Financial Reform Passes Senate, To Be Law Soon
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Not nearly as strong as it should be, but still a big repeal of failed conservative economics implemented during the last few presidencies.
The legislation gives the government new powers to break up companies that threaten the economy, creates a new agency to guard consumers in their financial transactions and shines a light into shadow financial markets that have escaped the oversight of regulators.
Named after Senate Banking Committee Chairman Chris Dodd and House Financial Services Committee Chairman Barney Frank, the legislation ends a trend to ease regulations and clamps down on the financial industry in ways unseen since the Great Depression.
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© 2000-2011 Oliver Willis
Scott Brown doesn’t seem very fond of teabaggers
I’m in the middle of Andrew Ross Sorkin’s Too Big to Fail. It’s absolutely appalling. These bank and investment CEOs acted like high-school kids. Junior high.
And the regulators don’t come off much better. Paulson high-mindedly insisted that it was the bankers’ patriotic duty to bail out their unsuccessful competitors while refusing to commit any government funds (he later reversed himself, of course). Meanwhile, Alan Greenspan was rambling on speakerphone about how the government needed to buy up houses and burn them to drive up the value of Lehman’s real estate, while the people on the other end are giving each other WTF? looks.
If ever anyone needed adult supervision, it’s this bunch. The book is big (500+ pages), but I highly recommend it to anyone interested in the financial crisis.
No end of TBTF, no mention of Fannie or Freddie, no auditing of The Fed, and the US tax payer is left holding the bag…Big friggin’ deal.
Total Wall Street Bailout Cost:
$4.74 TRILLION DISBURSED
$13.89 TRILLION MAX. STILL AT-RISK
$2.01 TRILLION STILL OUTSTANDING
“The legislation gives the government new powers to break up companies that threaten the economy.”
Careful what you wish for: whatever powers you give the current goverment, remember that eventually someone you disagree with is eventually going to hold that power at some point.
Oh noez, my freedumbs, they go bye bye again as Obama is transforming us into some kind of muzzlum socialist communist fasshusst state! Won’t someone please think of the children!
Well, SF, I really disagree with leaving that power solely in the hands of the financiers. They need to be reined in. Having those reins in place is a good idea, even if we do eventually get a government too stupid to use them.
Careful what you wish for: whatever powers you give the current goverment, remember that eventually someone you disagree with is eventually going to hold that power at some point.
Which is why budget deficit figures from the CBO must be watchdogged. Checks and balances against power. How’s that CBO project coming along SF?
Boehner is already mumbling about repeal. Haw!
“Boehner is already mumbling about repeal.”
Dumb ass. He should be screaming for all that I mentioned above plus the return of Glass-Steagall.
Sore losers. The game is over and the GOP lost. Again. Yet they still demand we “turn those machines back on!”
That’s two major initiatives pushed through Congress, and President Obama still hasn’t been broken.
Keep on kicking ass, Mister President.
Chris Dodd:
Hey, isn’t THAT what got us into this mess in the first place?
Hey, isn’t THAT what got us into this mess in the first place?
No, it was a lack of regulation, but thanks for playing.
And how do we know this bill will solve said issue if THE BILL’S CO-AUTHOR doesn’t even know what’s in it? Even Stevie Wonder can see the myriad of potential problems.
Chuckle. I bet 90% of the people that love talking about “Glass-Steagall” had no idea what the hell it was before it became a talking point in attempting to cast blame on the repeal of that law for the housing crisis.
Of course, nothing in this “reform” bill addresses the issues with Fannie Mae and Freddie Mac who were given government tax incentives to purchase many of these bad loans (But remember, the left will tell us it was “deregulation” that caused it).
As for financial institutions that made of these risky loans, they did so based in large part due to the government bailout of the S&L’s in the 80′s figuring the government would step in and offer assistance if things got out of hand. And they did.
I’m really at a loss as to how regulating swipe fees is going to prevent another housing crisis 20 years down the road.
No, it was a lack of regulation
Oy.
You forgot to quote the rest of what Dodd said, SF:
“But we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”
So, Jay, the financial crisis was cause by too much regulation?
Thanks for demonstrating what John Stuart Mill wrote over 140 years ago is still true today:
Mish gets it just about right:
“Medical Reform vs. Financial Reform
Medical reform not only accomplished nothing, it actually made matters substantially worse.
In sharp contrast to medical reform, I cannot come up with any financial reform provisions that make matters substantially worse.
Given the absolute best we could ever expect out of a major piece of legislation supported and promoted by Obama is nothing, and given that nothing was accomplished with no major detriments making matters much worse, the financial reform bill must be considered a stunning success.
