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Should the "too big to fail" be nationalised?

Should the "too big to fail" be nationalised?

  • Total voters
    37
There should never be a such thing as "too big to fail." That notion takes the risk out of business. If you fail as a business then your business is gone. That is what is supposed to happen. It is not the governments job to use tax payer money to prop up mistakes made by these businesses.

We should trust a free market system a lot more then this centrally controlled flawed system. Anyone who opens a business accepts the risks that comes with it. We have proper bankruptcy protection laws, but that is as far as the help goes. If you fail, then you are out of business...end of story
 
Sig said:
Presumably, the government would take control long before the company began to fail, while it was still healthy and functional. This would be the point.
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Oh, so it WOULD be like Chavez. The government takes control of companies that are making money.
 
ttwtt78640 said:
WRONG. The notion of "sub-prime" mortages was NOT invented by bankers, it was a gov't creation to attempt to allow the "poor" to become homeowners. Bankers reluctantly issued these "gifts", disguised as "low income" mortgage loans, ONLY through gov't pressure and offers of "safety" by the gov't backed "insurance" of these loans. This GOV'T CREATED artificial demand, for more private homes, caused the "housing bubble", having the (unintended?) effect of flooding the market with oversupply, eventually dropping the value of many existing homes on the resale market, placing otherwise innocent home buyers in a position of being "underwater" on their traditional home mortgages.
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You are quite correct.

Furthermore, ACORN...and other community activist organizations...were the fist the government used to persuade the banks to play the game...against the bank's better judgment.
 
Too big to fail should not exist. If they fail, they fail.
 
ttwtt78640 said:
WRONG. The notion of "sub-prime" mortages was NOT invented by bankers, it was a gov't creation to attempt to allow the "poor" to become homeowners. Bankers reluctantly issued these "gifts", disguised as "low income" mortgage loans, ONLY through gov't pressure and offers of "safety" by the gov't backed "insurance" of these loans. This GOV'T CREATED artificial demand, for more private homes, caused the "housing bubble", having the (unintended?) effect of flooding the market with oversupply, eventually dropping the value of many existing homes on the resale market, placing otherwise innocent home buyers in a position of being "underwater" on their traditional home mortgages.
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That's not what crashed it. Those were subsidized through the government and the banks made money on it. There's a reason they were lying on application forms to get those sorts of loans through. If they were losing money, they wouldn't have engaged in just aggressive predatory loan actions as they did for those.
 
Lokiate said:
Banks aren't the only ones that got bail outs.
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I agree, many other politically popular entities, like those using union labor (auto industry and state/local gov'ts), got included in the spending binges known as TARP and the "stimulus" packages, but the initial justification for this economic madness was mostly the mess caused DIRECTLY BY the "housing bubble" popping and the economic instability created by "sub-prime" mortgages; without that factor much of the rest would never have happened, as it was neither the emphasis of nor the largest part of the bail-out/stimulus craze.
 
The government repealed the Glass-Steagall Act through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton and allows commercial banks to gamble and speculate with depositors money like the investment banks. With the blessing and help of Fannie Mae and Freddie Mac by taking on more risk moving into the subprime mortgage market. The government encouraged all this lending, not because they're altruistic and wanted everyone to have homes but because increased sales from credit improves revenue by stimulating the economy giving them more money to spend. The SEC allowed the Credit Rating Agencies (Moody's, Standard & Poor and Fitch) to give AAA+ ratings to securities that were junk mixed 50/50, so that banks could sell the repackaged mortgages to investors knowing that 1/2 would default. Those securities as is custom were insured by companies like A.I.G. to the tune of trillions and even the insurance policies were sold as investments. When the inevitable occurred and markers were called in on foreclosures there was a liquidity crisis causing a chain effect that rippled thru the markets threatening to crash the worlds economies. If the US government had not stepped up with the bailouts there would of have been a collapse of the financial system as we know it. All those future sales on homes and other items (cars, ATV's, boats, motorcycles, RV's, jet ski's, snow mobiles, etc) from easy credit created a ton of toxic paper, wealth that evaporated over night from over valuating the markets and their assets.

The credit bubble has run the economy for over a decade now and had to be re-propped up but it's starting to sink again because it's a flawed concept.
 
Interesting spin on TARP, 'the crash', sub-prime, Unions, corporations, government...

We tried letting the chip fall where they may many times before, read up on the crashes we routinely had till 1929.

There is no such thing as a free market, unless total anarchy is the goal.

Competition in Capitalism leads to monopolies and that never favors the citizen.

Government didn't force banks to make bad loans, banks rewrote banking laws to mine deeper and deeper into the mountain until they unleashed forces they couldn't control but we tax payers backed them up so to the banker's minds the risks were low and the competition fierce to mine that last loan dollar.

