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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

    Votes: 29 56.9%

  • Barney Frank, Chris Dodd and the CRA

    Votes: 6 11.8%

  • Poor people buying houses they can’t afford

    Votes: 3 5.9%

  • Other

    Votes: 13 25.5%
  • Total voters
    51
apdst said:
Wait until poor folks can't come up with the 20% down payment on a $50,000 home. The Libbos will take to the streets, again, to demand that Glass-Steagal be repealed.
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If you think those things are related you have a whole lot of esplainin' to do.
 
Catawba said:
If you think those things are related you have a whole lot of esplainin' to do.
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You don't even know what Glass Steagal is, do you? :lamo
 
StillBallin75 said:
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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not "Dodd-Frank", the legislators Chris Dodd and Barney Frank. Both of whom were full-throated and powerful in their support of Fannie and Freddie and expanding the subprime mortgage market.
 
pbrauer said:
Can you back these ridiculous claims up with any evidence? Why would a lender lend money to someone who can't pay them back?
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because they can add that mortgage in with a bunch of others and sell them as securities which will be rated way above their actual value. In "The Big Short" Michael Lewis recounts (for example) the story of an itenerant Mexican fruit-picker who was approved for a 500,000 Ninja loan.
 
apdst said:
You don't even know what Glass Steagal is, do you? :lamo
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I already explained what it was here, before you joined the conversation, but do tell us what your understanding is of the Glass-Steagall Act?
 
Harry Guerrilla said:
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.
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eh. i'm open to criticisms of an easy money policy making it all possible.
 
Harry Guerrilla said:
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.
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Most of the blame belongs to the borrowers and the government.
 
i just wish they all crashed like they were supposed too...maw..mawhaha! :3
 
Catawba said:
I already explained what it was here, before you joined the conversation, but do tell us what your understanding is of the Glass-Steagall Act?
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I understand that Glass Steagall was passed in 1932 and not 1933 and it had nothing to do with the collapse of 1933. I know that much about, anyway.

Might wanna step down from your high-horse.
 
jasonxe said:
i just wish they all crashed like they were supposed too...maw..mawhaha! :3
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The congress critters weren't going to let that happen. The bankers would have released all kinds of docs showing how the government pressured them into making all those bad loans.
 
apdst said:
I understand that Glass Steagall was passed in 1932 and not 1933 and it had nothing to do with the collapse of 1933. I know that much about, anyway.

Might wanna step down from your high-horse.
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"The first Glass-Steagall Act of 1932 was enacted in an effort to stop deflation, and expanded the Federal Reserve's ability to offer rediscounts on more types of assets, such as government bonds as well as commercial paper.[4] The second Glass–Steagall Act (the Banking Act of 1933) was a reaction to the collapse of a large portion of the American commercial banking system in early 1933. Literature in economics usually refers to this latter act simply as the Glass–Steagall Act, since it had a stronger impact on US banking regulation."

"The act introduced the separation of the bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation (FDIC) for insuring bank deposits."

Glass
 
apdst said:
The congress critters weren't going to let that happen. The bankers would have released all kinds of docs showing how the government pressured them into making all those bad loans.
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Safest place to keep your money now is Bank of America. Govt won't let it fall or will reimburse your money if it does:-D Reserve darwinism ftw!

Catawba said:
"The first Glass-Steagall Act of 1932 was enacted in an effort to stop deflation, and expanded the Federal Reserve's ability to offer rediscounts on more types of assets, such as government bonds as well as commercial paper.[4] The second Glass–Steagall Act (the Banking Act of 1933) was a reaction to the collapse of a large portion of the American commercial banking system in early 1933. Literature in economics usually refers to this latter act simply as the Glass–Steagall Act, since it had a stronger impact on US banking regulation."

"The act introduced the separation of the bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation (FDIC) for insuring bank deposits."

Glass
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I..can't concentrate on what you're saying. Every time you mention Steagall, all i can think of is this dude.

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apdst said:
Most of the blame belongs to the borrowers and the government.
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I disagree, the businesses knew that they needed to keep a higher level of liquidity and they didn't do that.
That doesn't mean I exclusively blame them though.

Like I said before, there is plenty of blame to go around.
 
Harry Guerrilla said:
I disagree, the businesses knew that they needed to keep a higher level of liquidity and they didn't do that.
That doesn't mean I exclusively blame them though.