Indeed, we should all be thrilled by it.”
http://globaleconomicanalysis.blogspot.com/2010/07/financial-reform-bill-was-stunning.html
Not “We have…”. “We believe we have…”
Can’t see the distinction?
They. Don’t. Know.
So, Jay, the financial crisis was cause by too much regulation?
Who said that? You claimed it was the result of a “lack of regulation” which is total crap. The housing and banking industries are two of the most heavily regulated industries in America.
Yet some people continue to crow the Gramm-Leach-Bliley Act somehow had something to do with the housing crisis when nothing could be further from the truth.
The housing and banking industries are two of the most heavily regulated industries in America.
Really?
Oh, BTW, you know more about the subject then these folks do, apparently:
At least they’re honest about what they do and don’t know, SF, do you remember this bit of certainty?:
“We know where they are. They’re in the area around Tikrit and Baghdad and east, west, south and north somewhat.”
“government bailout of the S&L’s in the 80’s”?
Notice two things,
1. A real estate bubble burst at the end of the last two two-term republican administrations causing economic havoc.
2. the bailouts were implemented by said republicans.
Jay:
It’s interesting how you specify “housing”. There wasn’t a “housing” crisis. There was a financial crisis. And, yes, that was caused by a lack of regulation.
Credit default swaps could be bought whether or not you had interest in the bonds. They could be sold regardless of whether you had assets to cover them. Bonds that were junk were sold with AAA ratings. Hilariously, the bonds were rated AAA based upon the price of a credit default swap, and the price of a credit default swap was low because they were rated AAA. And everyone jumped in with both feet because they were afraid of getting left off the gravy train, with complete disregard for prudent financial management.
The financial crisis occurred because of a lack of regulation, and the inability of the free market to self-regulate.
Careful what you wish for: whatever powers you give the current goverment, remember that eventually someone you disagree with is eventually going to hold that power at some point.
Where were you during the Bush years again??
It’s interesting how you specify “housing”. There wasn’t a “housing” crisis. There was a financial crisis. And, yes, that was caused by a lack of regulation.
CDS’s were one of many of the causes of the housing (you say financial – to-may-to/to-mah-to) crisis. It was not the sole cause.
Claiming this crisis happened solely due to lack of regulation is based on:
A. Ignorance
B. Dishonesty
Take your pick. If you’re going to take a “see/hear/speak no evil” position on the government’s role in the crisis, then you’re not being honest about what happened. The worst part is, many of people who voted “Yea” on many of government instruments that played a role in this crisis are often the ones leading the charge for laws such as this financial reform bill.
It’s the same kind of attitude that gave us the completely worthless Sarbanes-Oxley Act of 2002. Worse yet, last fall, Democrats were pushing to expand the Community Reinvestment Act that would put policies into place to make loans available to people who otherwise would not qualify. The CRA was not the main problem in the crisis, but it was certainly one of them. What possible sense does it make to continue to expand it?
Even MSNBC, MSNBC, isn’t sold on the effectivness of the bill.
Yes, they’re saying it’s too much regulation and constraints on the financial institutions……….
Oh, wait a minute……….
I didn’t know that MSNBC, MSNBC, was the preferred source for business news and analysis nowadays………….
Claiming this crisis happened solely due to lack of regulation is based on:
Alan Greenspans’ testimony that I quoted above.
I’ve been reading a book by John K. Galbraith, “The Great Crash 1929″, which has the following in the final section, “Causes and Consequences”:
Claiming this crisis happened solely due to lack of regulation is based on:
Alan Greenspans’ testimony that I quoted above.
You need to re-read what Alan Greenspan said:
Both government failed regulation and deregulation contributed to the crisis.
BOTH. Not ONE.
Let me school you in honesty, otherwise known as “quoting in context”:
In testimony before Congress both the Securities and Exchange Commission (SEC) and Alan Greenspan conceded failure in allowing the self-regulation of investment banks.[106][107]
Just so you can’t spin it, once again:
conceded failure in allowing the self-regulation of investment banks.
And there’s this:
Keep flailing, Jay, even a stopped clock is right twice a day, you’ll get something right eventually.
I bet 90% of the people that love talking about “Glass-Steagall” had no idea what the hell it was before it became a talking point
Heck, I still don’t know what it is. However, I once had a spinster aunt who collected Glass Seagulls. Does that count?
I bet 102% of the authors of this bill don’t know what’s in it.
DA, nothing you wrote backs up your contention which is that LACK OF REGULATION and that alone is what caused this crisis.
It’s not. You can repeat something 1000 times. It does not make it true.
DA, nothing you wrote backs up your contention which is that LACK OF REGULATION and that alone is what caused this crisis.
