Like these economic strategists / czars (who now play the dumb blonds) didn't know what the hell was inevitable. What a damned crock of shit! The "dumb blond" joke is on us! BTW we don't send ignorance to jail or call them traitors; do we? The SOB's are damned well playing dumb I know because I saw this whole escapade was economically unsustainable and I hardly know shit about economics.
http://www.scratchinpost.net/barefootbob//banking-fed-quotes.html This contrived "emergency" by the money vultures and the political manipulations of FDR, et. al. since then has created innumerous abuses, usurpations, and abridgments of Constitutionally delegated Powers and Authority as clearly stated in Senate Report 93-549 (1973): "A majority of the people of the United States have lived all of their lives under emergency rule. For 40 years, [-1824 years now in 109] freedoms and governmental procedures guaranteed by the Constitution have in varying degrees been abridged by laws brought into force by statutes of national emergency." Peace, Doc On Feb 22, 2:08 pm, Keith In Tampa <[email protected]> wrote: > I thought this article was interesting, especially considering former > Senator Gramm's involvement in the "Gramm-Leach-Bliley" Act, which President > Clinton signed into law. In essence, President Clinton repealed the > "Glass-Steagall" Act, the theory being at the time that America's financial > competitiveness was being hampered in comparison to Europe's and the > emerging economies of Russia and China. That we needed the > "Gramm-Leach-Bliley" Act, in order to make America's lending institutions > viable and competitive. > > By the mid 1990s, the Clinton Administration had in fact adopted a "quota > system" , and unabashedly favored expansion of, and the empowered use of > the "Community Reinvestment Act", believing that a governmental response to > economic problems in inner cities is more effective than a free market > solution.....The rest of course, is history, (*See* Chris Dodd, Barney > Frank, Chuck Schumer, Franklin Raines, Jim Johnson, and a multitude of other > bandits from the Democrat Party: > > ==================== > Deregulation and the Financial Panic Loose money and politicized mortgages > are the real villains. By PHIL GRAMM > February 20, > 2009http://online.wsj.com/article/SB123509667125829243.html?mod=djemEdito... > The > debate about the cause of the current crisis in our financial markets is > important because the reforms implemented by Congress will be profoundly > affected by what people believe caused the crisis. > > If the cause was an unsustainable boom in house prices and irresponsible > mortgage lending that corrupted the balance sheets of the world's financial > institutions, reforming the housing credit system and correcting attendant > problems in the financial system are called for. But if the fundamental > structure of the financial system is flawed, a more profound restructuring > is required. > > I believe that a strong case can be made that the financial crisis stemmed > from a confluence of two factors. The first was the unintended consequences > of a monetary policy, developed to combat inventory cycle recessions in the > last half of the 20th century, that was not well suited to the speculative > bubble recession of 2001. The second was the politicization of mortgage > lending. > > The 2001 recession was brought on when a speculative bubble in the equity > market burst, causing investment to collapse. But unlike previous postwar > recessions, consumption and the housing industry remained strong at the > trough of the recession. Critics of Federal Reserve Chairman Alan Greenspan > say he held interest rates too low for too long, and in the process > overstimulated the economy. That criticism does not capture what went wrong, > however. The consequences of the Fed's monetary policy lay elsewhere. > > In the inventory-cycle recessions experienced in the last half of the 20th > century, involuntary build up of inventories produced retrenchment in the > production chain. Workers were laid off and investment and consumption, > including the housing sector, slumped. > In the 2001 recession, however, consumption and home building remained > strong as investment collapsed. The Fed's sharp, prolonged reduction in > interest rates stimulated a housing market that was already booming -- > triggering six years of double-digit increases in housing prices during a > period when the general inflation rate was low. > > Buyers bought houses they couldn't afford, believing they could refinance in > the future and benefit from the ongoing appreciation. Lenders assumed that > even if everything else went wrong, properties could still be sold for more > than they cost and the loan could be repaid. This mentality permeated the > market from the originator to the holder of securitized mortgages, from the > rating agency to the financial regulator. > > Meanwhile, mortgage lending was becoming increasingly politicized. 