Like I said before, there is plenty of blame to go around.
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That's why Fannie and Freddie were created, as a place for banks to ditch all those bad loans. The government created every bit of the crap.
 
apdst said:
That's why Fannie and Freddie were created, as a place for banks to ditch all those bad loans. The government created every bit of the crap.
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The creation of Fannie and Freddie was completely dumb, but that doesn't absolve people in business who did wrong, like those who engaged in making liar loans.
Along with the toxic asset packaging.

No one comes out with clean hands, no one.
 
Harry Guerrilla said:
The creation of Fannie and Freddie was completely dumb, but that doesn't absolve people in business who did wrong, like those who engaged in making liar loans.
Along with the toxic asset packaging.

No one comes out with clean hands, no one.
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What were the bankers supposed to do, go to jail? Or, just make the dang loan?

There's on inescapable fact: most of the bad loans would have never been made, if the government had stayed out of it.
 
apdst said:
What were the bankers supposed to do, go to jail? Or, just make the dang loan?

There's on inescapable fact: most of the bad loans would have never been made, if the government had stayed out of it.
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Neither, they shouldn't have been making loans without income verification.
 
All of the above.

- Regulations were loosened more than they should have been.

- Lenders, unable to rationally control themselves, loaned money to people to buy houses they had no legitimate business buying

- Borrowers, unable to rationally control themselves, bought homes they had no legitimate business buying.

I'm sorry, but there is plenty of blame to go around on this one.
 
apdst said:
What were the bankers supposed to do, go to jail? Or, just make the dang loan?

There's on inescapable fact: most of the bad loans would have never been made, if the government had stayed out of it.
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FDIC: Speeches & Testimony - 12/17/2008

Point of fact: Only about one-in-four higher-priced first mortgage loans were made by CRA-covered banks during the hey-day years of subprime mortgage lending (2004-2006). The rest were made by private independent mortgage companies and large bank affiliates not covered by CRA rules.

where in the CRA does it say: make loans to people who can't afford to repay? No-where! And the fact is, the lending practices that are causing problems today were driven by a desire for market share and revenue growth ... pure and simple.

That is why the CRA never set out lending "target" or "goal" amounts. That is why CRA supporters, many of you here today, have labored for three decades to figure out how to do it safely. It makes no sense to give a loan to someone under terms you know they can't pay back. That's a set up for failure.


Keep in mind, the majority of foreclosures are taking place in middle and upper income neighborhoods. This idea that poor people that make up a small % of the mortgage market are to blame is just basically propaganda. It's to defer scrutiny away from Wall Street because when there's a massive failure on Wall Street, the natural reaction is to ask "Why" and "how do we prevent it in the future" which leads to regulation.
 
apdst said:
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.
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Absolutely. The number of people willing to take out bad loans, coupled with the number of banks willing to give bad loans resulted in an artificial and entirely unsustainable increase in home values. This resulted in lots of people defaulting on loans they shouldn't have had in the first place and an economy based on bad numbers and imaginary housing prices fell in on itself. None of these homes were ever really worth what they said they were on paper. It was a house of cards that imploded due to bad decisions on everyone's part.
 
What Created The 2008 Financial Meltdown?
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The Fraudulent Reserve System and such. :roll:
 
pbrauer said:
Can you back these ridiculous claims up with any evidence? Why would a lender lend money to someone who can't pay them back?
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Because a lot of these lenders were fly-by-night organizations who knew they could off-load the loans to the big lenders as a package. They didn't care if someone couldn't pay the loan back, they were going to be sipping margaritas on a beach somewhere before the loan fell apart.
 
Cephus said:
Absolutely. The number of people willing to take out bad loans, coupled with the number of banks willing to give bad loans resulted in an artificial and entirely unsustainable increase in home values. This resulted in lots of people defaulting on loans they shouldn't have had in the first place and an economy based on bad numbers and imaginary housing prices fell in on itself. None of these homes were ever really worth what they said they were on paper. It was a house of cards that imploded due to bad decisions on everyone's part.
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Testify, brother! Testify!

You wouldn't believe how many disagreements I had with friends 5-8 years ago over whether or not their equity was "real". They were adamant that it was. I kept saying it was an illusion based on hype and excitement. They didn't want to hear that.

Not that I'm some financial guru. Far from it. I just saw nothing real or substantial on which to base the boom in home sales and values. Without a solid foundation (no pun intended), everything will collapse... and it did.
 
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