Coffeehouse Thread

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Political Bing

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  • User profile image
    evildictait​or

    , dahat wrote

    You must be new... I do not feign anything... I am outraged that not only does the president think an ambassador being murdered by a terrorist attack is a minor thing... but that people like you are so eager to deflect... mmmm.... the desperation is delicious.

    Do people really have such short memories?

    Obama is getting beat up now about failing to keep an Ambassador and a bunch of CIA folks in a warzone safe.

    Bush failed to keep a whole ton of Americans citizens in New York safe. He blamed it on Iraq (not Saudi Arabia) and started a war that killed millions of Iraqis and thousands of American troops, and crippled the US economy.

     

    The democrats might have screwed up the Benghazi embassy, but it is nothing to how GWB screwed up the USA.

  • User profile image
    Bass

    They need to work on the bias slider. I want to see more copies of Communist Manifesto and Sex In the City episodes when I slide the bar to the left.

  • User profile image
    brian.​shapiro

    , cbae wrote

    *snip*

    This fallacy has been debunked so many * times, it's getting tiresome. The only pressure applied to banks was pressure from their own greed. They wanted in on the MBS action, so they created their own CDOs from loans originated by non-banks like Countrywide. As entities like Countrywide are not regulated as banks, they weren't compelled by any law to originate loans from low-income homeowners, if that's this "pressure" that you're referring to. In fact, these loans were way more risky than the FHA loans that the GSEs originated and securitized,

    However, around the time the * hit the fan, the GSEs did start lowering their origination standards--not because of some government mandate, but because they wanted to regain market share of the MBS market that they lost to the investment banks creating CDOs from portfolios of subprime loans. Again, greed is solely responsible. You have to remember that GSEs are NOT some sort of government agencies. They are true private sector companies that were traded on the NYSE.

    "As entities like Countrywide are not regulated as banks."

    Yea, which also means Countrywide wasn't regulated under Glass-Steagall or other laws in the first place, so I could use Countrywide's example to argue all of the deregulation that happened in the 90s can't be blamed for the subprime crisis either. Or Bear-Stearns', or Merill Lynch's, or other financial groups. We're talking about factors tangentially affecting the collapse here.

    The mortgage-backed security market in the first place didn't exist because of greed, and lax lending standards were encouraged by the government in the 90s through legal measures. Countrywide and other financial companies weren't particularly greedy in following the lead of lending standards that were being done everywhere else. Maybe they should have known better, but that's a different issue than whether they were greedy.

    As for GSEs, they have heavy government oversight and support and encouragement. Often their decisions are political, not financial. And while Republicans fought to deregulate the private market, they were also fighting to tighten regulations GSEs, which the federal government has special authority to do. Democrats were often doing the opposite. While Republicans like deregulation on the private market, they happen to like regulation of publicly sponsored entities.

    Anyway, its hard to disentangle either the market side or the regulatory side from the end result, and blame one over the other.

  • User profile image
    SteveRichter

    , brian.​shapiro wrote

    Anyway, its hard to disentangle either the market side or the regulatory side from the end result, and blame one over the other.

    I don't see why the government has to be involved in regulating any banks or lending companies. If the goverment offers deposit insurance it should do so after the bank first buys private insurance. I would not keep money in a bank that was not certified as sound by a reputable bank examiner. This business in the US of banks being too big to fail is nonsense. In a free market, if banks get too big and unstable, their stock price will suffer and their shareholders will move to break them up.

     

  • User profile image
    cbae

    , brian.​shapiro wrote

    *snip*

    "As entities like Countrywide are not regulated as banks."

    Yea, which also means Countrywide wasn't regulated under Glass-Steagall or other laws in the first place, so I could use Countrywide's example to argue all of the deregulation that happened in the 90s can't be blamed for the subprime crisis either. Or Bear-Stearns', or Merill Lynch's, or other investment banks. We're talking about factors tangentially affecting the collapse here.

    You're conflating two completely different things: loan origination and mortgage securitization.

