Malyla's Account Talk

[TRAFFIC_DOG]

Criticism and defense

Economists Robert Ekelund and Mark Thornton have criticized the Act as contributing to the 2007 subprime mortgage financial crisis, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system it "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay
dearly". [14]

In response to criticism of his signing the bill when President, Bill Clinton said in 2008:

"I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill ... On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence." [15]
​

In February 2009, one of the act's co-authors, former Senator Phil Gramm, wrote in its defense that:

"...if GLB was the problem, the crisis would have been expected to have originated in Europe where they never had Glass-Steagall requirements to begin with. Also, the financial firms that failed in this crisis, like Lehman, were the least diversified and the ones that survived, like J.P. Morgan, were the most diversified.
" Moreover, GLB didn't deregulate anything. It established the Federal Reserve as a superregulator, overseeing all Financial Services Holding Companies. All activities of financial institutions continued to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB." [16]



​

 

[TRAFFIC_DOG]

I couln't type in the previous post.

I'm not defending any of these A holes.

 

[350zCommTech]

In response to criticism of his signing the bill when President, Bill Clinton said in 2008:

"I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill ... On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence." [15]
​

In February 2009, one of the act's co-authors, former Senator Phil Gramm, wrote in its defense that:

"...if GLB was the problem, the crisis would have been expected to have originated in Europe where they never had Glass-Steagall requirements to begin with. Also, the financial firms that failed in this crisis, like Lehman, were the least diversified and the ones that survived, like J.P. Morgan, were the most diversified.
" Moreover, GLB didn't deregulate anything. It established the Federal Reserve as a superregulator, overseeing all Financial Services Holding Companies. All activities of financial institutions continued to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB." [16]

​

"I never had sexual relations with that woman."


AS for Gramm, I hope he burns in hell. Actually, right now be better.

Gramm should talk about C, which closed at $1.22 today.

 

[malyla]

"I never had sexual relations with that woman."


AS for Gramm, I hope he burns in hell. Actually, right now be better.

Gramm should talk about C, which closed at $1.22 today.

Ok - If I had to choose between a president who lied about being an adulterer or a senator who engineered the repeal of financial regulation causing the economic tsunami of the century, guess who I would pick as the worst American ever? hint- it would be a republican.
Clinton instills pity in me. He is a democrat who was in the wrong place at the wrong time as he could not get away from the neo-cons and the Reagan policies of deregulation and dismantling of the social entitlements (New Deal and Great Society initiatives - destroyed). The fact that he had cigar sex with a women in the white house does not shock or outrage me in the least (have you watched TV lately?). The fact that he lied about being an adulterer does not shock me (every president has lied about worst things – they are politicians people). What shocked me was the vindictiveness of the attacks by the republicans, through Kenneth Star, to castrate a progressive administration so that they could not cause too much damage to the neo-con agenda before they could get full power through Bush. THAT was scary and astonishing. And as a consequence of the neo-con anti-regulation policies, we get Gramm repealing all the regulations he can allowing for a sheriff-less wildwest atmosphere in the financial market. Whose legacy will be with us longer and whose legacy caused the most harm?

 

[malyla]

http://www.youtube.com/watch?v=064C5UrRfP4

Scumbags

Thanks mojo - that was a nice video that mirrors my thoughts exactly and over 7 months earlier than my thoughts too :cheesy:

 

[350zCommTech]

Ok - If I had to choose between a president who lied about being an adulterer or a senator who engineered the repeal of financial regulation causing the economic tsunami of the century, guess who I would pick as the worst American ever? hint- it would be a republican.

I'm not one or the other. They were all to blame. They all got used by the greedy Wall st. bankers. A good example is the SEC allowing Madoff to run a ponzi scheme for over a decade, where he made no trades. If I had my way, I would hang 90% of the folks in DC and Wall st.

I bashed Bush when he was in office and now I'm bashing Obamasiah for being a fraud and an idiot.

 

[Birchtree]

Phil Gramm is not the bad guy. Loose money and politicized mortgages are the real villains. Community Reinvestment Act (CRA) requirements led regulators to foster looser underwriting and encouraged the making of more and more marginal loans. Looser underwriting standards spread beyond subprime to the whole housing market. The early stages of the subprime market essentially emerged out of CRA.

