Are the Democrats responsible for the U.S. financial crisis?

[GePap]

Originally posted by Kuciwalker
That doesn't actually make sense as a response.

If society as a whole will be there to rescue these firms when they make mistakes, then society has every right to set rules to limit the mistakes and problems these firms can create or get into, to limit our collective liability.

[Kuciwalker]

Of course we have the right to anyway. My point was that I didn't see why we should, i.e. why that particular regulation was sensible.

"Limiting damage" isn't the right answer, because it doesn't set a particular limit on the size of banks; it just arbitrarily bifurcates the industry.

[rmsharpe]

Kidicious:

3 words

Community
Reinvestment
Act



GOOGLE IT

[Naked Gents Rut]

Given that stand-alone investment banks have been the hardest hit in the financial crisis, I fail to see how Glass-Steagall would've made the situation better.

[Kidlicious]

Originally posted by Naked Gents Rut
Given that stand-alone investment banks have been the hardest hit in the financial crisis, I fail to see how Glass-Steagall would've made the situation better.

Do you understand the part about deposits being used to invest in derivatives?

[GePap]

Originally posted by Kuciwalker
Of course we have the right to anyway. My point was that I didn't see why we should, i.e. why that particular regulation was sensible.

"Limiting damage" isn't the right answer, because it doesn't set a particular limit on the size of banks; it just arbitrarily bifurcates the industry.

The Federal government decided to insure the savings of individuals in banks - but if those banks are allowed to speculate with those deposits, like by buying mortage backed securities on leverage, and then things go south and the bank collapses, guess what, the Feds are now on the hook because they have to insure a significant portion of the deposits that would have been lost.

When Glass-Steagall was repealed, the government failed to inact safeguards to prevent these firms from taking too much risk. The problem is not that Glass-Steagall specificall was repealed, but that no alternative ways of ensuring that these firms limit risk were imposed.

[GePap]

Originally posted by Naked Gents Rut
Given that stand-alone investment banks have been the hardest hit in the financial crisis, I fail to see how Glass-Steagall would've made the situation better.

this from the guy claiming that Fannie and Freddie are the cause of the crisis....

[Naked Gents Rut]

Do you understand the part about deposits being used to invest in derivatives?

Stand-alone investment banks like Bear Sterns or Lehman didn't have an extensive deposit base. That was the problem. They didn't have a stable source of capital and were screwed when the market for short-term lending locked up.

If Citigroup or Bank of America had gone bankrupt, you and GePap might have a point. They haven't, however, so the repeal of Glass-Steagall is rather irrelevant.

this from the guy claiming that Fannie and Freddie are the cause of the crisis....

You haven't disproved that yet. Other have tried and failed; do you want to give it a shot?

[Theben]

Apparently up to 65% of the sub-prime loans made were eligible for prime fixed-rate loans, but lenders had a financial incentive to push sub-primes on them. And a lot of people who took these loans got them to fix the equity of their homes, due to maintenance costs and disrepair.

Any way you look at it, greed was the culprit. And both the dems and repugs are to blame... tho I believe the repugs own a bigger chunk of the responsibility.

[Naked Gents Rut]

Any way you look at it, greed was the culprit.

While correct on a simplistic level, this is a maddeningly vague analysis of the crisis and of no use in fixing the American financial system to make sure this doesn't happen in the future.

[Kidlicious]

Originally posted by rmsharpe
Community
Reinvestment
Act

So you're saying that this is all caused by trying to help the poor, and not because of trying to help bankers and the righ. WRONG!

1) That's a law that was enacted in 1977. This is over 30 years later. What took so long?

2) CRA activity largely ended in 2001. This is documented. GOOGLE IT!

3) In 2004 Bush severely weakened the law by pulling many banks out of from it's toughest standards.

4) CRA doesn't apply to most of the loans behind it. Most subprime loans were made by banks that were beyond the laws reach.

[Theben]

Originally posted by Zkribbler
Poor people can't afford homes.
So, either poor people don't get homes but rather live in apartments and rooming houses...or....
They move to places like Iowa (where homes cost 1/13 as much as they do in California).

If you're poor, there's some things you can't afford. FACT!

Moving away from your paycheck to paycheck job, leaving your support base of family and friends, when you have no money?!!

And what's wrong with trying to move from renting to owning property? Haven't we been *tsking* poor people all along for not seeking ownership and better financial stability?

[Kuciwalker]

We have?

[Kidlicious]

Originally posted by Naked Gents Rut
Stand-alone investment banks like Bear Sterns or Lehman didn't have an extensive deposit base. That was the problem. They didn't have a stable source of capital and were screwed when the market for short-term lending locked up.

If Citigroup or Bank of America had gone bankrupt, you and GePap might have a point. They haven't, however, so the repeal of Glass-Steagall is rather irrelevant.

They didn't have a large enough capital base because they didn't have regulatory requirements to have it. That's part of the problem.

[Naked Gents Rut]

Keeping Glass-Steagall around wouldn't have required them to have a large enough capital base. In fact, it probably would've led to there being even more under-capitalized stand-alone investment banks around to fail. That's why pointing to the repeal of Glass-Steagall as a source of the current financial crisis is stupid.