    The right wing talking point is to blame the government for encouraging forcing banks to ORIGINATE loans for low-income borrowers. I'm sure you've heard of ACORN. In Right Wing, Looney Bin World, uttering the word "ACORN" has the same potential for causing a conniption as saying "Planned Parenthood" or "equal pay". As a non-bank, the Countrywides of the world were not mandated to offer any such loans. Regardless, ACORN loans are far less risky than the subprime crap issued by Countrywide. Countrywide issued these subprime loans based on its own initiative--not the government's.

    As a non-bank, Glass-Steagall doesn't apply to Countrywide either. What Glass-Steagall does apply to are the investment banks that SECURITIZED the subprime loans. Because of the repeal of Glass-Steagall, these investment banks were allowed to merge with large commercial banks, and when these investment banks started buying up all the subprime mortgages issued by Countrywide, they put the entire commercial banking industry at risk.

  • User profile image
    cbae

    , SteveRichter wrote

    *snip*

    In a free market, if banks get too big and unstable, their stock price will suffer and their shareholders will move to break them up.

    If you believe that, I have some ENE and WCOM stock to sell to you.

  • User profile image
    SteveRichter

    , cbae wrote

    *snip*

    If you believe that, I have some ENE and WCOM stock to sell to you.

    I am not saying there will not be any criminal activity. But the fact that there were criminal prosecutions at those companies is plenty of deterent.  And prudent investors in those companies could have done due dilligence and gotten clues the companies were shifty and pulled their money out. The point is the free market of investors is better at sending and receiving signals of poorly run companies than the government.  And in the examples you cited, investors did not have to be covered by the government.

     

  • User profile image
    DeathBy​VisualStudio

    @cbae: Nice work here. Truly spot on.

  • User profile image
    brian.​shapiro

    , cbae wrote

    *snip*

    As a non-bank, Glass-Steagall doesn't apply to Countrywide either. What Glass-Steagall does apply to are the investment banks that SECURITIZED the subprime loans. Because of the repeal of Glass-Steagall, these investment banks were allowed to merge with large commercial banks, and when these investment banks started buying up all the subprime mortgages issued by Countrywide, they put the entire commercial banking industry at risk.

    All of the investment banks that first collapsed ; Bear Stearns, Merill Lynch, Lehmann Brothers, etc never merged with commercial banks. Countrywide would have been able to make the loans without any bank mergers, because there were plenty of investment firms ready to securitize them. Just like they made the loans without the government on their back. Which is why I said we're discussing more tangential factors in the market.

  • User profile image
    cbae

    , brian.​shapiro wrote

    *snip*

    All of the investment banks that first collapsed ; Bear Stearns, Merill Lynch, Lehmann Brothers, etc never merged with commercial banks. Countrywide would have been able to make the loans without any bank mergers, because there were plenty of investment firms ready to securitize them. Just like they made the loans without the government on their back. Which is why I said we're discussing more tangential factors in the market.

    Those investment banks weren't the reason for TARP now, were they? Banks like BofA, Citigroup, JP Morgan Chase were, and they all have investment banking arms. Nice try though.

    And Countrywide doesn't belong in a conversation about Glass-Steagall. Countrywide was neither a bank nor an investment bank. Countrywide was a loan originator, and its part in the financial crisis debunks the myth that government mandate to issue loans to low-income borrowers was the cause of the crisis.

    Again, you're conflating two completely separate things.

  • User profile image
    brian.​shapiro

    , cbae wrote

    *snip*

    Those investment banks weren't the reason for TARP now, were they? Banks like BofA, Citigroup, JP Morgan Chase were, and they all have investment banking arms. Nice try though.

    TARP funds included entities like AIG that weren't commercial banks, and Bank of America took over Countrywide's assets, and JP Morgan Chase took over Bear-Stearns' assets when the market was already failing, much of TARP funds did end up dealing with those assets. TARP funds also went to auto companies. At any rate, the market would have been hit hard even with Glass-Steagall.

     

  • User profile image
    cbae

    , brian.​shapiro wrote

    *snip*

    TARP funds included entities like AIG that weren't commercial banks, and Bank of America took over Countrywide's assets, and JP Morgan Chase took over Bear-Stearns' assets when the market was already failing, much of TARP funds did end up dealing with those assets. TARP funds also went to auto companies. At any rate, the market would have been hit hard even with Glass-Steagall.

