BAILOUT: Yes or No?

[Crazed Rabbit]

I realise that this is not really the time to be talking about solutions longer-term, but you might be interested in this analysis of the Santander Bank, a Spanish business that is quietly growing on the back of the British government's panic.

Not only has Santander weathered the storm, it has spectacularly benefited from it, announcing 9bn euros profit this year, a staggering 19.3 per cent improvement on last year.

Two reasons, really: first the Spanish banking system is very strictly regulated, largely as a result of a devastating crisis that shook the country's banking industry in the 1970s, and sent many regional and family banks to the wall. The Bank of Spain imposes iron controls in assuming high-risk assets, and insists that ordinary customers be protected from their vagaries. Second, Santander concentrates on retail banking – the unsexy stuff of high-street branches, current accounts and savings deposits – rather than investment banking, or anything fancier. The bank reckons its business is therefore largely immune from market swings.

In other words, a really conservative bank. You know, conservative in the real sense of the word.

Indeed. De-regulation in the late 1990s allowed new avenues for making profits in America. Those who used those opportunities wisely are doing fine.

But our problem is beyond mere capitalistic greed - the government and special interest groups pushed Fannie Mae and Freddie Mac to accept sub prime loans and the government didn't put the standard regulations on Fannie and Freddie.

I'm hearing the Democrat leadership is going to reinstall the liberal provisions of the bill to get more demos on board, including a huge amount of money for ACORN, the special interest group that pushed for giving sub prime loans to poor minorities.

CR

[HoreTore]

How about raising wages to make poor people afford a house instead of playing with the loan market?

[Husar]

How about raising wages to make poor people afford a house instead of playing with the loan market?

That way the rich wouldn't be as rich anymore(since rich is always relative) so that's obviously a pretty bad idea.

[Koga No Goshi]

Indeed. De-regulation in the late 1990s allowed new avenues for making profits in America. Those who used those opportunities wisely are doing fine.

But our problem is beyond mere capitalistic greed - the government and special interest groups pushed Fannie Mae and Freddie Mac to accept sub prime loans and the government didn't put the standard regulations on Fannie and Freddie.

I'm hearing the Democrat leadership is going to reinstall the liberal provisions of the bill to get more demos on board, including a huge amount of money for ACORN, the special interest group that pushed for giving sub prime loans to poor minorities.

CR

Seriously, stop with the reinventing history. If you want to turn this into a pure partisan matter (and of course, from your perspective, it is all and only the Democrats) then let's get into the ownership society. Whose deal is that? Bush. You guys are still complaining to this day about the New Deal, when your party has given us such wonderful things as the ownership society, the idea that you can have whatever you want, with a joke tax cut, on a subprime loan, a credit card, or by taking a part time minimum wage job or going to night school. This is the guy who told us to go shopping after 9/11.

"We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004."

Any finger you want to point at the Dems, three more are pointing back at you. The fact that we were even in a housing bubble is in large part because of heavily (not exclusively, but dominantly) Republican policies of deregulation, tax incentives for outsourcing, and the gutting of many major domestic industries. The last big cash cow was the housing market, and people's ability to pull big credit out of a house to pay for things their jobs didn't afford them but the economy depended on people buying (no matter how much we want to lecture about individual responsibility.) The fact that subprime loans were popping up like Starbucks was the result of deregulation of the financial markets, not regulation. The fact that they were not checking credit scores or income was deregulation. This was private failure enabled by pro-business, deregulation policies. This was not private victimhood brought on by too much regulation.

And, if you want to make this all about homeownership regulations regarding Freddie and Fannie, and blame it on the Dems... well, you guys controlled all three branches for nearly 8 years. But you were too busy with your ownership society.

I love how the defense of Republicans today, especially the McCain campaign, is "well we've been talking about the need for reform in the housing market for awhile now." Yeah, well, you did nothing with 7 and change years in control of government about it, so we know what your words were worth, right?

[Mangudai]

then let's get into the ownership society. Whose deal is that?

It's both parties. The "ownership society" has been promoted by both parties.

1994 changes in regulation of employee stock options were a major cause of the 2002 downturn. We had incentives in place to inflate stock prices rather than actual earnings. Dems favored generous employee stock options, to give workers a share of their company. Republicans liked the idea too in 1994, they finally fixed it.

