The Ultimate Wall Street Nightmare

[tbpew]

Originally Posted by Ferd

wonderful post. I agree this played some roll (and not a small roll) in this mess.

but I think it illistrates a point here.

A couple of people are talking about deregulation by the Bush Adminstration being a cause of the mess. I still would like someone (anyone) to point to speicific legislation pushed by GWB and company, or a set of rule changes made by GWB and company that equals deregulation.

I am pretty confident there is nothing they can point to. The fact that the real estate boom/bust industry BOOMED AND went 'BUST' during his term as president, will simply give angry people an effigy to burn.

If BHO gets into office, it could be during his watch that large numbers of persons can watch their equity-backed (in DJIA) IRA's evaporate to 1995 levels (7500). I just do not think a BHO type will be viewed as a calming voice in equity markets.

[Pressing-On]

Originally Posted by tbpew

I am pretty confident there is nothing they can point to. The fact that the real estate boom/bust industry BOOMED AND went 'BUST' during his term as president, will simply give angry people an effigy to burn.

If BHO gets into office, it could be during his watch that large numbers of persons can watch their equity-backed (in DJIA) IRA's evaporate to 1995 levels (7500). I just do not think a BHO type will be viewed as a calming voice in equity markets.

I agree with you on that!

[Ferd]

Originally Posted by tbpew

I am pretty confident there is nothing they can point to. The fact that the real estate boom/bust industry BOOMED AND went 'BUST' during his term as president, will simply give angry people an effigy to burn.

If BHO gets into office, it could be during his watch that large numbers of persons can watch their equity-backed (in DJIA) IRA's evaporate to 1995 levels (7500). I just do not think a BHO type will be viewed as a calming voice in equity markets.

Your lips to Gods ears.

You know what is really funny to me? the name that keeps popping up is Jamie Gurlik (sp)

LOL! someone ought to do some google research on that name.

[rgcraig]

Fed to provide $85 billion bridge loan to AIG: source 44 minutes ago

http://news.yahoo.com/s/nm/aig_loan_dc

(Reuters) - The Federal Reserve will provide a roughly $85 billion bridge loan to AIG (AIG.N) and take a nearly 80 percent stake in the company, according to a source briefed on the matter.

CNBC earlier reported the bridge loan would be secured and that shareholders would be severely diluted by the bailout.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and others were involved in the talks, CNBC said, adding that the bailout plan being negotiated "isn't a conservatorship."

[Aquila]

Originally Posted by Ferd

least anyone should think I might now agree with DanA, on politics, let me state as clearly as possible.

the LAST thing we need during this time is a committed socialist at the helm. voting for Obama is a vote to drive a stake thru the heart of the US Economy.

I see a another New Deal coming.

[Aquila]

Originally Posted by Ferd

This might be fun. Can either of you tell me exactly what deregulations GWB and crew did that led to this failure in the banking industry?

Here's an interesting article....

The Subprime Mess and Phil Gramm: An Experiment in Deregulation
June 24, 2008 - 04:12 PM
Category: Miscellaneous
Tags: Senator Phil Gramm, John McCain, George Bush, Senate, Congress, subprime, mortgage mess, deregulation, Enron, Secretary Paulson, UBS, Mother Jones
9 Comments Print Article Feed
http://losangeles.injuryboard.com/mi...oogleid=242468

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

Now, Gramm has a second chance of extending his out-of-touch and ill-performing policies, as Senator John McCain appointed Gramm to be his "economic expert" and cochair of his presidential campaign, last year. Also, it is likely that if Senator McCain were to win in November, Gramm would be our next Treasury Secretary, which means more of the same deregulatory mess and the continuation of failed and insidious economic policies.

[Aquila]

Here's another....

http://www.prospect.org/cs/articles?...ortgage_crisis

[Jekyll]

Originally Posted by Daniel Alicea

Sounds like he will be FDR of this generation ... Ferd.

Be it as it may.

Now with 99% of your 17k posts being absolute nonsense, mindless jabber, and aimless fairytales,

This has to be one of the most moronic statements I have heard, especially from the great Kettle himself.



Guess who relaxed all of the regulations for the investment banks and hedge funds??? Your good ole boy Clinton. That's right, we've been paying for Clinton's demoralizing pillage of any ethics our economic structure and fabric had during the 90's.

That's right, we don't need 8 more years of Clinton's ignorant and ethicless policies.

[OP_Carl]

Originally Posted by U376977

Actually the dereg trend started way back in the Carter admin. and picked up a lot of steam with Regan.

President Jimmy Carter used policy to pressure banks to lend to the "disadvantaged" social groups that were under-represented in home ownership. Equal Housing or some such. In 2002, President Bush did the same thing when he called for 1 million new minority homeowners. Banks were pressured to relax rules in an effort to meet quotas. At the same time, President Bush de-regulated the risk rules for the SEC.

I think in retrospect a 20% down payment seems like a pretty decent equalizer for home ownership.

But that does not matter....the Pres Demo or Rep. is not "directly responsible" for this. You have to lay the blame on the Fed. they are the regulators!!! Go all the way back to Greenspan and the .com bubble that he did not allow us to go into recession over, the almost free easy money and loose credit markets. Home ownership of 70+%, when the actual taget rate, per JP Morgan Chase/and Freddie Mac economists should be no more than 65% and maybe less.

The Fed does not hold the blame. They were doing the bidding of others when they used rate changes to prolong the bubble. The Fed has only one trick: interest rates. The executive branch was using policy to pressure a lot of this.

I think it is a mistake for government to become so meddlesome that the American dream becomes the American mandate. Everybody wants a photo-op doing something to help the "virtuous poor." News Flash: Most poor people have poor financial management skills.

Obama supporters say we cannot afford four more years of 'this.' What they do not understand is that what it is that we cannot afford is four more years of inexperience guided by advisors with ulterior motives - which is exactly what Obama & Biden will bring.

Historically, our economy has always suffered when government attempted to "fix" it.

[Aquila]

Originally Posted by Jekyll

Now with 99% of your 17k posts being absolute nonsense, mindless jabber, and aimless fairytales,

This has to be one of the most moronic statements I have heard, especially from the great Kettle himself.



Guess who relaxed all of the regulations for the investment banks and hedge funds??? Your good ole boy Clinton. That's right, we've been paying for Clinton's demoralizing pillage of any ethics our economic structure and fabric had during the 90's.

That's right, we don't need 8 more years of Clinton's ignorant and ethicless policies.

If you remember Clinton championed himself as a New Democrat and signed various bills strongly supported by conservatives to the dismay of his more liberal constituency. NAFTA's another example.