No wonder there's a deficit....

[GG]

OK, from the premise above that I'm dumber than a stone; again, please s'plain why it is a good thing for the country to permit these folks to "get" $ from the gov't at 0.zip interest, then use than $ to buy bonds from the gov't that pay 2++% ? The only people that assume any risk are the taxpayers.

 

They didn't put the amount of the loan in circulation to stimulate anything; they used it to repay the loan after they had the milk from the cow.

 

When you bring a devil to the dance, you shouldn't complain about getting burned. Again, it's not as simple an answer that Taibbi is trying to spin. You have 15-years worth of a mortgage backed security market that you want to unwind at the same time you are trying to keep the entire financial system afloat. As I said, your choices are limited from least bad to worst. There are naturally going to be proft makers at the expense of misery of others. That's what Wall Street does best.

 

I can certainly see the validity of the argument that the big banks have an unfair advantage of tapping government funding. The quid pro quo, however, was that the government was supposed to keep a check on the banks to make sure that risks did not blow up. Too bad for the government, the risk crept up in places they weren't looking or where they thought there was no risk.

 

A popular solution is to take the government completely out of regulating finance. But knowing what I know, and knowing history, that would be disastrous.

[jjamie12]

I would think more than lyrbob.

Boy, I sure hope so!

 

Care to attack my position, or just me?

Well, Rob - I'm going to point out that I haven't attacked you or your position. Of course, you'd need to have a position on this for me to attack it but, unfortunately "...If you're talking about Barney Frank and Chris Dodd, then yes, I think Taibbi is fine with letting them "solve" the problem." isn't actually a position.

 

I'm just trying to understand who I'm talking to, because the things I would say to, for example, GG if he were to respond with the quote you did would be miles apart from the response I'd have for Keukasmiles or RKFast if they said the same thing. In other words, I'm trying to understand what your knowledge of the mortgage markets is. Fair?

[Rob's House]

Well, Rob - I'm going to point out that I haven't attacked you or your position. Of course, you'd need to have a position on this for me to attack it but, unfortunately "...If you're talking about Barney Frank and Chris Dodd, then yes, I think Taibbi is fine with letting them "solve" the problem." isn't actually a position.

 

I'm just trying to understand who I'm talking to, because the things I would say to, for example, GG if he were to respond with the quote you did would be miles apart from the response I'd have for Keukasmiles or RKFast if they said the same thing. In other words, I'm trying to understand what your knowledge of the mortgage markets is. Fair?

I don't mean to be too defensive; I had some of the usual suspects deferring to authority in a previous thread and got my mind going in that direction.

 

I don't work in the mortgage industry, although I have some banking experience, so I don't know the esoteric intricacies that guys like GG and Magox do, but I have had some education on the matter.

 

My position was essentially, that the Federal government played a huge role in the mortgage debacle that led to the financial meltdown. I don't even think the contrary can be argued. I used Dodd and Frank because they're the two most visible and hypocritical players in the whole scheme. I'm sure there is a lot of blame to go around. Moody's has some explaining to do as does the Federal reserve, and I'm sure several major financial firms and people who knowingly manipulated the system to get theirs and get out.

 

I do think there is a danger in attributing something so intricate to something as vague as "corporate greed", and in dismissing the role the government played just because it's not convenient to our predetermined political affiliations.

 

Edit: (lost on a tangent): and I think that Taibbi is just fine with letting one set of guys who caused the problem "solve" it, while arbitrarily throwing the other set to the wolves.

Edited April 14, 2011 by Rob's House

[DC Tom]

They didn't put the amount of the loan in circulation to stimulate anything; they used it to repay the loan after they had the milk from the cow.

 

They couldn't, it all went to maintaining reserve requirements. Basically, they were barred from lending the money to people by the same people that routinely bitched at them for not lending the money.

[jjamie12]

I don't mean to be too defensive; I had some of the usual suspects deferring to authority in a previous thread and got my mind going in that direction.

 

I don't work in the mortgage industry, although I have some banking experience, so I don't know the esoteric intricacies that guys like GG and Magox do, but I have had some education on the matter.

 

My position was essentially, that the Federal government played a huge role in the mortgage debacle that led to the financial meltdown. I don't even think the contrary can be argued. I used Dodd and Frank because they're the two most visible and hypocritical players in the whole scheme. I'm sure there is a lot of blame to go around. Moody's has some explaining to do as does the Federal reserve, and I'm sure several major financial firms and people who knowingly manipulated the system to get theirs and get out.

 

I do think there is a danger in attributing something so intricate to something as vague as "corporate greed", and in dismissing the role the government played just because it's not convenient to our predetermined political affiliations.

 

Edit: (lost on a tangent): and I think that Taibbi is just fine with letting one set of guys who caused the problem "solve" it, while arbitrarily throwing the other set to the wolves.

Finally.

 

First of all, there were no good actors in this mess and the federal government deserves its share of blame, but in my mind, they are way down on the totem pole of people who were playing 'huge' roles in this. (I'm assuming, of course, that your primary beef here is the nature of CRA loans and the stated goal of homeownership by the government, and not the whole "Government is supposed to regulate commerce and they did a really piss-poor job of regulating the mortgage market" Side note -- Really, the mortgage market was one of the most heavily regulated markets in the US and our response is, you guessed it, more regulation. That makes sense.)

 

Given the assumption above -- Community Reinvestment Act loans are a pittance compared to the size and scope of the nonsense that was coming out of Option One or Fremont in the bad old days. FNMA didn't create Pay Option ARM's. FNMA didn't create CDO's. FNMA didn't create CDO^2's. FNMA didn't sell CDS on CDO^2's. Rating agencies had NO idea what was going on. None. All of these things were way, way, way more important to the collapse of the market than anything the federal government did (that's not to say that the federal gov't is innocent in this. I agree with you that they aren't. They just aren't (in my opinion) anywhere near the top of the heap of the blame game in the way that you want them to be)