At the request of some of the banking moguls, the white house refused to tighten up loan rules. Fat cat banker Paulson sure has been free with our tax money when it comes to bailing out thosesame corrupt banks.
WASHINGTON " The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.
"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.
Bowing to aggressive lobbying " along with assurances from banks that the troubled mortgages were OK " regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.
OK. Just as long as weare clear that Bush might have been part of the problem but he wasnt the source of the problem, and he had more than a little help from his Democratic colleagues like Barney "roll the dice" Frank.
__________________
"Shoot him again....his soul is still dancing"
OK. Just as long as weare clear that Bush might have been part of the problem but he wasnt the source of the problem, and he had more than a little help from his Democratic colleagues like Barney "roll the dice" Frank.
Lanse: It was one of thosebi-partisan things thathappen in DC on rare occasions.The Democrats wanted poor folks with no money to be able to "buy" homes and the Republicans wanted the banks and mortgage companies to make the loans.
The danger of a financial meltdown because of such policies was foretold during the Clinton administration.
Am well aware of that. That did not keep Bush from signing the Gramm bank deregulation bill into law.
Without that law, the market would have completely crashed. How do you think Bank of America was allowed to buy Merrill Lynch?
__________________
John Adams The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
The danger of a financial meltdown because of such policies was foretold during the Clinton administration.
Am well aware of that. That did not keep Bush from signing the Gramm bank deregulation bill into law.
Without that law, the market would have completely crashed. How do you think Bank of America was allowed to buy Merrill Lynch?
Along those lines... an interesting read:
Quote:
Who's responsible for the panic of 2008? In the gathering legend, it's one man, former Sen. Phil Gramm, the ex-John McCain adviser who lamented "a nation of whiners" a few months ago and therefore is fit to have responsibility for one of the nation's worst financial crises heaped on his head.
Gramm's alleged sin is pushing the 1999 Gramm-Leach-Bliley bank deregulation bill. Barack Obama has identified the legislation as ground zero of the financial implosion, the deregulatory predicate for Wall Street's excess. As a Texas conservative who afflicted liberaldom for years before decamping to Wall Street, Gramm is easy to vilify. That doesn't make the case against him any less unjust.
The law allowed commercial and investment banks to consolidate, repealing the New Deal-era Glass-Steagall Act that prevented banks from offering customers insurance, investment or commercial banking services. Gramm-Leach-Bliley tore down the walls between financial institutions. Was this the disastrous mistake that it is now portrayed as on the stump? No.
One, Democrats in good standing supported the final bill. Robert Rubin and Larry Summers, Clinton Treasury officials whom Obama relies on for advice, supported it. Joe Biden voted for it, it passed the Senate with 90 votes, and President Clinton signed it. Heaven knows, Washington can make bipartisan mistakes, but if the bill were so obviously the road to financial perdition, presumably some of these Democrats much keener to regulate the economy than Gramm would have voted "no."
Two, the bill was a foregone conclusion. Europe already had so-called universal banking in which financial institutions could undertake varied operations. U.S. banks were finding loopholes in the law to keep up with foreign competitors, and increasingly bumped up against the 60-year-old regulatory constraints. The Gramm bill just blessed the world as it was already evolving.
Three, the legislation appears to have alleviated the current crisis rather than making it worse. Big, diversified financial institutions have been weathering the crunch better than anyone else and have occasionally swooped in to lessen the pain. Bank of America acquired Merrill Lynch, which would have been impossible prior to Gramm's deregulation. Otherwise, Merrill would either have gone under or been bailed out by the taxpayers.
Indeed, we've witnessed the end of the era of the large investment bank, with the dramatic decision of the last two firms standing, Goldman Sachs and Morgan Stanley, to transform themselves into traditional bank holding companies. The investment-bank model of relying on short-term markets for funding was no longer workable. Instead, Goldman and Morgan will rely more on less risky sources of funding, as regular banks do. Would we really want a 1930s law saying, "No, sorry, you have to remain pure investment banks and go bust"?
The root of this crisis is subprime loans lavished on people who couldn't truly afford their homes. Gramm makes an unlikely villain here, since he opposed the rush to give marginal borrowers mortgages " and took hell for it from left-wing activist groups " and his deregulation didn't create securitization or other financial exotica.
It's the very word "deregulation" that galls Gramm's critics. In their simplistic morality play, anything promoting it must be to blame. But Fannie Mae and Freddie Mac were practically arms of the government ("government-sponsored enterprises") and still did more than any other institution to spread the bad debt before requiring a bailout themselves.
It's certainly possible to fault lax regulation. The Securities and Exchange Commission's 2004 decision to allow the investment banks to double their leverage looks foolhardy. But the mistakes that created this crisis can't be attributed to one man. In other words, Barack Obama and every other Democrat should lay off their scapegoat of the hour.
Ipsy, i have read that piece. It is theofficial Republican partyline.Much of it is distortions and lies.
The repeal of the Glass-Seagall act was bad enough. Then just before Christmas of 2000 thatGramm guy sneaked a 268 page rider called the commodity futuresmodernization act into a must have spending bill. That act completely deregulated derivitatives. The Enron loophole wasin that bill.
This bill allowed credit default swaps to come into being. There are somewhere between 45 trillion dollars and 65 trillion dollars of paper out there based on six trillion in assets. No one knows for sure becauseCDSs are totally deregulated. Most financial gurus agree that it is very shakey and if it crashes all the world will be in deep dark depression.
Then Gramm went to work for UBs.
Quote:
DAVID CORN: ".As often happens in Washington, Congress had yet to pass most of the appropriation measures that are needed to before that Congress coming to a close, and so they were lumping together, you know, six, seven different appropriation bills into one mega bill, working all hours of the day, and no one really understanding what was and wasn"t in the bill that they had to pass to keep the government going and most people being distracted by the ongoing fight between George W. Bush and Al Gore in the Supreme Court.
And in the midst of all that chaos, Senator Phil Gramm slipped into this must-pass spending bill a 268-page bill, the Commodity Futures Modernization Act, which had been kicking around for about a year. The House had passed one version of it, but there were a lot of different versions. And the point of it was really to do a lot of different types of deregulation. It included something called the Enron loophole, which allowed Enron to sell energy futures on a deregulated basis, which helped lead to the California energy crisis the following year and the subsequent collapse of Enron.
White House Refused To Tighten Loan Rules