 

[malyla]

Phil Gramm is not the bad guy. Loose money and politicized mortgages are the real villains. Community Reinvestment Act (CRA) requirements led regulators to foster looser underwriting and encouraged the making of more and more marginal loans. Looser underwriting standards spread beyond subprime to the whole housing market. The early stages of the subprime market essentially emerged out of CRA.

Thanks Birchtree. Something else to research Exerpt in italics from http://en.wikipedia.org/wiki/Community_Reinvestment_Act <Bold added my ME>

Relation to 2008 financial crisis
Some economists, politicians and other commentators have charged that the CRA contributed in part to the 2008 financial crisis by encouraging banks to make unsafe loans. Others however, including the economists from the Federal Reserve and the FDIC, dispute this contention. The Federal Reserve and the FDIC holds that empirical research has not validated any relationship between the CRA and the 2008 financial crisis.[56][57]
Economist Stan Liebowitz wrote in the New York Post that a strengthening of the CRA in the 1990s encouraged a loosening of lending standards throughout the banking industry. He also charges the Federal Reserve with ignoring the negative impact of the CRA.[51] In a commentary for CNN, Congressman Ron Paul, who serves on the United States House Committee on Financial Services, charged the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks."[58] In a Wall Street Journal opinion piece, Austrian school economist Russell Roberts wrote that the CRA subsidized low-income housing by pressuring banks to serve poor borrowers and poor regions of the country.[59] Jeffrey A. Miron, a senior lecturer in economics at Harvard University, in an opinion piece for CNN, calls for “getting rid” of Fannie Mae and Freddie Mac, as well as policies like the Community Reinvestment Act that “pressure banks into subprime lending.”[60]

However, others dispute the involvement of the CRA in the crisis. San Francisco Federal Reserve Bank Governor Randall Kroszner has stated that no empirical evidence had been presented to support the claim that "the law pushed banking institutions to undertake high-risk mortgage lending".[56] In a Bank for International Settlements ("BIS") working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust," relying partly on evidence that the housing bust has been a largely exurban event.[61] Others have also concluded that the CRA did not contribute to the current financial crisis, for example, FDIC Chairman Sheila Bair,[62] Comptroller of the Currency John C. Dugan,[63] Tim Westrich of the Center for American Progress,[64] Robert Gordon of the American Prospect,[65] Daniel Gross of Slate, and Aaron Pressman from BusinessWeek.[66]

Some legal and financial experts note that CRA regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA. In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[67][34] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[68] According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made risky "high-priced loans" at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the higher-priced loans that have contributed to the current crisis.[69] A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.[70] Emre Ergungor of the Federal Reserve Bank of Cleveland found that there was no statistical difference in foreclosure rates between regulated and less-regulated banks, although a local bank presence resulted in fewer foreclosures.[71]

<see the link above for the full article - it's too big to post>

Seems to me that the argument that the CRA was the reason for the unregulated feeding frenzy we are suffering from, with the meltdown in the financial markets, is very unlikely. It's the shifting of subprime risk from the banks to the investment banks/mortgage lenders that caused this mess. If the ability to shift risk was not present, I seriously doubt that the subprime lending would have occurred. Banks were not required to lend to high risk people under CRA. Some banks did that when they could sell those high risk assets to someone else. However, it was the non-banks that wrote mortgages that caused the worst damage. That fed on itself as shown in this video http://www.wimp.com/badtime/

 

[malyla]

Just found that there is more video on the credit crisis at http://www.crisisofcredit.com/
The video on wimp only has ~7:30 minutes while the whole video is ~11 minutes long.
http://vimeo.com/3261363
Part 1
http://www.youtube.com/watch?v=Q0zEXdDO5JU

Part 2
http://www.youtube.com/watch?v=iYhDkZjKBEw The shifting of risk explained...

 

[malyla]

I just had a thought. Do you think someone on CNBC reads these posts? Or maybe a CNBC contributor? Any thoughts on this?

 

[KevinD]

Probably not...