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. > > As Mr. Greenspan testified last October at a hearing of the House Committee > on Oversight and Government Reform, "It's instructive to go back to the > early stages of the subprime market, which has essentially emerged out of > CRA." It was not just that CRA and federal housing policy pressured lenders > to make risky loans -- but that they gave lenders the excuse and the > regulatory cover. > > Countrywide Financial Corp. cloaked itself in righteousness and silenced any > troubled regulator by being the first mortgage lender to sign a HUD > "Declaration of Fair Lending Principles and Practices." Given privileged > status by Fannie Mae as a reward for "the most flexible underwriting > criteria," it became the world's largest mortgage lender -- until it became > the first major casualty of the financial crisis. > > The 1992 Housing Bill set quotas or "targets" that Fannie and Freddie were > to achieve in meeting the housing needs of low- and moderate-income > Americans. In 1995 HUD raised the primary quota for low- and moderate-income > housing loans from the 30% set by Congress in 1992 to 40% in 1996 and to 42% > in 1997. > > By the time the housing market collapsed, Fannie and Freddie faced three > quotas. The first was for mortgages to individuals with below-average > income, set at 56% of their overall mortgage holdings. The second targeted > families with incomes at or below 60% of area median income, set at 27% of > their holdings. The third targeted geographic areas deemed to be > underserved, set at 35%. > > The results? In 1994, 4.5% of the mortgage market was subprime and 31% of > those subprime loans were securitized. By 2006, 20.1% of the entire mortgage > market was subprime and 81% of those loans were securitized. The > Congressional Budget Office now estimates that GSE losses will cost $240 > billion in fiscal year 2009. If this crisis proves nothing else, it proves > you cannot help people by lending them more money than they can pay back. > > Blinded by the experience of the postwar period, where aggregate housing > prices had never declined on an annual basis, and using the last 20 years as > a measure of the norm, rating agencies and regulators viewed securitized > mortgages, even subprime and undocumented Alt-A mortgages, as embodying > little risk. It was not that regulators were not empowered; it was that they > were not alarmed. > > With near universal approval of regulators world-wide, these securities were > injected into the arteries of the world's financial system. When the bubble > burst, the financial system lost the indispensable ingredients of confidence > and trust. We all know the rest of the story. > > The principal alternative to the politicization of mortgage lending and bad > monetary policy as causes of the financial crisis is deregulation. How > deregulation caused the crisis has never been specifically explained. > Nevertheless, two laws are most often blamed: the Gramm-Leach-Bliley (GLB) > Act of 1999 and the Commodity Futures Modernization Act of 2000. > > GLB repealed part of the Great Depression era Glass-Steagall Act, and > allowed banks, securities companies and insurance companies to affiliate > under a Financial Services Holding Company. It seems clear 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. > > When no evidence was ever presented to link GLB to the financial crisis -- > and when former President Bill Clinton gave a spirited defense of this law, > which he signed -- proponents of the deregulation thesis turned to the > Commodity Futures Modernization Act (CFMA), and specifically to credit > default swaps. > > Yet it is amazing how well the market for credit default swaps has > functioned during the financial crisis. That market has never lost liquidity > and the default rate has been low, given the general state of the underlying > assets. In any case, the CFMA did not deregulate credit default swaps. All > swaps were given legal certainty by clarifying that swaps were not futures, > but remained subject to regulation just as before based on who issued the > swap and the nature of the underlying contracts. > > In reality the financial "deregulation" of the last two decades has been > greatly exaggerated. As the housing crisis mounted, financial regulators had > more power, larger budgets and more personnel than ever. And yet, with the > notable exception of Mr. Greenspan's warning about the risk posed by the > massive mortgage holdings of Fannie and Freddie, regulators seemed unalarmed > as the crisis grew. There is absolutely no evidence that if financial > regulators had had more resources or more authority that anything would have > been different. > > Since politicization of the mortgage market was a primary cause of this > crisis, we should be especially careful to prevent the politicization of the > banks that have been given taxpayer assistance. Did Citi really change its > view on mortgage cram-downs or was it pressured? How much pressure was > really applied to force Bank of America to go through with the Merrill > acquisition? > Restrictions on executive compensation are good fun for politicians, but > they are just one step removed from politicians telling banks who to lend to > and for what. We have been down that road before, and we know where it > leads. > > Finally, it should give us pause in responding to the financial crisis of > today to realize that this crisis itself was in part an unintended > consequence of the monetary policy we employed to deal with the previous > recession. Surely, unintended consequences are a real danger when the > monetary base has been bloated by a doubling of the Federal Reserve's > balance sheet, and the federal deficit seems destined to exceed $1.7 > trillion. > > *Mr. Gramm, a former U.S. Senator from Texas, is vice chairman of UBS > Investment Bank. UBS. This op-ed is adapted from a recent paper he delivered > at the American Enterprise Institute.* --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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