According to US generally accepted accounting principles in effect before June 2005, stock options granted to employees did not need to be recognized as an expense on the income statement when granted, although the cost was disclosed in the notes to the financial statements. This allows a potentially large form of employee compensation to not show up as an expense in the current year, and therefore, currently overstate income. Many assert that over-reporting of income by methods such as this by American corporations was one contributing factor in the Stock Market Downturn of 2002.

http://en.wikipedia.org/wiki/Employee_stock_option



http://uk.youtube.com/watch?v=_MGT_cSi7Rs

Who was pushing home ownership beyond any rational limits?

[Koga No Goshi]

It's both parties. The "ownership society" has been promoted by both parties.

1994 changes in regulation of employee stock options were a major cause of the 2002 downturn. We had incentives in place to inflate stock prices rather than actual earnings. Dems favored generous employee stock options, to give workers a share of their company. Republicans liked the idea too in 1994, they finally fixed it.

I agree Clinton was crap. "Centrist" as the Republicans would say, or "Republican" as my brand of Dem would say, on economic issues. But, that was 14 years ago. 1994 was FOURTEEN YEARS AGO, even if Clinton feels like yesterday to people. So I still fail to see how posters like CR can legitimately convince themselves that after 2 terms of FULL Republican control, this is all the fault of Democrats, or even primarily so would be a stretch in my mind. The bar here seems to be, the Dems need to do everything correctly the first time, and fix anything wrong that the excesses of greed or corporate influence that inhabit the Rep party might try to slip in here and there, because we can't count on the Reps to do crap but line pockets and pick their nose. That is the message I'm getting out of people like CR who claim to be SO against the conditions that enabled all of this, while his political party sat in control for the last 8 years. Clearly he and his party have a difference in opinion as to whether or not regulation or deregulation was needed.

Again, goin back to page 1... deregulation has been the mantra of the GOP since Reagan. All these fake protests now, after the fact, about how McCain or the Republicans or the GOP or this or that or so and so's friend George "talked about better control of the financial industry" isn't worth the paper it was never printed on.

[Ronin]

it´s funny....because it´s true

[Mangudai]

Again, goin back to page 1... deregulation has been the mantra of the GOP since Reagan. All these fake protests now, after the fact, about how McCain or the Republicans or the GOP or this or that or so and so's friend George "talked about better control of the financial industry" isn't worth the paper it was never printed on.

You're oversimplifying in the extreme. Nobody is against all regulation, and nobody is for every conceivable regulation. The main divide is that republicans favor only regulation to protect the public safety, democrats also favor regulation to distort price incentives to promote the interests of the underprivileged.

Reagan style deregulation was extremely successful. Here are two important examples:

http://www.econlib.org/Library/Enc/T...egulation.html

The Motor Carrier Act of 1935 required new truckers to seek a "certificate of public convenience and necessity" from the ICC. Truckers already operating in 1935 could automatically get certificates, but only if they documented their prior service, and the ICC was quite restrictive in interpreting proof of service. New trucking companies, on the other hand, found it extremely difficult to get certificates.

http://en.wikipedia.org/wiki/Airline_Deregulation_Act

Since 1937, the federal Civil Aeronautics Board (CAB) had regulated all domestic air transport as a public utility, setting fares, routes, and schedules. The CAB promoted air travel, for instance by generally attempting to hold fares down in the short-haul market, to be subsidized by higher fares in the long-haul market. The CAB also was obliged to ensure that the airlines had a reasonable rate of return. It also earned a reputation for bureaucratic complacency; airlines were subject to lengthy delays when applying for new routes or fare changes, which were not often approved.

We used to have crap like that in all sorts of industries. Thanks to Reagan style deregulation most of it is gone now.

India's economy was known as the "permit raj" because it required licensing for all sorts of activities. India has "liberalized" (republican style) their economy, and they are taking off.

China is totally different. Their regulation has more to do with personal relationships and less to do with written codes. Their model sucks.

[Koga No Goshi]

You're oversimplifying in the extreme. Nobody is against all regulation, and nobody is for every conceivable regulation. The main divide is that republicans favor only regulation to protect the public safety, democrats also favor regulation to distort price incentives to promote the interests of the underprivileged.

