• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

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

American said:
Exactly what I would expect from a socialist. No one ever said it was the poor people's fault. The only thing anyone on the right has ever said was that poor people aren't OWED a living. The fact that a law is named after two big clowns probably says a lot.
Click to expand...

The funniest part of it is someone who defines themselves so ideologically.... who nonetheless apparently doesn't know what corporatism and capitalism mean. :D
 
TheDemSocialist said:
Completely deregulated? True no banking industry was completely deregulated. But one very important deregulation aspect took place and that was the Glass-Stegall Act and history prove what happened when that was repealed.
Click to expand...

I am truly aghast as to the many who are turning a blind eye to this. It's mind-boggling.
 
OpportunityCost said:
The government swooped in and helped the capitalists because it determined that they needed to be saved for the "greater good". Thats what comes from running government without regard to outcomes and unintended consequences.

FYI---this is the only time the extreme left and extreme right were in agreement AGAINST the bailouts. Odd that, all the establishment peckerheads on both sides wanted it.
Click to expand...

Bailing out large failed businesses is the prime directive of the GOP :rolleyes:
 
Banks Ranked by Total Deposits as of 2007-12-31

The above is the list of banks and their deposits ranked.. as of 31. Dec. 2007.

On the list, there are some names that have no links.. that is because they do not exist any more. They have been "bought" by others and gone bankrupt.

Now Wachovia was taken over (at gun point) by Wells Fargo and Washington Mutal was taken over by JP.Morgan (also at gun point). BOA merged with Myrill.. also at gun point at the time.

At the time that was over 600 billion in deposits. Now we now know that at the time BOA and Citi were also in serious trouble. BOA had eaten Myrill Lynch (with all their toxic assets) and Citi had been heavily lending to consumers for years (god I hated their constant snail mail telling me I could get cheap loans).

So of the top 5 US banks by deposit, all but one were in serious trouble at the end of 2007. Even JP Morgan was in problems because it could not get liquidity as easy as it once could.

Now had all these banks gone belly up, as many on the right were advocating at the time.. who would have bought them? Very few had the funds to do so in the US, and letting non-American banks take over US banks would have been political suicide. The Chinese could have bought out BOA no problem.. as could some other European and Asian banks .. at the time, but politically and legally it is a non starter. So let them go bankrupt says most right wingers.. but would the FDIC have the 2.2 trillion dollars to pay all the depositors? Nope. So you would overnight take 2.2 trillion dollars, peoples life savings, out of the economy... and dont tell me that wont effect the economy.

Now it is of course even worse today

Banks Ranked by Total Deposits

Here BOA, CITI, JP Morgan and Wells Fargo have over 3.5 trillion dollars of deposits, out of a total deposit of an estimated 6 trillion. Fact is the FDIC does not have the money to guarantee the deposits and is basing that guarantee on one thing... the US fed.

Basically.. break up the top 4 US banks. They are even more "too big to fail".
 
OpportunityCost said:
The government swooped in and helped the capitalists because it determined that they needed to be saved for the "greater good". Thats what comes from running government without regard to outcomes and unintended consequences.

FYI---this is the only time the extreme left and extreme right were in agreement AGAINST the bailouts. Odd that, all the establishment peckerheads on both sides wanted it.
Click to expand...

So you should be for the GM bailout, right? For the greater good.
 
PeteEU said:
Nope... it becomes corporatism, since government is owned by private business.

Of course you can. Capitalism is flawed, because it has no checks and balances in the real world.
Click to expand...

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.

Problem is when capitalism buys the bureaucrats and hence the government, then you end up with capitalism's worst traits.
Click to expand...

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.
 
Last edited:
Neomalthusian said:
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.
Click to expand...

Excellent post - imo.
 
tigger said:
then you let it fail. The largest issue in this country right now is people not being required to deal with the consequences of their own actions, thoughts, words, and deeds.
Click to expand...

Exactly!!!

Wimps have taken over...nobody seems to want to take responsibility for their mistakes anymore...just let the government/Fed smooth over everything with debt.
 
