Doc, I actually agree with you.....I think.....Sort of......
On Feb 22, 3:40 pm, Doc Holliday <[email protected]> wrote: > 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 In essence, President Clinton repealed the 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. 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