I absolutely am not, in the context of Republican control for the last 8 years and CR's insane piecemealed tack-on arguments to say this is all the fault of Democrats and minorities and "liberal pet projects." If Republicans believe there can be good regulation (debatable, especially considering the GOP's voting record), and also believed that Freddie and Fannie and the financial market needed it, nothing stopped them from sitting on their hands for 8 years and then, when the whole thing exploded, blaming it on Democrats. What great leaders on this issue.

And, your characterization of the differences is very inadequate. The kinds of regulations various different Democrats may support can run the gamut and frequently DO cover issues like safety and public health, rather than just some imaginary oppress-the-whites pro-minority advocacy you seem to be implying. The only consistency, whatsoever, to what Republicans seem to support when it comes to corporations, laws, and regulation, is what's profitable for corporations who have significantly contributed to the current GOP congress, the GOP politicians up for re-election, or the present GOP administration. Iraq, for instance... stories about septic contamination of water the troops are receiving from private contractors connected with Cheney. Yes, I see the attention to care and safety there that you say Republicans support regulation for. Everything else, from checking social security numbers of employees to try to catch illegal immigrants, to minimum wages, to safety inspections (mine cave-in's of the last few years), is very expendable depending on who didn't want it, whose profit it hurts, and if that industry happened to give a lot of money to GOP politicians.

[Mangudai]

You're oversimplifying in the extreme. Nobody is against all regulation, and nobody is for every conceivable regulation. The main divide is that republicans favor only regulation to protect the public safety, democrats also favor regulation to distort price incentives to promote the interests of the underprivileged.

And, your characterization of the differences is very inadequate. The kinds of regulations various different Democrats may support can run the gamut and frequently DO cover issues like safety and public health, rather than just some imaginary oppress-the-whites pro-minority advocacy you seem to be implying.

Your logic is inadequate. I said something like Alice only likes apples, and Bob also likes bananas.
Bob might like apples, oranges and pears. Alice does not like anything except apples.

[Crazed Rabbit]

Any finger you want to point at the Dems, three more are pointing back at you. The fact that we were even in a housing bubble is in large part because of heavily (not exclusively, but dominantly) Republican policies of deregulation, tax incentives for outsourcing, and the gutting of many major domestic industries. The last big cash cow was the housing market, and people's ability to pull big credit out of a house to pay for things their jobs didn't afford them but the economy depended on people buying (no matter how much we want to lecture about individual responsibility.) The fact that subprime loans were popping up like Starbucks was the result of deregulation of the financial markets, not regulation. The fact that they were not checking credit scores or income was deregulation. This was private failure enabled by pro-business, deregulation policies. This was not private victimhood brought on by too much regulation.

And, if you want to make this all about homeownership regulations regarding Freddie and Fannie, and blame it on the Dems... well, you guys controlled all three branches for nearly 8 years. But you were too busy with your ownership society.

And the dems control congress and can't pass the bailout. But when that happens, you call it a bipartisan failure.

I'm not saying the FNMA collapse was brought on by too much regulation. I'm saying there was too little.

It was the GSEs that got special privileges and bonuses from the government. They bought up sub prime loans, which encouraged banks to give those loans which encouraged more people to buy homes, which increased the price of homes. This has little to do with late 1990s deregulation.

Fannie and Freddi enabled this, and they are not private companies. And that's without mentioning their accounting scandals.

As for blaming political parties, perhaps I've been a bit soft on the GOP. But they never had 60+ in the Senate, and democrats were against this regulations because it meant regulating a GSE instead of a private firm. And the GOP failed getting all sorts of other legislature conservatives wanted passed. So it was not pure GOP aversion to regulating Fannie and Freddie that stopped regulations in '04 and '05.

I'm sorry, but with that post you seem to be piling on the democrat talking points.

CR

[Decker]

First off I'm not exactly the smartest or most informed person on this subject. I'm really trying to be... in a sense and following it when I can. But school is a nice little nag . So please excuse me if my question is a bit ignorant or already been answered in some way shape or form...