PeteEU said:
Lets look at the facts.

We had one major "bank" go down and it caused a total credit freeze world wide. [
Click to expand...
That is not a fact. That is your belief. Sure, the world paniced for a few days. Big deal. They panic every few years. They take a deep breath. realize the sky is not falling and get on with business. Like Black Monday in 1987. You think they did not panic then? Sure they did. And what happened? Everyone calmed down and went on with life.
Now please prove to me using ONLY links to unbiased sources that there would have been a 'total credit freeze world wide'.

You do realize that the people claiming this the loudest are ALL people that have a vested interest in it?

Banks. Corrupt politicians that are lobbied by the banks. And 'economists' whose income depends on going on CNBC/writing books/managing accounts and peddling the Keynesian/big government economic model.

Please show me a link to unbiased facts - not opinions - facts, that back up what you and SO many people have said since '08...but have never shown (to my knowledge) one OUNCE of factual evidence to back it up...that the economic sky was falling and we were all 'saved' by government/Fed bailouts?

By forcing supposedly healthy banks with bail-out money, they stated that those banks all were backed by the government and were safe.
Click to expand...
You apparently missed my point. How could the banks have been close to collapse if they refused TARP money and had to be forced to take it by Paulson?

What CEO would not take a government handout if it would save his/her company?

Come on now.



TARP was not perfect but it was needed. The banking and financial industry can not collapse as a whole period.. it would be beyond catastrophic,
Click to expand...
I will ask you one simple question?

Would the major banks - in your opinion - have failed without TARP?
 
Last edited:
John.NoseTip said:
I tend to agree with you but there's very little chance we will ever know the complete truth because it would require subpeona powers and motivated investigators which isn't going to happen. If you read the "Shock Doctorine" ,which came out the year before the so called banking crisis, it outlines how other governments have been screwed over be it Russia, Poland or somewhere else and what happened in 2008 was very similar. That doesn't mean they're guilty but I would encourage everyone to read it because it will provide some perspective on things. If nothing else the reader will learn that Rahm didn't invent the concept of "never waste a crisis" in fact it's much more a tool of the Friedmanites.
Click to expand...

I agree.

But since there is no absolute factual proof one way or the other - then my problem is with people that say the sky WOULD have (as a matter of fact) fallen without the government/Fed riding to the rescue.

If they want to say they BELIEVE it would have? Fine - they are entitled to their opinion.

But to run around - especially 'experts' - telling the ignorant masses that all heck would have broken loose were it not for big brother government is simply a fabrication.

They do not know - they only believe.

And they should say it as such and stop being dishonest.
 
Republic Now! said:
What would Glass-Stegall done to prevent the collapse?
Click to expand...

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.
 
lizzie said:
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.
Click to expand...


:shock: I didn't know Glass-Stegall prevented that.
 
TheDemSocialist said:
[/FONT][/COLOR]U.S. 'Pretty ****ed' - Former TARP Inspector - YouTube

[FONT=arial, sans-serif]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!![/FONT]
Click to expand...

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:
Neomalthusian said:
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.
Click to expand...

Capitalism does have one major flaw. The greed aspect of it will always lead to it's demise.
 
Republic Now! said:
:shock: I didn't know Glass-Stegall prevented that.
Click to expand...

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.
 
Born Free said:
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?
Click to expand...

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.
 
Republic Now! said:
:shock: I didn't know Glass-Stegall prevented that.
Click to expand...

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.
 
John.NoseTip said:
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.
Click to expand...
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
Click to expand...

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.
Click to expand...

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.
Click to expand...

Which activities?

While I'm all for separating depository banking, investment banking and insurance companies the system still has issues.
Click to expand...

I'm not exactly against the idea either.

lizzie said:
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.
Click to expand...

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.
Click to expand...

That sounds like business as usual (in politics) to me.
 
Republic Now! said:
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.
Click to expand...


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.
 
DA60 said:
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?
Click to expand...

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:
John.NoseTip said:
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.
Click to expand...

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:
You must log in or register to reply here.
Back
Top Bottom