Wells Hall Off Topic Board

Yes, it was the banks (and the government).

So why do you support the Federal Reserve? Why do you support large government? Start making some sense.

Cowboy Bush

Correct. So do you support banning corporate political donations and lobbying? That would help get 'em out of bed, wouldn't it??

To answer your question in your earlier post, the fed gov't is the ONLY entity with enough power to control/limit what mega corporations can do. If not for the control exerted by the govt, we, the little people down here, would be steam-rolled. We'd be living in the United States of Walmart.

BTW, do you think BOA will remember this $8.5B fine (ok, "settlement")?? I think they will. Remember to send a thank you letter to your elected reps.

The real culprits here are S&P, Moodys, Fitch, the credit rating agencies. No coherent explanation has ever been given as to how these subprime securities (by definition risky loans) could be bundled and sold with high bond ratings. The high bond ratings allowed AIG to justify reinsuring them which the banks thought took care of their risk. And the rest is history.

But then the good news is that all of those nasty wealthy people are now poor because they lost their shirts on those investments when all of the dirty little poor people defaulted on their mortgages. So it all works out in the end, no?

I disagree. The market cannot control them because MEGA CORPORATIONS MAKE THE MARKET. But the government CAN control them by emposing regulations. The problem is that we go through political cycles of regulation - deregulation - regulation - deregulation...

Glass-Stegall was in place for some 67 years, and our economy flourished during that period. It was repealed 12 years ago, and you can see what's happened since then.

Because they are private businesses and not government agancies...they were paid to look the other way...

Correct. And what "private" entity would allow itself to be controlled by politcal appointees??

I'm pretty sure the Fed gives the president a list of candidates to choose from and he chooses from that list.

Banning political donations isn't the solution to the problem; the money will find it's way back where it needs to go in order to "make the system work".

The problem is that the federal government is powerful enough that it is worth the effort of the lobbyists to co-opt it. If you reduce the power of the federal government to its pure Constitutional role, then it no longer has enough influence to make it a target of the lobbyists and lawyers. If you put the power back at the state level, that's too broad of a target for the lobbyists to effectively use them as they do the federal government. It'd be like trying to herd cats.

As usual, the solution is a minimized federal government...

This sounds like pure revisinist history...the Banks making the loans had no reason to expect the Federal government to make them whole when they were making the loans...if they did then why did so many of them take our CDSs effectively hedging against the mortages...why go to that expense if you are sure that the government has your back so to speak?

Anyway the lack of regulation on a number of finanical markets has been going on since the Carter administration and after Greenspan was put in charge of the Fed because Volker was following the law and regulating more than Reagan wanted regulated these was basically no regulation of these markets...thus we had the market mealtdown in 1987, the S&L meltdown during Bush, the dot com bubble during Clinton and the Housing meltdown during Bush Jr. All due to too much rish (bad paper) being allowed in these unregulated markets under the theory that the buyer would be smart enought to self regulate, clearly the buyers either are not smart enough or they have found a way to transfer the risk to others or both...in any case the root cause of these meltdowns in markets where the finanicial insturments are not regulated to manage the risks along with the fact that self regulation will not work when people see a way to sell risky investments but take no risk themselves...

BTW there are lots of finanicial companies that have gone bankrupt over this...many of their officers walked away will billion dollar personal assests...given that the corporate system protects the people at the top from losing their money when the corpoation fails whhy would they care about the risk in the market anyway?