My question is,
Since it appears that the US will borrow 700 billion from foreign banks and such, how will this, in the long run, help the US economy and those around the world who are connected to our economy? It will put us further into debt, and the more I think about the current bail out plan (and from what I've heard and read, as I have yet to see the actual details about it), it will just make everything "feel" good now, but bite us harder in the future. I feel like we should have let it collapse and then build it back from the ground up. I know it may takes years and maybe even decades, but I'm looking at how this will work out for future generations.

[Lemur]

A bunch of high-grade economists discussing where we are and what may happen. Long, but worth it.

[KukriKhan]

First off I'm not exactly the smartest or most informed person on this subject. I'm really trying to be... in a sense and following it when I can. But school is a nice little nag . So please excuse me if my question is a bit ignorant or already been answered in some way shape or form...

My question is,
Since it appears that the US will borrow 700 billion from foreign banks and such, how will this, in the long run, help the US economy and those around the world who are connected to our economy? It will put us further into debt, and the more I think about the current bail out plan (and from what I've heard and read, as I have yet to see the actual details about it), it will just make everything "feel" good now, but bite us harder in the future. I feel like we should have let it collapse and then build it back from the ground up. I know it may takes years and maybe even decades, but I'm looking at how this will work out for future generations.

Your question: "...how will this...help...?" is a fine one, Decker, and one actually not adequately addressed by either the right or left, here, on TV, or in Congress/Administration.

My answer is just my personal opinion: it might not help at all. They're basically gambling that we can spend our way out of the mess by covering (that is: removing from play) bad paper and holding it for awhile, until things (the housing and credit and monetary markets) get better on their own; then slowly re-introducing that bad paper into the system, a little at a time - sort of like an immunization plan for a patient with cancer, who took too much of an anti-cancer wonder drug, but saw his liver and kidneys fail from too much of a good thing. The "doc" has to roll back the dosage, and make the treatment more long term, so the patient survives, AND the cancer goes away, over time. He hopes.

If he fails, and either the cancer, or the drug side-effects, win, the patient dies. And in this case, we go into Great Depression v2.0. No jobs, no credit, no capital, etc.

As to "how it will work out for future generations": you and your kids will be paying for this for about 40 years+. Because if government intervention really is the only way to fix this (and I'm not convinced yet that it is), then $700bn isn't gonna be enough. They pulled that number out of thin air anyway. My ignorant blue-collar best guess would be more in the neighborhood of $2 Trillion. That amount should be about enough to buy up all mortgages that have 2 or more missed payments - which I would define as 'bad paper', and include properties going to auction next week.

Net effect: U.S. Gov't becomes the biggest property-holder, bank, landlord, and insurance company on earth. And how it's all paid for depends on whether we elect the "tax and spend" Dems, or the "borrow and spend" Rep's. Either way it's spending OPM (other people's money - that hasn't been earned yet).

And finally, none of this refers to anything in the Constitution, except that there is some semblance of voting going on.

[Don Corleone]

I'm just wondering if in 3-4 pages of unflinching confrontation, CR & Koga ever considered the possibility that they're BOTH right. That Fannie Mae and Freddie Mac WERE incentivizing people to make loans to people that might not be the most secure risk, but that loan officers were off on a tear and doing well more than anything being asked of them by FM/FM?

Seriously, guys, take it down a notch. Take the 10,000 foot view for a second:

-You have Democrats arguing that in order to save the economy, we must subsidize Wall Street's bad investments. Privatized profits, socialized losses. Does that sound like a Populist stance to any of you?

-At the same time, I would argue, in an even greater departure from their avowed principles, you have Republicans arguing that the only way our credit markets can be resolved is to socialize them. Hmmm....

Similarly, the bill didn't pass for 2 reasons: 1) too many House Republicans dug their heels in and showed some spine (65%) 2) some Democrats showed commitment to their prinicples too, and voted against redistributing wealth upwards (I'd peg that at about 25%).

And yes, I think to a limited degree, Nancy Pelosi getting up and saying "By voting for this bill, you wisely and publicly agree that Republican fiscal policies are a failed joke" was about 10% responsible. That was one of the dumbest political stunts I've ever seen. Or was it? I wonder if she didn't speak to her true feelings and try to sabotage the bill while simultaneously voting for it.

