Then take GM which it's stock price is now half, and what we own of GM is worth half, talk about another big ****ing mistake. BTY these are government mistakes. How about let business prosper or fail all on their own, with government standing on the sideline. Would you go for that?
Last edited by Born Free; 08-14-12 at 09:09 PM.
Liberals - Punish the Successful, Reward the Unsuccessful
Liberals - Tax, Borrow, Spend, and Give Free Stuff
Obama's legacy - National Debt / Credit Downgrade / Obamacare Failure / Economic Failure / Foreign Policy Failure / Liar of the Year Award / The Rise of ISIS
"There is a lot of talk coming from CitiGroup about how Dodd-Frank isn't perfect, So let me say this to anyone listening at Citi —I agree with you. Dodd-Frank isn't perfect. It should have broken you into pieces." -- Elizabeth Warren
Also it is my understanding the Glass Steagal prevented insurance companies like AIG from engaging in certain activities. For what it's worth AIG fincancial products was started by a guy from Drexel Burnham. The gift that keeps on giving.
While I'm all for separating depository banking, investment banking and insurance companies the system still has issues.
"God is the name by which I designate all things which cross my path violently and recklessly, all things which alter my plans and intentions, and change the course of my life, for better or for worse."
-C G Jung
What do you mean? The CDS's allowed the CDO's to be counted as tier 1? You mean by using CDSes the CDOs(which were made largely of sub-prime loans) could be classified as tier 1 capital?When that was removed and cds's allowed the cdo's to be counted as tier 1 capital
I don't imagine the banks would have even tried it if they didn't think they would get bailed out. TARP was a huge joke.the demand for cdo's and cds's went through the roof. So you had a real demand to sell more mortgages which has it's own set of problems that were magnified greatly because the capital requirements of cds's where dreadful. This was all based on the premise that property always goes up so in the end someone would have a more valuable asset. That premise was held by buyers and the banks however the banks are the ones who got bailed out. Moreover it seems to me they were bailed out twice because if the cds's sold by AIG insured the CDO's held by the banks then it would seem that one or the other should have been bailed out not both. I wasn't for bailing out either. To me the dead giveaway was one of the first things they did was change mark to market. So the same people wanting this money are advocating inflating assets. WTF I call bulls**t.
Which activities?Also it is my understanding the Glass Steagal prevented insurance companies like AIG from engaging in certain activities. For what it's worth AIG fincancial products was started by a guy from Drexel Burnham. The gift that keeps on giving.
I'm not exactly against the idea either.While I'm all for separating depository banking, investment banking and insurance companies the system still has issues.
I had never heard that Glass-Steagall prevented subprime loaning. Maybe it prevented the bundling of subprime loans in CDOs, but from my understanding, the method used in the housing crisis was largely criminal anyway.Originally Posted by lizzie
That sounds like business as usual (in politics) to me.Repealing Glass-Steagall was accomplished by deal-making in congress, that subsequently led to one of the biggest disasters in our country's history, so I hold no high regard for most members of congress. Republicans favored deregulation, and democrats made a deal with them. The dems would support the repeal, if the CRA would be strengthened. It was congress at its worst.
One who makes himself a worm cannot complain when tread upon.
My understanding was the depostiory banks were allowed to keep x amount of the deposits on hand and they could take the remaining amount and make loans and things such as that. However, they couldn't take that money and do things like invest in deravitives because the risk of losing all your money on one bad investment was just to great. Granted if the economy turned bad you may have a few more loans default but it's unlikely to have 100% default as can happen in equity investment.
My understanding is that the CDS's acted as an insurance against the CDO's going bad. Since the CDO's had the CDS's they could be counted as Tier 1 because it was percieved that the risk had been adequately protected. The capital requirements for the CDS's where next to nothing so when the CDO's went bad they didn't have anything backing them up and the banks could meet their Tier 1 requirements. In a nutshell they took on much more risk than they could afford because they thought they were protected.
My understanding is that insurance companies weren't allowed to engage in banking activities. Things like AIG financial products may have the appearance or even the function of insurance but it didn't have the capital requirements that traditional insurance did.
Makes more sense to me to just get a few more progressives in Congress to join the 60 co-sponsors that support rebuilding that firewall between investment banks and commercial banks, so the next time we could say **** you, without cutting our own throats in the process.
Last edited by Catawba; 08-15-12 at 01:39 AM.
Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children. ~ Ancient American Indian Proverb
The biggest issue is that we have this bad habit of always thinking things will continue in the way they have been going. If the economy is good, then it will remain good. In bubble markets you have what's called the "Greater Fool Theory." That is, that bubbles will continue to grow as long as there is a greater fool. If you over pay for a house, but the next person over pays even more, you are a fool, but the person that followed is a greater fool. The last person to buy in a bubble is called the greatest fool. No one should buy just before the market goes down unless they absolutely have to for some reason, but there always seems to be a few fools willing to join in. This is just a negative aspect of capitalism, but there are ways to prevent this or at least limit the problem.
One of the big issues that I learned from an online course I took for work on the housing market crash, is that in some states they were lending 120% LTV loans. That's where the loan is 20% greater than the appraised value. Basically, the house was underwater the day it was bought. The idea was, that people who had credit card debt could buy a home and use the remaining loan to wipe out the credit card debt. Since mortgages have a lower interest rate than credit cards, it would be a very affordable option. The only issue is that when you have people that have a tendency to have bad credit card debt, once their credit cards are no longer maxed out, they start using them again.
Basically, what needs to be done is that the LTV of a loan needs to be set at a rate lower than the value of the house, requiring a down payment. This would prevent the housing market from inflating too fast and give some insurance for when housing markets go down. I think we could get away with giving out 90% LTV loans, but if we really wanted to be safe they would have a maximum of 80%.
Last edited by lordnate; 08-15-12 at 03:31 AM.