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Major makeover of Wall Street regs passes House

the makeout hobo said:
How was the government responsible for Adjustable Rate Mortgages? Or subprime lending?
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When the Government started telling banks to lend to high risk minority "voters" and let's be honest here, that's all that was, vote getting. It had the upshot of letting millions of people buy houses they couldn't afford. The downside was... 2008.

But let's not quibble over what REALLY happened, they meant well right?
 
Blaming minorities. Classy.
 
Orius said:
Blaming minorities. Classy.
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I didn't notice anyone blaming minorities. Are you claiming that minorities are the only folks that took out loans they couldn't afford? No white folks did that?
 
Ethereal said:
Market forces, which can only exist if the Fed's plenary influence over credit conditions is restricted or redefined in some way.
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Who are banking going to borrow from as the last resort? You do realize that interest rates are initially set from the fed no? They set the base rate upon which all other rates are derived from. How do you intend to replace that base rate?
 
MrVicchio said:
When the Government started telling banks to lend to high risk minority "voters" and let's be honest here, that's all that was, vote getting. It had the upshot of letting millions of people buy houses they couldn't afford. The downside was... 2008.

But let's not quibble over what REALLY happened, they meant well right?
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I see you are ignoring how securitization and ratings fraud didn't play a role no? That turned what was a housing crisis into a full blown liquidity/credit crisis. Housing alone makes up a relatively small percent of the economy. If that by itself went bad, then we would not be in this mess. That's partially why many investment houses got socked in the mouth. They didn't quite realize just how far securitization of mortgages had gone. Couple that with far too many firms relying on commercial paper and we get this mess. If we had not securitized and sold worthless mortgages fraudulently rated up to AAA, we would not be in this mess.
 
obvious Child said:
Who are banking going to borrow from as the last resort? You do realize that interest rates are initially set from the fed no? They set the base rate upon which all other rates are derived from. How do you intend to replace that base rate?
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I can't tell you what specific reforms I would make. I am familiar with the Federal Reserve and how it operates, and I am not so rigid ideologically that I am incapable of recognizing its utility, however, I am at odds with the basic operating principles of our monetary system, and I think the Federal Reserve's role in our economy should be reexamined and redefined so as to shift the current economic paradigm from one of a credit-based, consumer economy towards one with an emphasis on savings and long-term sustainability.

Basically, our government needs to stop facilitating the American inclination to financially overextend in the pursuit of worthless material possessions.
 
Ethereal said:
I can't tell you what specific reforms I would make. I am familiar with the Federal Reserve and how it operates, and I am not so rigid ideologically that I am incapable of recognizing its utility, however, I am at odds with the basic operating principles of our monetary system, and I think the Federal Reserve's role in our economy should be reexamined and redefined so as to shift the current economic paradigm from one of a credit-based, consumer economy towards one with an emphasis on savings and long-term sustainability.

Basically, our government needs to stop facilitating the American inclination to financially overextend in the pursuit of worthless material possessions.
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Amen bro, I have a hard enough time balancing a checkbook, when it comes to finance, if I post at all its usually a drive by. ;)
 
Ethereal said:
I can't tell you what specific reforms I would make. I am familiar with the Federal Reserve and how it operates, and I am not so rigid ideologically that I am incapable of recognizing its utility, however, I am at odds with the basic operating principles of our monetary system, and I think the Federal Reserve's role in our economy should be reexamined and redefined so as to shift the current economic paradigm from one of a credit-based, consumer economy towards one with an emphasis on savings and long-term sustainability.

Basically, our government needs to stop facilitating the American inclination to financially overextend in the pursuit of worthless material possessions.
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Fair enough, but I don't see how we can replace the base rate without a viable substitution for the fed that would work the same way.

One problem I see is that monetary policy can be extremely efficient and precise in alleviating economic crisis. Take that away and you're left with fiscal policy. Anyone who's argued the Stimulus has failed is pretty much going to be stuck with that kind of alleviating mechanism. I'd really prefer monetary policy over fiscal. Monetary is a surgical knife where fiscal is a sledge hammer.
 
MrVicchio said:
When the Government started telling banks to lend to high risk minority "voters" and let's be honest here, that's all that was, vote getting. It had the upshot of letting millions of people buy houses they couldn't afford. The downside was... 2008.

But let's not quibble over what REALLY happened, they meant well right?
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Oh come on, that was such a little part of the problem. Mostly, the banks lent to people to make a quick buck, then sold off the contracts in bundles for profit, leaving other institutions with the bills.
 
Ethereal said:
Why can't we let the market set interest rates?

Who said anything about the Congress being able set interest rates?
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You mean just getting rid of the Fed entirely? Compare the performance of the US economy before the Fed with the performance since; we've pretty much eliminated depressions. In fact, the only depression we've had in the 100 years since we've had the Fed was partially caused by the Fed not doing enough.

During a recession, the market will inevitably set the interest rate too high, choking off capital and prolonging the recession. During a boom, it's just the opposite; the market will set the interest rate too low, which will encourage even more borrowing and create a bigger bubble.
 
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the makeout hobo said:
Oh come on, that was such a little part of the problem. Mostly, the banks lent to people to make a quick buck, then sold off the contracts in bundles for profit, leaving other institutions with the bills.
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I love how you conveniently don't name those "other institutions" like oh... Freddy and Fannie.

And I love how you also ignore that this "Give out loans to make a fast buck" scheme was forced on them by the Federal Government. Of course they looked for a way to make a profit off the deal!
 
MrVicchio said:
I love how you conveniently don't name those "other institutions" like oh... Freddy and Fannie.

And I love how you also ignore that this "Give out loans to make a fast buck" scheme was forced on them by the Federal Government. Of course they looked for a way to make a profit off the deal!
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How was it "forced on them" by the government? There were a few loans under a program started in the 70's, but most of it was just them trying to make a fast buck to make a fast buck.
 
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