By the way, while we're all patting ourselves on the back and talking about how the responsible taxpayer is going to get shafted by the irresponsible fatcats, how about a little bit of sobering reality for all of us?

-We have a 9.6 trillion national debt.
- The average American taxpayer holds over $12K in unsecured debt (credit cards, educational loans, car loans).
-Over 70% of the government's money comes from the top 10% of wage earners.
-About 40% comes from the top 1%.
-When people talk about "giving" $2300 to each American, that's exactly what it is. Pure redistribution of wealth. The bottom 50% pay less than 3% of their income in taxes.

Seriously folks, let's get real. For all our "soak the rich" talk, we already are. And we're not talking about paying this bill ourselves. We're talking about screwing our kids. We've over consumed the wealth our current 2 generations can produce, and we're now eating into our kid's future earnings. I'm not going to pay for this bailout, Jillian and Allison will, and they're 3 years and 6 mos, respectively!

Any plan that restores us to fiscal conservatism, balanced budgets and $0 debt is good in my book. Which is why I'm thrilled to death that the bailout bill went down, even though it personally cost me about 20% of my retirement savings. And if Koga wants to give me and the other evil Republicans credit for it, I'll at least proudly take my 65% of that credit.

Seriously folks, we should go to Frankfort and study how successful markets are run. While we've been busy playing world cop, the Germans have quietly and successfully transformed themselves into the largest exporter as a percentage of GDP (greater than China!). That used to be what we did.

[HoreTore]

Very good post, Don

But this:

Seriously folks, let's get real. For all our "soak the rich" talk, we already are.

It's sad that certain people still haven't figured out that we can't pay our way out of everything by taxing the rich. If we're going to get anywhere, if we're going to raise any decent amount of money, then sorry, the regular guy has to pay. And by looking at your debt, I'd say you ought to start taxing yourselves... Very soon.

[Big_John]

And yes, I think to a limited degree, Nancy Pelosi getting up and saying "By voting for this bill, you wisely and publicly agree that Republican fiscal policies are a failed joke" was about 10% responsible.

any representatives who changed their vote based on her speech need to be deported.

[Koga No Goshi]

And the dems control congress and can't pass the bailout. But when that happens, you call it a bipartisan failure.

It is. The Republicans are almost ALL against it. And a lot of the Dems are. This is a very unpopular bill, what do you want? You are operating on a total double standard, you say you are not for the bailout, but then you want to declare a Democratic failure to pass one. If you don't want the bailout, then not passing it is a victory. Simple as that.

I'm not saying the FNMA collapse was brought on by too much regulation. I'm saying there was too little.

No, you keep repeating that the only reason any of this happened was the government "forcing" home loans for people who couldn't afford them, purportedly as part of some pet project to help minorities or poor people that only the Dems espoused. Even though, as already pointed out, both parties have been part of the "Ownership society", with our current Republican President being quite enthusiastic for it.

It was the GSEs that got special privileges and bonuses from the government. They bought up sub prime loans, which encouraged banks to give those loans which encouraged more people to buy homes, which increased the price of homes. This has little to do with late 1990s deregulation.

Dude. Do you even KNOW anyone who works in finance? Ask anyone why these banks wanted to give out subprime loans. They didn't need "encouraging" from anyone. Commission fees, and very nice commissions for the loan agents who brokered them. This became the financial equivalent of used car salesmanship. Everyone, BANKS INCLUDED, believed the housing market was continuing upwards for a very long time. So they didn't worry (and the law did not require them to worry, or even do basic checking on loan applicant information) because by the time subprime borrowers got crunched, their housing value "should" have increased to the point where they could either a) sell at a profit and get out of the loan b) take equity out for more on hand cash.

Fannie and Freddi enabled this, and they are not private companies. And that's without mentioning their accounting scandals.

Freddie and Fannie were not private? You just pulled a Sarah Palin.

As for blaming political parties, perhaps I've been a bit soft on the GOP. But they never had 60+ in the Senate, and democrats were against this regulations because it meant regulating a GSE instead of a private firm. And the GOP failed getting all sorts of other legislature conservatives wanted passed. So it was not pure GOP aversion to regulating Fannie and Freddie that stopped regulations in '04 and '05.