    AIG issued credit default swaps to insure securities issued by investment banks owned by commercial banks. With Glass-Steagall in place, investment banks would have lacked the leverage to do what they did to the level they did. In short, there's no need to speculate how hard the market still would have been hit with Glass-Steagall, because the scenario that played out simply wouldn't have played out.

  • User profile image
    brian.​shapiro

    , cbae wrote

    *snip*

    AIG issued credit default swaps to insure securities issued by investment banks owned by commercial banks. With Glass-Steagall in place, investment banks would have lacked the leverage to do what they did to the level they did. In short, there's no need to speculate how hard the market still would have been hit with Glass-Steagall, because the scenario that played out simply wouldn't have played out.

    AIG only insured investment banks owned by commercial banks? They insured investment banks which had at the time no connection to commercial banks.

    And if Bank of America didn't buy Countrywide and Merill Lynch and JP Chase Morgan didn't buy Bear-Stearns they probably wouldn't have needed TARP funds and would have weathered the problems on their own without government help.

  • User profile image
    cbae

    , brian.​shapiro wrote

    *snip*

    AIG only insured investment banks owned by commercial banks? They insured investment banks which had at the time no connection to commercial banks.

    And if Bank of America didn't buy Countrywide and Merill Lynch and JP Chase Morgan didn't buy Bear-Stearns they probably wouldn't have needed TARP funds and would have weathered the problems on their own without government help.

    Citigroup and JP Morgan Chase had huge investment banking arms well before the financial crisis. What do you think the "JPMorgan" part of "JPMorgan Chase" does? Why do you think "group" part of "Citigroup" does?

     

  • User profile image
    brian.​shapiro

    , cbae wrote

    *snip*

    Citigroup and JP Morgan Chase had huge investment banking arms well before the financial crisis. What do you think the "JPMorgan" part of "JPMorgan Chase" does? Why do you think "group" part of "Citigroup" does?

    Yes, and JP Morgan Chase was still in relatively good financial shape compared to the other firms. People will argue they still never really needed a bailout. With Citigroup you have a point.

  • User profile image
    ScanIAm

    , SteveRichter wrote

    *snip*

    I don't see why the government has to be involved in regulating any banks or lending companies. If the goverment offers deposit insurance it should do so after the bank first buys private insurance. I would not keep money in a bank that was not certified as sound by a reputable bank examiner. This business in the US of banks being too big to fail is nonsense. In a free market, if banks get too big and unstable, their stock price will suffer and their shareholders will move to break them up.

    Ah, yes, the 'shareholders are totally in charge' fallacy. 

    Have you ever actually owned a stock? 

    If so, do you vote at the yearly board meetings?

    If so, did you have enough shares to make your needs felt?

    Starting from the last question to the first, I guarantee that at least on of those answers is 'No'.

    Publicly traded companies are never governed by the majority of shareholders, they are governed by the shareholders with a majority of shares.  And those folks don't have the same interests as you do.

     

  • User profile image
    Maddus Mattus

    You can never ever prove Glass-Steagall would have prevented the crisis, never. You can only look at the factors that created the crisis.

    Banks were forced to grant mortgages to the non credit worthy because of the community reinvestment act. That's what started this ball rolling back in 1992. Not because of the repeal of Glass-Steagall in 1999.

    Stop conjuring up this red herring, it does not exist. 

  • User profile image
    ScanIAm

    , Maddus Mattus wrote

    You can never ever prove Glass-Steagall would have prevented the crisis, never. You can only look at the factors that created the crisis.

    Banks were forced to grant mortgages to the non credit worthy because of the community reinvestment act. That's what started this ball rolling back in 1992. Not because of the repeal of Glass-Steagall in 1999.

    Stop conjuring up this red herring, it does not exist. 

    Yes, I can.  There was more to the 'crisis' than just the big banks' potiential to fail.  Here is a list of bank failures since 2008:

    http://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)

    Banks fail every year, but there was an excess of this happening during the recession because these banks were able to do things that weren't legal in Glass Steagall.

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