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Thread: U.S. 'Pretty ****ed' - Former TARP Inspector

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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by lizzie View Post
    It would have kept a good number of people with poor credit ratings from buying houses that they could not afford, and it would have kept banks and lending institutions somewhat controlled wrt whom they were loaning money to. That being said, the CRA should never have been strengthened either, as it was a huge risk to be loaning money, based on social factors, and not creditworthiness.

    I didn't know Glass-Stegall prevented that.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by TheDemSocialist View Post
    [/FONT][/COLOR]U.S. 'Pretty ****ed' - Former TARP Inspector - YouTube

    Welcome to corporatism folks...... Enjoy it while it lasts. We gotta pay for all the mistakes of the capitalistic elite, while we get told its the lazy poor peoples fault... Enjoy it! The coming oligarch! Yayyy!!
    Who ever said that? No we don't have to pay for any capitalistic anything. Where did you ever get that idea. Further what in hell was Obama doing investing tax payer money in companies like Solyendra. Talk about paying for mistakes.

    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 11:09 PM.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by Neomalthusian View Post
    Yes it most certainly does. Defend your position that it does not. Capitalism is self-regulation.

    The only place capitalism probably fails to self-regulate is environmentally. It is possible for capitalism to lead to tragedies of the commons that don't self-correct very quickly or peacefully. But then again I'm not sure any other economic model is terribly concerned with the environmental impacts of our pro-growth policies.



    Not really. You end up with an quasi-socialist oligarchy that learns how to disguise itself as a capitalist republic. Capitalism may bring about ****ty scenarios now and then, but that is a very necessary aspect of the self-regulatory nature of capitalism. When government step in and interfere, they're destroying that self-regulatory mechanism and turning the system into something other than a free market.
    Capitalism does have one major flaw. The greed aspect of it will always lead to it's demise.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by Republic Now! View Post
    I didn't know Glass-Stegall prevented that.
    My understanding of Glass Steagal was that it prevented depository banks from engaging in things like deravitives based on the logic that it's other people's money so you can't just do whatever you want with it. When that was removed and cds's allowed the cdo's to be counted as tier 1 capital 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.

    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.

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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by Born Free View Post
    Who ever said that? No we don't have to pay for any capitalistic anything. Where did you ever get that idea. Further what in hell was Obama doing investing tax payer money in companies like Solyendra. Talk about paying for mistakes.

    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?
    Not just the loss in GM stock price.

    There are something like $12+ billion dollars that will NEVER be recovered from the initial bailouts of GM and Chrysler.

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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by Republic Now! View Post
    I didn't know Glass-Stegall prevented that.
    Not sure if you're being serious or not, but yeah, that's the short story version, although it is more complicated than my post suggested. 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.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by John.NoseTip View Post
    My understanding of Glass Steagal was that it prevented depository banks from engaging in things like deravitives based on the logic that it's other people's money so you can't just do whatever you want with it.
    Well, that would be partially false then, since a bank pays you interest because you are loaning them the money. I had thought Glass-Steagall was to prevent what happened in the great depression with the banks.

    When that was removed and cds's allowed the cdo's to be counted as tier 1 capital
    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?

    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.
    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.

    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.
    Which activities?

    While I'm all for separating depository banking, investment banking and insurance companies the system still has issues.
    I'm not exactly against the idea either.

    Quote Originally Posted by lizzie
    Not sure if you're being serious or not, but yeah, that's the short story version, although it is more complicated than my post suggested.
    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.

    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.
    That sounds like business as usual (in politics) to me.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by Republic Now! View Post
    Well, that would be partially false then, since a bank pays you interest because you are loaning them the money. I had thought Glass-Steagall was to prevent what happened in the great depression with the banks.



    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?



    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.



    Which activities?



    I'm not exactly against the idea either.



    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.



    That sounds like business as usual (in politics) to me.

    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.

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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by DA60 View Post
    There is a simple way to fix all this - STOP BAILING OUT THE BANKS.

    It is total crap that the economy/banking system would collapse without TBTF (Too Big Too Fail).

    Healthy banks simply buy up the desired assets of failed banks.

    Private citizens assets are covered by FDIC.

    And their mortgages are simply sold to another bank.


    All this fake panic that the gov't./banks try and instill in the masses that the banks MUST be protected is nothing but corporate cronyism.

    Banks will NEVER stop taking gigantic chances so long as they know they will be covered if they mess up by taxpayers money - and why would they?
    When we once again have a firewall between investment banks and commercial banks as we had for a half century under the Glass - Steagall Act, I would be more than happy to let the investment banks fail for making unwise investments. But letting them fail without that firewall means ours and the rest of the world's monetary system failing. Worse turmoil than during the great depression. If anarchy was your goal, that would be the way to accomplish it.

    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 03:39 AM.
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    Re: U.S. 'Pretty ****ed' - Former TARP Inspector

    Quote Originally Posted by John.NoseTip View Post
    My understanding of Glass Steagal was that it prevented depository banks from engaging in things like deravitives based on the logic that it's other people's money so you can't just do whatever you want with it. When that was removed and cds's allowed the cdo's to be counted as tier 1 capital 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.

    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.
    That's pretty much right. I'm not really an expert on Glass-Steagal, but that's pretty much what it did from my understanding. However, it doesn't prevent a lending crisis, as Glass-Steagal was active during the Carter Administration where we had another lending meltdown.

    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 05:31 AM.

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