I'm sorry, but with that post you seem to be piling on the democrat talking points.

CR

If you "don't want to get into the blame game", then stop making every other post a little snippet about how this is all the Democrats. And the Dems don't have 60+ in the Senate either, and you have been more than happy to heap blame on the "Democratic Congress" for not fixing an economic and political trend of laissez faire Christmas Day for Investor Class capitalism that has been going back to Reagan in a couple of months. Oh, and don't even give me a "they didn't have a big enough majority to pass things they wanted to" excuse for the Republican Congress, which changed the rules of the House and Senate and threatened the nuclear option left and right. So if you don't want a fight about whose party sat in power for years and either enabled, or advocated, and put their stamp on, A LOT if not most of the policies hurting us at the moment from Iraq to the economy, then stop starting one.

[Crazed Rabbit]

No, you keep repeating that the only reason any of this happened was the government "forcing" home loans for people who couldn't afford them, purportedly as part of some pet project to help minorities or poor people that only the Dems espoused. Even though, as already pointed out, both parties have been part of the "Ownership society", with our current Republican President being quite enthusiastic for it.

By forcing you must mean the government laws that say banks have to give out loans not just to the safest customers, and the laws that allow special interest groups to hold up bank mergers and the like if the special interest groups don't think the banks are helping out minorities enough by giving out subprime loans?

Dude. Do you even KNOW anyone who works in finance? Ask anyone why these banks wanted to give out subprime loans. They didn't need "encouraging" from anyone. Commission fees, and very nice commissions for the loan agents who brokered them. This became the financial equivalent of used car salesmanship. Everyone, BANKS INCLUDED, believed the housing market was continuing upwards for a very long time. So they didn't worry (and the law did not require them to worry, or even do basic checking on loan applicant information) because by the time subprime borrowers got crunched, their housing value "should" have increased to the point where they could either a) sell at a profit and get out of the loan b) take equity out for more on hand cash.

Those banks made those loans because they knew Fannie and Freddie would buy about risky subprime loans, so they could make money without the risk.

Freddie and Fannie were not private? You just pulled a Sarah Palin.

Oh, I'm sorry, do private corporations have huge lines of credit with the US treasury? Do private firms have the benefit of the Federal Reserve purchasing their debt? Are private firms exempt from local and state taxes?

Here's an article by Ron Paul five years ago:
http://www.lewrockwell.com/paul/paul128.html

If you "don't want to get into the blame game", then stop making every other post a little snippet about how this is all the Democrats. And the Dems don't have 60+ in the Senate either, and you have been more than happy to heap blame on the "Democratic Congress" for not fixing an economic and political trend of laissez faire Christmas Day for Investor Class capitalism that has been going back to Reagan in a couple of months. Oh, and don't even give me a "they didn't have a big enough majority to pass things they wanted to" excuse for the Republican Congress, which changed the rules of the House and Senate and threatened the nuclear option left and right. So if you don't want a fight about whose party sat in power for years and either enabled, or advocated, and put their stamp on, A LOT if not most of the policies hurting us at the moment from Iraq to the economy, then stop starting one.

Funny thing; McCain gave a speech in support of the tougher regulations on Fannie and Freddie. Obama was completely silent.

Finally, an article about how deregulation has nothing to do with this mess:
http://www.bloomberg.com/apps/news?p...d=a6M1QA55PB9Y

Sept. 30 (Bloomberg) -- In the debate on Sept. 26, Democratic presidential nominee Barack Obama argued that the current crisis in the financial markets is the result of Republican deregulation.

The advertising from his campaign has been saying the same thing, and this claim is becoming a fixed element in the talking points of Democratic candidates this year.

The credibility of the charge depends on ignoring several important facts:

-- There has been a great deal of deregulation in our economy over the last 30 years, but none of it has been in the financial sector or has had anything to do with the current crisis. Almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks.

-- The repeal of portions of the Glass-Steagall Act in 1999 -- often cited by people who know nothing about that law -- has no relevance whatsoever to the financial crisis, with one major exception: it permitted banks to be affiliated with firms that underwrite securities, and thus allowed Bank of America Corp. to acquire Merrill Lynch & Co. and JPMorgan Chase & Co. to buy Bear Stearns Cos. Both transactions saved the government the costs of a rescue and spared the market substantial additional turmoil.