Actually, Jay, I didn’t make that claim, I merely stated that it was the lack of regulation that led us to this, not what SF stated.
And if you read what I excerpted, Greenspan did also mention a factor that contributed that wasn’t due to regulations or the lack thereof:
Greenspan also blamed banks for relying too heavily on the flawed judgment of credit ratings agencies to assess the value of mortgage-backed securities and dropping the ball when it comes to risk management.
So, was lack of regulation the only factor to bring about the economic crisis?
No, but as John Kenneth Galbraith prophetized, it was a major factor, and your attempt to rewrite history is most risible.
Are SF and you engaged in a contest to see who can leave the dumbest comments here today?
It sure seems like it
DA, your original comment said in response to SF when he talked about getting us back into the same mess was:
“It was a lack of regulation, but thanks for playing.”
Now you’re saying you “didn’t make that claim” when you clearly did. Then you dishonestly attempted to make it appears as though I said it happened because of “too much regulation” when I said nothing of the sort. I made the true claim that many aspects of government regulation particularly with respect to bailouts, GSE’s and the CRA played a large role as well.
I then stated that the housing and banking industries are amongst the most heavily regulated in the country which was a direct retort to your statement of, “It was a lack of regulation” which can do NOTHING but imply these industries were not regulated at all.
All you had to do was say, “Jay, yes they are regulated, but there should have been more regulation.”
Instead, you tried to continue to dig yourself into a deeper hole with your bullshit.
Jay, whose opinion do you think you can change by going through all these antics here?
I said it was the lack of regulations, but I didn’t say that nothing else contributed to it, aside from SFs silly assertion that it was regulations, as in this bill, that contributed to the crisis, which you’ve yet to demonstrate has any factual basis whatsoever.
I made the true claim that many aspects of government regulation particularly with respect to bailouts, GSE’s and the CRA played a large role as well.
Except you’re again full of shit when it comes to the CRA:
However, many others dispute that the CRA was a significant cause of the subprime crisis. 2008 Nobel Prize in Economics winner Paul Krugman states that the notion “has been refuted up, down, and sideways.”[104] He also noted in November 2009 that 55% of commercial real estate loans were currently underwater, despite being completely unaffected by the CRA.[105] According to San Francisco Federal Reserve Bank Governor Randall Kroszner, the claim that “the law pushed banking institutions to undertake high-risk mortgage lending” was contrary to their experience, and that no empirical evidence had been presented to support the claim.[100
I then stated that the housing and banking industries are amongst the most heavily regulated in the country which was a direct retort to your statement of, “It was a lack of regulation” which can do NOTHING but imply these industries were not regulated at all.
I quote Alan Greenspan about the lack of regulation, and to state that I implied that there was no regulation whatsoever when I wrote ‘lack of regulation’ is to engage in the most egregious word-turning outside the RNC.
All you had to do was say, “Jay, yes they are regulated, but there should have been more regulation.”
Except I never stated the extreme position you attribute to me that there was no regulation when I said there was A LACK OF REGULATION, WHICH IS DIFFERENT FROM NO REGULATIONS WHATSOEVER.
Instead, you tried to continue to dig yourself into a deeper hole with your bullshit.
By that measure, I’m three inches below the surface, while you should be reaching the Earth’s mantel with your next response to me.
Oh, and this isn’t your blog, so fuck you and all your suggestions as to how I should and shouldn’t comment here.
Of course, nothing in this “reform” bill addresses the issues with Fannie Mae and Freddie Mac who were given government tax incentives to purchase many of these bad loans (But remember, the left will tell us it was “deregulation” that caused it).
10 months ago, you said it was black people buying houses. What gives?
The CRA was not the main problem in the crisis, but it was certainly one of them. What possible sense does it make to continue to expand it?
Oh wait, you still are blaming them, nevermind.
Like I pointed out then, CRA loans were less likely to default than non-CRA loans. Of course, you’ll claim I’m wrong without even reading it, just like last time.
Ah, the circle of life.
Oh Paul Krugman. There’s a reliable source. People like to claim the CRA had nothing to do with the crisis because all they ever do is point back to the original legislation from 1977 and speak nothing of the many times it has been amended since.
Except I never stated the extreme position you attribute to me that there was no regulation when I said there was A LACK OF REGULATION
LACK OF means – “Absence of”, “To be missing” or “Without.”
Don’t blame me because of what you wrote.
Oh, and this isn’t your blog, so fuck you and all your suggestions as to how I should and shouldn’t comment here.
Yeah and there we have it. We get to the “fuck you” part of things which basically translates to, “I ain’t got shit.”