Too big to fail means to big to walk amongst us. We broke up monopolies before, corporations have burrowed themselves in deep and thanks to the Supreme Court, can pour millions into picking political leaders.

Perhaps the outcome will be corporations running for office, they are people too if you ask the Supreme Court or Willard.
 
grip said:
The government repealed the Glass-Steagall Act through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton and allows commercial banks to gamble and speculate with depositors money like the investment banks. With the blessing and help of Fannie Mae and Freddie Mac by taking on more risk moving into the subprime mortgage market. The government encouraged all this lending, not because they're altruistic and wanted everyone to have homes but because increased sales from credit improves revenue by stimulating the economy giving them more money to spend. The SEC allowed the Credit Rating Agencies (Moody's, Standard & Poor and Fitch) to give AAA+ ratings to securities that were junk mixed 50/50, so that banks could sell the repackaged mortgages to investors knowing that 1/2 would default. Those securities as is custom were insured by companies like A.I.G. to the tune of trillions and even the insurance policies were sold as investments. When the inevitable occurred and markers were called in on foreclosures there was a liquidity crisis causing a chain effect that rippled thru the markets threatening to crash the worlds economies. If the US government had not stepped up with the bailouts there would of have been a collapse of the financial system as we know it. All those future sales on homes and other items (cars, ATV's, boats, motorcycles, RV's, jet ski's, snow mobiles, etc) from easy credit created a ton of toxic paper, wealth that evaporated over night from over valuating the markets and their assets.

The credit bubble has run the economy for over a decade now and had to be re-propped up but it's starting to sink again because it's a flawed concept.
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Exactly. It is not if, but when, this will be "needed" again, perhaps the massive increase in student loans, state/city pension "unfunded" obligations or the national debt itself (as interest rates rise) will be the next "trigger" for it. We can not, as a nation, continue to spend more that we "earn" and expect some future economic "miracle" to occur to balance the books.
 
Government didn't force banks to make bad loans, banks rewrote banking laws to mine deeper and deeper into the mountain until they unleashed forces they couldn't control but we tax payers backed them up so to the banker's minds the risks were low and the competition fierce to mine that last loan dollar.
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This is actually so true. 50 years of stable banking after Great Depression era regulations where insituted. After the 80's and the beginning of deregulation we get the Savings and Loan failures and now the worst downturn since the Great Depression. What we hear NOW is that when we deregulate banks and allow them to "innovate" the problem is we don't let them fail.
So now we're going to let major insitutions fail like domino's. If you wanted to end capitalism and the market system that's a great ideology to follow.
 
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iliveonramen said:
This is actually so true. 50 years of stable banking after Great Depression era regulations where insituted. After the 80's and the beginning of deregulation we get the Savings and Loan failures and now the worst downturn since the Great Depression. What we hear NOW is that when we deregulate banks and allow them to "innovate" the problem is we don't let them fail.
So now we're going to let major insitutions fail like domino's. If you wanted to end capitalism and the market system that's a great ideology to follow.
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NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane. Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable. Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
 
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ttwtt78640 said:
Exactly. It is not if, but when, this will be "needed" again, perhaps the massive increase in student loans, state/city pension "unfunded" obligations or the national debt itself (as interest rates rise) will be the next "trigger" for it. We can not, as a nation, continue to spend more that we "earn" and expect some future economic "miracle" to occur to balance the books.
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An example is in the Phoenix AZ area where homes were over built. I was advised to buy a 'second' home as an investment (It would be an unfunded obligation.), by the time it was built I could sell it for a substantial profit. This is an exact example of what you posted about except for one thing, that is that it was driven by private business.
So, how do you think that housing bubble should have been, um, controlled?
 
ttwtt78640 said:
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane.
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No, pretending banks didn't influence, pressure, and pay Congress to change the banking laws is what's insane.


Come on, we all know what the score is, here - quit playing around.
 
OhIsee.Then said:
An example is in the Phoenix AZ area where homes were over built. I was advised to buy a 'second' home as an investment (It would be an unfunded obligation.), by the time it was built I could sell it for a substantial profit. This is an exact example of what you posted about except for one thing, that is that it was driven by private business.
So, how do you think that housing bubble should have been, um, controlled?
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By requiring (returning to?) the prior SANE lending laws (that did allow "discrimination") by requiring down payments, solid buyer income and credit history, reasonable loan to value ratios, and honest "fair market" valuation appraisals.
 
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane.
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So I guess you assume that campaign donations and lobbying doesn't influence congress? That the revolving door between the financial sector and the Treasury, SEC, Fed Reserve Etc is harmless? I agree to a certain extent....big Wall Street money COUPLED with anti-regulatory ideologues led to the loosening of banking laws but to act like the banking sector hasn't had a large influence?

Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable.
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Fannie and Freddie have been around for a long time as has the US push for home ownership. Fann and Freddie's share of the subprime lending market DECREASED during the bubble.

