People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.
Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
"True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero
Perhaps there are better solutions to avoiding a future crisis. Clearly this would only address part of the problem. I've been mulling it over and am not certain this law is the correct one, but it does appear that banks have been reckless with their investment capital and that if they fail, it will require government bail-out, thus it is non-optimum and requires remedy.Well, the implication is that we must remove the perverse elements from the system, so the free-market can work as intended. What we have now is not a free-market, and please, when I say free-market, do not think that I'm talking about anarcho-capitalism.
"Everyone has his axe to grind - his favorite fiction to pimp. We live in a world of hustlers and clowns."
~ Bob Somerby
Housing was heavily subsidized by fiscal policy:
Many lenders were "encouraged" by the government to service the poor:The American Dream Downpayment Initiative (ADDI) was signed into law on December 16, 2003. The American Dream Downpayment Assistance Act authorizes up to $200 million annually for fiscal years 2004 - 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program
American Dream Downpayment Initiative - Affordable Housing - CPD - HUD
Interest rates were kept artifically low for too long:The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining. The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.). To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804.).
Community Reinvestment Act - Wikipedia, the free encyclopedia
And the money supply had been doubling about every ten years:
Quite the recipe for disaster.
I believe there's already a law against fraud.Had banks not had these investment vehicles of CDOs (falsely rated AAA by credit rating agencies that were paid by the banks selling the CDOs themselves and who ignored rapidly increasing mortgage defaults)...
Are you saying AIG's top executives were all stupid enough to insure a bunch of mortgages they knew would fail?...and the CDSs to insure them against defaults on the payment of those CDOs, it gave free license to give home loans to anybody who asked for one, as there was no risk, particularly with the backstop of the U.S. Government bailing them out if things crashed.
The banks were defintely reckless, but so were the American people. The only reason both parties were able to engage in such wrecklessess is because the government provided them the means.Perhaps there are better solutions to avoiding a future crisis. Clearly this would only address part of the problem. I've been mulling it over and am not certain this law is the correct one, but it does appear that banks have been reckless with their investment capital and that if they fail, it will require government bail-out, thus it is non-optimum and requires remedy.