View Poll Results: What Created The 2008 Financial Meltdown?

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  • Greedy Wall Street Investment Bankers /Deregulation of the financial Industry

    37 33.94%
  • Barney Frank, Chris Dodd and the CRA

    32 29.36%
  • Poor people buying houses they canít afford

    27 24.77%
  • Other

    13 11.93%
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Thread: What Created The 2008 Financial Meltdown?

  1. #1
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    What Created The 2008 Financial Meltdown?

    What Created The 2008 Financial Meltdown?

    Greedy Wall Street Investment Bankers /Deregulation of the financial industry

    Barney Frank, Chris Dodd and the CRA

    Poor people buying houses they canít afford.

    Other


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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by pbrauer View Post
    What Created The 2008 Financial Meltdown?

    Greedy Wall Street Investment Bankers /Deregulation of the financial industry

    Barney Frank, Chris Dodd and the CRA

    Poor people buying houses they can’t afford.

    Other
    Try all of the above...
    Well certainly the first and third, and depending how it was implemented, also the second. But I suspect that the second one resulted in at least some loans to people who didn't deserve them based on their credit.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by pbrauer View Post
    What Created The 2008 Financial Meltdown?

    Greedy Wall Street Investment Bankers /Deregulation of the financial industry

    Barney Frank, Chris Dodd and the CRA

    Poor people buying houses they can’t afford.

    Other
    I think it can be traced back directly to the repeal of the the Glass-Steagall Act, and helped along by lax/non regulation of our other banking-oversight laws at the time.

    Not too surprising, it is at the top of the list of demands of the OWS protesters across the country, to get the Glass-Steagall Act reinstated.

    "Glass-Steagall was passed under the Roosevelt administration in 1933 in direct response to the Wall Street shenanigans that ushered in the Great Depression where banks shoved their own depositors into buying the stocks the banks were dealing. The basic idea was to keep banks from speculating with the savings that American citizens were entrusting within their vaults.

    Its repeal, under the Gramm-Leach-Bliley Act, drafted and passed by a Republican congress, and signed by William Jefferson Clinton, allowed commercial banks to merge with investment banks. For instance, Citigroup merged with Traveler's Insurance (although this merger was announced in 1998, before the act was passed, at the time Citigroup CEO Sanford I. Weill said that he spoke with the Feds and, "that over that time the legislation will change...we have had enough discussions to believe this will not be a problem.").

    Now, on the one side they could sell mortgages to homeowners, and then invent fancy investment structures which they sold on Wall Street. Because they were "covered" on both ends, banks felt free to sell increasingly dicey mortgages, just so long as another sucker was picking up the garbage. This sucker was picking it up because he had a plan to repackage it and sell it to another sucker, and so on. Eventually we end up with no-doc stated income interest-only option-ARM no money down mortgages being repackaged as "sound investments" being sold as "stable assets" for city pension plans to park their money in. (See "Subprime Meltdown As Told By Stick Figures").

    We can only imagine the level of machination exerted over those 30 years, but we do know this. Robert Rubin was Secretary of Treasury, which had oversight over Glass-Steagall regulation. Days before he resigned, Glass-Steagall was repealed. Just over a year later, he became chairman of the Citi executive committee, with an annual compensation of $40 million, a position he still holds, despite Citigroup's $24 billion in subprime-related losses."

    Blame The Subprime Meltdown On The Repeal Of Glass-Steagall - The Consumerist
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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by A.Pearce View Post
    Try all of the above...
    Well certainly the first and third, and depending how it was implemented, also the second. But I suspect that the second one resulted in at least some loans to people who didn't deserve them based on their credit.
    Please how the second and third options has any bearing on the issue. The poor created this mess. Really?


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    Re: What Created The 2008 Financial Meltdown?

    The second option makes no sense, as Dodd-Frank was signed into law two years after the meltdown. Who honestly blames the financial meltdown on Dodd-Frank?

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    Re: What Created The 2008 Financial Meltdown?

    Mr. Pearce echoed my thoughts. Definitely #1 and #3, possibly some #2 thrown into it.

    Glass-Steagall gets crucified in this because too many people want to shirk responsibility involved in this. The true crime existed when regulations allowed for high-risk ventures to essentially be compensated when they would fail. If a business tried to bust coffers with derivatives and risky money market tools, the government would just recoup losses. That never should have come to be.

    I give the bulk of the blame to two parties - the dumbass who walked into the bank making $30,000 a year wanting a loan for a $250,000 house, and the dumbass bank who OK'd it. Put both of them in front of a firing squad.

    The only real problem is that it happened en masse, and while we could punish handfuls of individuals who do this, when they come out in full force and exert stupidity, you can't turn your back. If a fool and his money are soon parted, government should part too.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by pbrauer View Post
    Please how the second and third options has any bearing on the issue. The poor created this mess. Really?
    Well, not just poor people borrowing too much. Everyone who borrowed for frivolous things that they couldn't afford is partially responsible, at least in part. What portion is the debatable part. As for the second, well encouraging home ownership isn't ALWAYS a good policy. The bigger issue is the government pushing home ownership in the first place. Look at these statistics:
    Home ownership statistics - Countries Compared - NationMaster

    Home ownership rate in Ireland in 2000: 83%!!! And we all know their economy is doing well. It's not a coincidence that the majority of the countries with high home ownership rates got hit by this recession. After all, the junk bonds were just a symptom caused by banks trying to hide bad assets.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by pbrauer View Post
    Please how the second and third options has any bearing on the issue. The poor created this mess. Really?
    A person making $2,000 a month has no business taking out a loan with a $1,000 a month note, which is what happened in many cases. At some point, the people who took out loans they knew they couldn't afford must take at least a little responsibility for their actions.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by apdst View Post
    A person making $2,000 a month has no business taking out a loan with a $1,000 a month note, which is what happened in many cases. At some point, the people who took out loans they knew they couldn't afford must take at least a little responsibility for their actions.
    .........Yes.

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    Re: What Created The 2008 Financial Meltdown?

    Some in the finance business, some in the regulation arms of government and some (at all income levels) American families.
    Plenty of blame to go around.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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