None of the investment banks that got into financial trouble, specifically Bear Stearns, Merrill Lynch, Lehman Brothers Holdings Inc., Morgan Stanley and Goldman Sachs Group Inc., were affiliated with commercial banks, and none were affected in any way by the repeal of Glass-Steagall.

EDIT: Fannie and Freddie were also exempted from some of the Sarbanes-Oxley Act, passed to force disclosure of more accounting information after Enron failed.

CR

[Koga No Goshi]

By forcing you must mean the government laws that say banks have to give out loans not just to the safest customers, and the laws that allow special interest groups to hold up bank mergers and the like if the special interest groups don't think the banks are helping out minorities enough by giving out subprime loans?

This is absolutely not true. Unscrupulous subprime lenders were frequently totally separate from regional banks. There is no overarching law saying thou must give bad loans to everyone who asks. The banks that didn't mess around with subprime are doing okay. Companies specifically set up for that ran out and did it to earn commission fees, NOT to follow some government mandate to "help minorities", but because they believed it was viable because of expected continuing inflation of the housing market. And most of them made a ton of money until the housing market caved in.

Oh, I'm sorry, do private corporations have huge lines of credit with the US treasury? Do private firms have the benefit of the Federal Reserve purchasing their debt? Are private firms exempt from local and state taxes?

How do you do a Federal intervention on something that was already Federal and not private?

Funny thing; McCain gave a speech in support of the tougher regulations on Fannie and Freddie. Obama was completely silent.

McCain has been in the Senate for 26 years and Palin "will have to get back to you" via Katie Couric as to whether any single instance can be found in his entire record of voting on the side of more regulations as opposed to less. I'm not interested in what McCain lip flapped about and then went and voted the opposite way on. (There's an awful lot of that, like veterans, torture, tax cuts..)

And my advice, CR.... if I were following my party's "talking points", I would be in support of this bailout. I'm not. People who live in glass houses shouldn't throw around stones. This is nothing but a weak and ill-supported ideological attempt to insist there has been nothing wrong with the Reaganomics school of deregulated free market that has been consistently applied by the GOP for the last three decades, that the problem is Democrats hiding in the ricebowl here, or minorities trying to invade your gated community over there. More scare tactics, more smoke and mirrors, yes there were problems with the structure of the regulations and financial markets, most of that revolving around almost no regulation whatsoever. We wouldn't even be having this discussion if there was even a baseline-- not a socialist, not a strict, not an overly controlling, but even a COMMON SENSE level of regulation-- that for instance, a bank had to check on your reported income before stamping approved. So, if you want to run around swallowing every talking point and every right-wing spin on this whole situation, and your best answers are "banks were forced to do this cause of civil rights crap" and "McCain TALKED about regulation, while his campaign manager and twelve other members of his campaign staff are or were paid Fannie and Freddie deregulation lobbyists", then don't go around lobbing accusations of who is mindlessly swallowing their party's talking points.

[Crazed Rabbit]

This is absolutely not true. Unscrupulous subprime lenders were frequently totally separate from regional banks. There is no overarching law saying thou must give bad loans to everyone who asks. The banks that didn't mess around with subprime are doing okay. Companies specifically set up for that ran out and did it to earn commission fees, NOT to follow some government mandate to "help minorities", but because they believed it was viable because of expected continuing inflation of the housing market. And most of them made a ton of money until the housing market caved in.

*sigh*
Those bankers going after the commission fees got the loans, and then the loans were bought by Fannie and Freddie. Thus they could sell all sorts of risky loans and not face the inherent risk.

Fannie and Freddie were following the 'give loans to the poor who can't afford them' principles.

Liberal special interest groups like ACORN brought pressure on banks that didn't lend to enough poor people who couldn't afford the loans (among other criminal activities for ACORN.)

How do you do a Federal intervention on something that was already Federal and not private?

They are GSEs: Government Sponsered Enterprises, hideous Frankenstein concoctions of firms started and given special advantages by the government.