As for you and Zython (with him actually going back and trolling old posts, good grief) repeating the oft repeated myth that the CRA had nothing to do with the housing crisis, you better get a more reliable source than Paul Krugman.
Like I pointed out then, CRA loans were less likely to default than non-CRA loans.
You see, this is the kind of sleight of hand nonsense. The fact that CRA loans were less likely to default is irrelevant. It was the CRA that did require relaxed lending standards which spread throughout the market. You can read a whole take on the subject here which offers up a lot more information:
http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6
When you two are willing to be intellectually honest and admit the government itself played a major role in this housing crisis, let me know. Until that time, enjoy having your head in the sand.
Jay, you sniff at a Nobel-prize winning economist and then turn right around and cite the economic analysis of a Skadden Arps lawyer?
And then accuse someone else of having his head in the sand?
Haw!
Oh Paul Krugman. There’s a reliable source.
Dude, you should totally alert the committee responsible for his Nobel Prize! Kruggs is, like, sooooooooo unreliable! Although, he pretty much nailed the Iraq Invasion. And the wildly irresponsible and regressive George Bush, Jr. tax cuts. And the Housing Bubble. And deflation. And unemployment. (How’d you do in those departments?) But other than that, dude, you should totally be a tenured professor of economics at Princeton, not that stupid-head Paul Krugman.
There’s a reliable source.
When you’re a world-famous economist, I guess that gets held against you in Conservativeland.
Speaking of sources, where are yours, Jay, besides your last link?
I found the following there:
It’s like the disappearance of pirates causing global warming. If it requires several thousand words, and dozens of dots to be connected, then you aren’t going to prove a causal relationship. All you have are a lot of circumstances where it may be convenient to blame the government for a private sector failure.
speak nothing of the many times it has been amended since.
Which isn’t brought up because it has little to do with what happened with the subprime meltdown:
As for your continued futile assault about what I meant by regulation, if you really thought I meant that “lack of regulation” = “no regulations whatsoever”, then dance your victory dance in your Cheetos-dusted underpants, before Mom comes in to tell you to get off the fucking computer and come to dinner NOW!
Yeah and there we have it. We get to the “fuck you” part of things which basically translates to, “I ain’t got shit.”
Even SF had a link worth addressing, you come in and poo-poo the facts and figures laid out for you by a few others besides myself because why?
When you two are willing to be intellectually honest and admit the government itself played a major role in this housing crisis, let me know. Until that time, enjoy having your head in the sand.
The regulators were PART OF THE GOVERNMENT
HOW IS THAT NOT THE GOVERNMENT ITSELF PLAYING A MAJOR ROLE IN THE HOUSING CRISIS?
You know more than Krugman, and we have our head in the sand?
That’s it, SF, you were a valiant opponent, but Jay has just written the dumbest comment today, better luck next time
When you’re a world-famous economist, I guess that gets held against you in Conservativeland.
If you’re a world-famous economist and you keep getting Important Shit right, well then. That’s even worse in in The Anti-Science, Anti-Book Larnin, Pro-Palin, Pro-Beck, “Get A Brain Morans” Party.
“I once had a spinster aunt who collected Glass Seagulls. Does that count?”
Only if they were Hummels.
As for you and Zython (with him actually going back and trolling old posts, good grief) repeating the oft repeated myth that the CRA had nothing to do with the housing crisis, you better get a more reliable source than Paul Krugman.
What the hell are you talking about? Paul Krugman had nothing to do with the study you never read.
(with him actually going back and trolling old posts, good grief)
Aw, don’t like being held accountable for the things you said? Google’s a bitch, ain’t it?
The fact that CRA loans were less likely to default is irrelevant.
What? So CRA loans being less likely to result in the event that led to the housing crisis is irrelevant? O…k then…
Ok, let me summarize the points for you since you’re too stupid to read my link (seriously, it’s not even that long).
1. CRA loans made up 22.8% of all loans and 9.2% of high-cost loans.
2. CRA banks were 66% less likely to originate high cost loans.
3. CRA banks were 16% less likely to deny applications.
4. CRA banks were 58% less likely to originate high cost loans to LMI (low-to-middle income) borrowers.
5. CRA banks were more than twice as likely to retain originated loans in their portfolio.
There, now you don’t have to hurt your fragile little brain reading a 10 page study. If the percent signs make you angry, I’ll try to dumb it down even further.
If you’re a world-famous economist and you keep getting Important Shit right, well then. That’s even worse in in The Anti-Science, Anti-Book Larnin, Pro-Palin, Pro-Beck, “Get A Brain Morans” Party.
Liberals are truly modern day Cassandras.