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Great story from 60 Minutes explaining how Wall Street lost its mind over mortgage-backed derivatives and how the spiral was aided and abetted specifically by the rampant deregulation championed for decades by Republicans and conservatives (like George W. Bush, Ronald Reagan, and John McCain).
(If you click the button on the bottom right, you can make the video full-screen and easier to watch)
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You are wrong, Oliver. There most certainly were regulations. Couorse they were voluntary.
“Leading up to its collapse, Bear Stearns was participating along with other major investment banks in a “voluntary” oversight program begun in 2004 designed to consolidate supervision. The idea was that voluntary regulation of these banks was the only way to effectively govern their behavior because of the peculiar complexity and their international structures.
In Bear Stearns’ case, however, auditors found the company failed to comply with a number of the voluntary rules before its collapse, and that the SEC did little or nothing to pressure Bear Stearns into compliance.”
Mas: http://digbysblog.blogspot.com/2008/09/voluntary-corruption-by-digby-i-know.html
Who could have predicted that voluntary regulations would lead to disaster? Have the Usual Suspects accused Democrats of being wholly at fault for this insanely horrible idea?
I’m not going to pretend that I’m smart enough with respect to finance to ascertain for myself (through independent research) who and what was at fault here. I suspect most people are like me and essentially, like a jury, have to choose between the sources and settle hopefully on the one that offers the most credible theory.
Thus far, this one strikes me as probably the closest to reality, Bill O’Reilly’s attempt at bullying Barney Frank notwithstanding.
Kudlownomics is the gift that keeps on giving to soup kitchen fetishists
This is a complex issue with plenty of blame to go around. Olivers lead into this story is misleading at best.
Let us examine some facts.
http://online.wsj.com/article/SB122298982558700341.html
http://online.wsj.com/article/SB122290574391296381.html?mod=article-outset-box
The short version is the Federal government strong armed lenders into offering credit to people who were unlikely to be able to repay the loans. Efforts to rein in this foolishness were thwarted by key Democrat legislators. One of Fannie Mae’s most prominent defenders live in lover was an executive with Fannie Mae at the time that these reforms were thwarted. Howard Raines who is tied to the Obama campaign ran this baby into the ground. Obama himself has been given a lot of money by Fannie Mae. Only one other politician has received more money from the failed company than Obama.
Check out the podcast of this This American Life (radio show) for this week.
I think it’ll be available on their website starting tomorrow.
Tie that with 60 minutes and folks will be more knowledgeable than 99.99% of the folks who comment on blogs.
When the Limbaugh drone in your office bring up the “This is all the fault of that CRA and Fannie and Freddie lending to shiftless n*gg*rs” bit, hit them with the following question:
How many mortgages did Lehman issue?
How many mortgages did Morgan-Stanley issue?
(etc. for any of the failed financial houses)
Answer: NONE. Did the evil CRA and the shiftless darkies hold guns to the heads of the CEOs of these unassailable Wall Street giants and force them to invent these crazy “Collateralized Debt Obligations” and other incomprehensible financial products? Did the CRA make these parasites of Wall Street poison every sector of the economy with this bad debt? Did it force them to falsely value their holdings to keep the party going?
Then when they can’t answer, kick them in the nutsack.
Rheinhard,
How ironic you pick a Germanic nickname for your role as a digital brown shirt. Your reach on complex economic matters exceeds your grasp. Perhaps you might research Fannie Mae’s role in the bundling of subprime mortgages based on mandated minority applicants. Please examine the role of several key Democrat legislators who thwarted efforts to curb this mess. Note Howard Raines role in this affair and his ties to Obama.
Our economic prosperity has been put in peril as a consequence of another piece of liberal social engineering gone bad.
The trolls are getting shriller by the hour.
AO:
Please explain how “key Democrat legislators” could block ANYTHING that Republicans wanted to do while the House was controlled by Republicans from 1994-2006.
As you said, there is blame enough to go around. But the idea that noble Republicans were looking out for the little guy while eevil Dems were plotting to bankrupt us all is just fucking silly.
Oh, and Rheinhard is not speaking literally. As anyone with a sense of humor can see.
And I think you mean FRANKLIN Raines. Or is he “currantly” going by Howard now?
I stand corrected, it’s late. So what is your opinion of Obama’s advisor’ performance?
Which advisor do you mean? Certainly not Raines, since it is factually incorrect that he was ever an Obama “advisor.”
But Plouffe seems to be doing fine.
The short version is the Federal government strong armed lenders into offering credit to people who were unlikely to be able to repay the loans.
Nice try, but if you actually read the stuff I posted before, you’d know that CRA loans were MORE likely to be repaid. Nice try.
Oh, and Rheinhard is not speaking literally.
He’s not? Damn. I was so looking forward to doing some nutsack kicking.
The short version is the Federal government strong armed lenders into offering credit to people who were unlikely to be able to repay the loans.
Can we expect that you’ll be able to provide us with statistics on the default rate of loans issued as a result of “federal government strong arming”?
We’ll wait while you scamper off to gather your “facts.”
Curiouser and curiouser,
the wingnuts keep saying it’s that evil Gobermt. that forced the titans of wall street to Over Leverage all their products. Oh, sure.
Honore de Balzac said it best (and he was a conservative). “Behind every great fortune their is a crime.”
The fact is that this recent bail out of Wall Street costs more than all the so-called subprime mortages that Fannie Mae supposedly guaranteed..(and Fannie Mae and it’s much smaller ‘competitor’ is only the ’secondary market’ not the seller of said mortages). So Fannie Mae was ‘bailed out’ earlier this year. So why is Wall Street still in a tizzy? And why do they want more and more of the nation’s money? So the problem is in fact much, much bigger than a relatively poor section of the financial markets (low income mortage holders_). The problem is Leverage and the HiJacking of future incomes off indebted Americans who aren’t given appropriate raises in order to pay for such Hedged Bets on the future. The problem is in fact corruption of a Republican encouraged culture of greed and corruption that has leveraged the nation’s future on a mountain of debt that has no relation to reality: 30 to one, 40 to one, even 60 to one Bets on a Unsustainable future earnings.
Let’s put this in perspective; the Wingnut faction is also obsessed about the the high cost of education in the USA which they say is an obsenity for costing 500 billion a year (for every teacher, school, janitor, the whole Shebang). And we just Gave George W. Bush and his Treasury Sec. nearly a Trillion bucks For What??? And now Republicans want to continue the Bush Regime for the Destruction of the USA with McSame?