 

[alevin]

Thanks Birchtree. Something else to research Exerpt in italics from http://en.wikipedia.org/wiki/Community_Reinvestment_Act <Bold added my ME>

Relation to 2008 financial crisis
The Federal Reserve and the FDIC holds that empirical research has not validated any relationship between the CRA and the 2008 financial crisis.[56][57]

Some legal and financial experts note that CRA regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA. In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[67][34] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[68] According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made risky "high-priced loans" at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the higher-priced loans that have contributed to the current crisis.[69] A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.[70] >

Seems to me that the argument that the CRA was the reason for the unregulated feeding frenzy we are suffering from, with the meltdown in the financial markets, is very unlikely. It's the shifting of subprime risk from the banks to the investment banks/mortgage lenders that caused this mess. Banks were not required to lend to high risk people under CRA. Some banks did that when they could sell those high risk assets to someone else. However, it was the non-banks that wrote mortgages that caused the worst damage.

Excellent research, Malyla. Kudos to you for bringing out this information for all to consider.

 

[malyla]

Excellent research, Malyla. Kudos to you for bringing out this information for all to consider.

YW - Birchtree made me do it

 

[Birchtree]

At least now I know you don't have me on ignore - that's a relief.

 

[malyla]

At least now I know you don't have me on ignore - that's a relief.

Malyla

 

[malyla]

I'll be out for awhile. I do plan on trying for a bounce soon and if I can I'll post it. Take care - see you in 30.

 

[malyla]

Well,... D&%M*&,... I missed the bounce opportunity. Who got it right? It seems to me that Coolhand, Uptrend, ContrarionJeff, and WindHunter got it right. Did they base their trades on the SS signal or Elliott Wave or some other. I don't know and that is why I had family members dish me (they do love me) about my not get any of this 20% gain in the market. My response is &%$@, this is a bear market and until we retest the lows (666) and uptrend from there, we will go lower (Just you wait and see). It's tiring being a bear.

Still zero in the F fund, but waiting for another interest decline. I think I will refinance at 2% less than I carry now. This is a good thing. Keeping people in their homes will help the economy recover (add job retention for 100% recovery).

Waiting to morph into a spring bull - just when will this happen??????

 

[Birchtree]

Something more for your consideration: http://financialsense.com/Market/daily/tuesday.htm by Frank Barbera

 

[Steadygain]

http://www.tsptalk.com/mb/showpost.php?p=217157&postcount=15

Malyla,
I know I sound like a 'man man' - and who knows?? :nuts: BUT I've been raking my brains trying to make sure that nothing was left undone and had forgotten I'd get back with you on this.

PLEASE KNOW - This is it and I won't bother you again. Wanted to get the last 3 loose ends finished before the week was over.

OK - it is only with this belief and wholly with this intention that I talk about 'connecting'. I believe we are by Nature Pure and Innocent. We are Neutral and uncontaminated (in any thought or belief - whether we consider it good or bad) when we come into this world. As we grow through life we become contaminated in a wide variety of ways that seperate us from one another in almost every way imaginable. So my goal and the only reason I strive to come up with something that can wholly connect us on the highest level is so we can get beyond all the contamination and come to the ultimate truth.

So what I am saying has absolutely nothing to do with intruding on your thoughts and emotions - or in anyway invading your mind. Nor would I ever try in anyway to burden you with mine.

You see if we connected in the manner I am speaking there would be no male or female, no white or black, no geographical location status, no fat or skinny, or anything else that could possibly cause divisions between us. It would be pure brains totally in touch with each other and all the burdens of life - all the stress and strain would disappear - as you found a 'connectedness' that would otherwise be impossible. In the realest and truest sense - by finding you are one - by fully acknowledging in real life the commonality between you and whoever you connect with - any trace of division would disappear and with that all fear or uncertainty would vanish. This would result in an experience that would bring the ultimate peace and comfort and the most solid confirmation to the priceless nature of your existence.

If it resulted in anything less - then you would not have to destroy the technology - because I would fine tune it until it was perfect. It's been a pleasure knowing you.

Steady

 

[malyla]

Just back for a quick look-see as my plate is more than full. I'm still in F waiting for a signal I can believe in for intermediate term trades. It looks like Coolhand (Don on tradertalk) has a promising indicator, so I may follow the next buy signal. Wouldn't it be something if it happen at the next wave from the pie-cycle chart (Nov 2009)? Capital preservation is my goal in a Bear market.

G.L. Everyone. Get well soon SB.