterprise regulates itself.....the law of supply and demand is so powerful that it can NOT be overcome even by regulation. Every time the government interferes they will later have to interfere again to correct the "new" problem that THEY created.
That kind of thinking got us into this mess!
Prime example........."anti-gouging" laws......when a supply is tight how else can you regulate how soon it will be wasted away if you do NOT raise the price. Last 3 rolls of toilet paper in town and you can't "auction them". Keep in mind that you were the one with the foresight to stockpile and paid for them and furnished the place to store them. Actually if you think about it ALL auctions should be illegal using the anti gauge laws.

The deregulation of the banking industry allowing them to merge with insurance and investment companies has a direct correlation to what we are seeing happen right in front of our eyes.

saltwn · #7 (**permalink**) 10-10-2008, 01:05 PM

Quote:

Originally Posted by Adept1

The great depression.......Stock market collapses all over the world..........2 years later the world recovered......The US government enacted many laws and "programs" that then KEPT us in recession for another 10 years and then it took a WORLD WAR to pull us out. Are we realy stupid enough to repeat this history.

Those that don't know history are doomed to repeat it.
Those that don't know history correctly...are simply doomed.

Exactly! The steel act helped protect us all those years and Reagan thought he could improve on that. What a dum bass.

Adept1 · #8 (**permalink**) 10-10-2008, 02:48 PM

Quote:

Originally Posted by saltwn

The deregulation of the banking industry allowing them to merge with insurance and investment companies has a direct correlation to what we are seeing happen right in front of our eyes.

Well darn I thought it was all the "worthless paper" that eventually permeated the entire market place that caused the problem. Funny, credit unions and most "regular banks" are just not participating in this debacle.
ALL experts agree that the root problem was government interfering and FORCING lending institutions to lend to bad risks and then Mac & mae buying up 70% of the worthless mortgages(under a presumptive government guarantee) bundling them and SELLING them to all of the institutions that are now failing due to worthless paper.

saltwn · #9 (**permalink**) 10-10-2008, 04:16 PM

Quote:

Originally Posted by Adept1

Well darn I thought it was all the "worthless paper" that eventually permeated the entire market place that caused the problem. Funny, credit unions and most "regular banks" are just not participating in this debacle.
ALL experts agree that the root problem was government interfering and FORCING lending institutions to lend to bad risks and then Mac & mae buying up 70% of the worthless mortgages(under a presumptive government guarantee) bundling them and SELLING them to all of the institutions that are now failing due to worthless paper.

No they don't. All Fox propagandists try to force that theory. There are many things at work here, but the basis of the helter skelter techniques these banks used was that they were allowed to merge with trading and insurance companies. That lead to the downfall of the American economy like similar loop holes lead to the last depression. We fixed it, then along came greedy gut and unfixed it so his friends and fluck buddies could make a mint.
And the insinuation that anything but Republican mismanagement lead to the Great Depression would laughable. If it wasn't so damned sad.

Adept1 · #10 (**permalink**) 10-10-2008, 04:32 PM

Quote:

Originally Posted by saltwn

No they don't. All Fox propagandists try to force that theory. There are many things at work here, but the basis of the helter skelter techniques these banks used was that they were allowed to merge with trading and insurance companies. That lead to the downfall of the American economy like similar loop holes lead to the last depression. We fixed it, then along came greedy gut and unfixed it so his friends and fluck buddies could make a mint.
And the insinuation that anything but Republican mismanagement lead to the Great Depression would laughable. If it wasn't so damned sad.

EXCEPT that the republicans in this EXACT instance were NOT promoting deregulation it was "that one", the other party.
Now take a moment to explain to me why it WASN'T the "bad paper" that caused this and why and which rules that were changed did cause it....please be specific about which changes you mean rather than just saying "the deregulation" cause I'm slow and need to understand what they did that caused this.

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