It was "financial innovation" that led to trillions being pumped into housing. The idea that stacks of questionable mortgages stacked created senior tranches that were virtually risk free (triple A rated) The idea that some banks were like "ok...let's take these less senior tranches and stack them" and created new CDO's and turned lower rated tranches into new senior tranches. It was financial innovation where banks were basing their purchases and models on ratings agencies that had no idea what were making up the actual derivatives. It was financial innovation where banks like Countrywide (who didn't sell to frannie and freddie) were able to mass produce loans with little to no limited information and sell it on Wall Street.

Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
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Are you purposely being obtuse here or do you not understand how money corrupts politics.
 
MoSurveyor said:
No, pretending banks didn't influence, pressure, and pay Congress to change the banking laws is what's insane.


Come on, we all know what the score is, here - quit playing around.
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Interesting theory, and one that should be quite easy to "prove". Which members of congress voted for these changes, how much did they get in campaign cash (or other favors) from the banking industry and why do their district/state voters not care about these "corrupt" voting patterns? Perhaps they may include the likes of Barney Frank or other solid blue dudes that have no fear of being denied re-election? That would be "shocking" would it not? That it was the very liberals that cried the loudest about those "greedy bankers" that were the very folks that allowed these "compassionate" and "less discriminatory" lending laws to be "abused" by those mean old greedy bankers. ;-)
 
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ttwtt78640 said:
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane. Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable. Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
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We could have purchased a second or third home and many did and no " "sub-prime" loans WITH gov't backed blessing" were needed. Our third home, we expect to sign the papers today, purchased via a short sale, apparently the owners were pushed over the edge by a 2nd mortgage used to purchase a new car. I don't think 2nds were enabled by anything but the 'banking' industry.
 
ttwtt78640 said:
By requiring (returning to?) the prior SANE lending laws (that did allow "discrimination") by requiring down payments, solid buyer income and credit history, reasonable loan to value ratios, and honest "fair market" valuation appraisals.
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But to get this you would have needed government regullation. Don't forget that the lenders are judged on their performance over a short time period, months. This is because it is a private industry. The problem actually develops over a few years that is longer than the feed back control process that private industry uses.
 
ttwtt78640 said:
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane. Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable. Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
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Apparently you don't know how and who authors bills in Congress. You believe that your district and state representatives sit down in a conference room with their staff and other Congressional members and write bills? Ha!

Lobbyists and Special Interests organization author bills, which may or not be even read by our Congressional members. Hell, neither side of the isle had a clue as to what was in the Health Care Bill before signing it into law...and admitted to as much. Who wrote the health care bill's 2000 plus pages? Guess who! It was pharmaceutical, insurance, medical provider Lobbyists who were creating a bill for their specific benefit...not ours.

All Congressional members do is "Sponsor" or Co-Sponsor bills. Yes, as a rule their staffers are at varying degrees involved in bills, but no way to really know for sure. That's why special interests now own our government.
 
Removable Mind said:
Apparently you don't know how and who authors bills in Congress. You believe that your district and state representatives sit down in a conference room with their staff and other Congressional members and write bills? Ha!

Lobbyists and Special Interests organization author bills, which may or not be even read by our Congressional members. Hell, neither side of the isle had a clue as to what was in the Health Care Bill before signing it into law...and admitted to as much. Who wrote the health care bill's 2000 plus pages? Guess who! It was pharmaceutical, insurance, medical provider Lobbyists who were creating a bill for their specific benefit...not ours.

All Congressional members do is "Sponsor" or Co-Sponsor bills. Yes, as a rule their staffers are at varying degrees involved in bills, but no way to really know for sure. That's why special interests now own our government.
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What you say is quite true, yet these members of congress that sponor, co-sponsor and vote for these bills have names, districts/states that elect them and there is ample recourse for their "traitorous" and "corrupt" actions. Start naming them for us.
 
ttwtt78640 said:
By requiring (returning to?) the prior SANE lending laws (that did allow "discrimination") by requiring down payments, solid buyer income and credit history, reasonable loan to value ratios, and honest "fair market" valuation appraisals.
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I additionally have to point out that I was a design engineer in the computer industry. I had enough income etc., as you point out, to participate in the housing bubble. Many of my peers did.
I guess I should add that I'm participating in the housing bubble, sold one near the top, bought three near the bottom. Freedom.
 
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OhIsee.Then said:
But to get this you would have needed government regullation. Don't forget that the lenders are judged on their performance over a short time period, months. This is because it is a private industry. The problem actually develops over a few years that is longer than the feed back control process that private industry uses.
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We had just such regulation PRIOR TO the legalization of "sub-prime" mortages. This "private" industry is regulated as much, if not more, than any other, and with good reason. You can not have it both ways here, either the regualtions were changed for the worse (as I assert) or the banks broke the law (as you seem to assert). I wonder who is rght?
 
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