McCain has been in the Senate for 26 years and Palin "will have to get back to you" via Katie Couric as to whether any single instance can be found in his entire record of voting on the side of more regulations as opposed to less. I'm not interested in what McCain lip flapped about and then went and voted the opposite way on. (There's an awful lot of that, like veterans, torture, tax cuts..)

He didn't vote against it. The dems prevented it from getting a floor vote.

And my advice, CR.... if I were following my party's "talking points", I would be in support of this bailout. I'm not. People who live in glass houses shouldn't throw around stones. This is nothing but a weak and ill-supported ideological attempt to insist there has been nothing wrong with the Reaganomics school of deregulated free market that has been consistently applied by the GOP for the last three decades, that the problem is Democrats hiding in the ricebowl here, or minorities trying to invade your gated community over there.

*sighs*

I'll link the article again, but deregulation has nothing to do with this.
http://www.aei.org/publications/pubI...pub_detail.asp

-- There has been a great deal of deregulation in our economy over the last 30 years, but none of it has been in the financial sector or has had anything to do with the current crisis. Almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks.

-- The repeal of portions of the Glass-Steagall Act in 1999--often cited by people who know nothing about that law--has no relevance whatsoever to the financial crisis, with one major exception: it permitted banks to be affiliated with firms that underwrite securities, and thus allowed Bank of America Corp. to acquire Merrill Lynch & Co. and JPMorgan Chase & Co. to buy Bear Stearns Cos. Both transactions saved the government the costs of a rescue and spared the market substantial additional turmoil.

Alright? Is that clear? Can we get off the 'deregulation is the problem'? rail?

CR

[Strike For The South]

The dollar is up, oil is down. Im sick of this fear mongering and pessimism. I use to think people who thought the world was controlled by a select few were crazy but now Im not so sure.

[Koga No Goshi]

The dollar is up, oil is down. Im sick of this fear mongering and pessimism. I use to think people who thought the world was controlled by a select few were crazy but now Im not so sure.

Oil came down just before the 2000 election, just before the 2004, and just before the 2008. It's not a coincidence. Just like how the color-coded alert system disappeared right after Bush won in 2004. "Wait, weren't we on orange alert yesterday? What? They don't show me the pretty colors anymore? Then I don't know how scared to get!" We just had Ike, and yet prices are still steadily going down. If Ike had happened five weeks after the election it would be an excuse for prices to jump a dollar for five months.

[Strike For The South]

Hopefully people wont buy into this propaganda. I refuse to bail out the powerful I refuse to have a king. I will not see my republic turned into an oligarchy.

[Alexanderofmacedon]

Hopefully people wont buy into this propaganda. I refuse to bail out the powerful I refuse to have a king. I will not see my republic turned into an oligarchy.

Then say "hello great depression II" and a very troubled future. I hope I'm wrong, but that's my opinion based on the facts I've read/heard.

EDIT: Though as I've stated I don't know how much, nor do I know what regulations should be put on the banks. And the link doesn't work to Bloomberg from what I've tried...

[Strike For The South]

http://www.daveramsey.com/common_sense_fix.txt

[Alexanderofmacedon]

http://www.daveramsey.com/common_sense_fix.txt

Okay, I mistook your post to mean you didn't want ANY sort of meddling. I agree regulations need to be posed and a better number is possible. With no market for these assets, 700 billion seems to be a hefty number pulled out of their ass.

[gaelic cowboy]

http://www.daveramsey.com/common_sense_fix.txt

How would you know what value to insure the loans and debt at the policy would have to be hugely weighted because of no one really having a clue what to value them at. You couldnt value them at the old price only todays price.

[Strike For The South]

Okay, I mistook your post to mean you didn't want ANY sort of meddling. I agree regulations need to be posed and a better number is possible. With no market for these assets, 700 billion seems to be a hefty number pulled out of their ass.

How would you know what value to insure the loans and debt at the policy would have to be hugely weighted because of no one really having a clue what to value them at. You couldnt value them at the old price only todays price.

lol. I was just posting another option. The type didnt show up. I say let it all burn.

[gaelic cowboy]

lol. I was just posting another option. The type didnt show up. I say let it all burn.

Well it looks like you may get your wish.