How did we get into this mess?

[Patroklos]

Regulations for many agencies are internal and not something easily available to the public outside of official documents for the industry. Further, even if they are not readily available or easy to find, that does not mean they do not exist. I suppose the New York Times and other respectable media sources are lying about this in some sort of grand conspiracy?

Thank you for being honest enough to admit that you are talking out of your ass when speaking about deregulation.

It is refreshing to see a Polytubbie able to admit they don't actually have anything to back up there claims. Bravo

How is this relevant?

How is sane regulation proposed by the Republicans tailored specifically to prevent the very crisis currently transpiring relevant in a thread where you are blaming Republicans for not supporting regulation? Seriously?

[Vesayen]

You want me to give you internal documents from an administrative agency which says that they will no longer regulate an industry in a certain way-where can I get that from? Simply because I do not have it, does not mean the policy does not exist. Do you think the New York Times and others in the media, as well as congressman who talk about it, invented this as a big lie? Is it a conspiracy?

It was the national policy for several years. You could go into a bank and ask for a mortgage and they would only ask you about your financial situation, not asking for any proof. 12 years ago if you walked into a bank and asked for a mortgage, the banks were required to get varying levels of proof you could afford it-what more evidence is needed?

The Republicans are to blame because they were in pwoer when the change was made.

[Aeson]

I'm think there was a raising (or elimination?) of leveraging limits as one of the "deregulations" that is responsible for this mess. This was SEC regulations that were loosened up in 2004.

I don't want to search for the actual regulations right now... maybe later. Here's the first reference:

http://bigpicture.typepad.com/comments/2008/09/regulatory-exem.html

Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.

Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.

Must just be a coincidence there? Leverage up 30:1, on virtually any assets, and things can turn ugly really fast.

[Aeson]

Just something interesting about level 3 assets... and leveraging. (From May 08)

http://www.minyanville.com/articles/index.php?a=17068

Ten companies now have more Level 3 assets than capital. In order they are (as a % of total shareholder equity:

1) Bear Stearns (BSC): 313.97%
2) Morgan Stanley (MS): 234.88%
3) Merrill Lynch (MER): 225.4%
4) Goldman Sachs (GS): 191.56%
5) Lehman (LEH): 171.18%
6) Fannie Mae (FNM): 161.48%
7) Northwest Air (NWA): 142.02%
8) Citigroup (C): 125.06%
9) Prudential (PRU): 119.36%
10) Hartford (HIG): 108.52%

You would have done pretty well shorting this list so far...

[Kidlicious]

Why not just make these assets illegal? They seem to be the biggest part of the problem.

[Patroklos]

You want me to give you internal documents from an administrative agency which says that they will no longer regulate an industry in a certain way-where can I get that from? Simply because I do not have it, does not mean the policy does not exist. Do you think the New York Times and others in the media, as well as congressman who talk about it, invented this as a big lie? Is it a conspiracy?

So, just to make this clear, something doesn't exist so instead of going with that you decide to assume it must exist to justify your ranting? Do you know what a truther is?

Vesayan

It was the national policy for several years. You could go into a bank and ask for a mortgage and they would only ask you about your financial situation, not asking for any proof. 12 years ago if you walked into a bank and asked for a mortgage, the banks were required to get varying levels of proof you could afford it-what more evidence is needed?

And what made that standard practice? Again, look of Raines and then look up who his backers are. Freddie Mac and Fanny Mae are intimately liked to one party. Hint, it isn't the Republicans.

[Aeson]

Well, I don't think they need to be illegal, just firms have to be held accountable if they leverage themselves up on illiquid assets. It's not rocket surgery... if you can't sell an asset quickly and you're leveraged up 30:1... a ~3% move can wipe you out. And 3% moves, even in the most stable assets, can happen rather quickly.

[Vesayen]

Patroklos: Yes or no: "I believe that the New York Times and other members of the media as well as members of Congress have lied to us about changes in regulation."

[Aeson]

For instance, FX markets allow up to 200:1 leveraging. They can do that because cash is... well... extremely liquid. The FX markets are open 24/7, so if something starts to move against you, you can cover your ass (or your broker can force you to do so).

It's the leveraging on illiquid assets that's the problem. (Or one of the problems.)

[Aeson]

Hmmm... someone(s) else seems to have taken a notice to HIG (off the level 3 list... though that's probably not where they noticed it )

Falling like a rock.

[Lancer]

This is great. We're all agreed that this whole mess is a case of the left using home mortgages that could never be repaid to buy votes among the poor? Yes?

Excellent, I don't have to look in this thread any more now.

[Kidlicious]

Originally posted by Aeson
Well, I don't think they need to be illegal, just firms have to be held accountable if they leverage themselves up on illiquid assets. It's not rocket surgery... if you can't sell an asset quickly and you're leveraged up 30:1... a ~3% move can wipe you out. And 3% moves, even in the most stable assets, can happen rather quickly.

But the thing is that we all pay for it when they are held accountable. Since that's the case we need to outright prevent it.

[Kidlicious]

Originally posted by Lancer
This is great. We're all agreed that this whole mess is a case of the left using home mortgages that could never be repaid to buy votes among the poor? Yes?

Excellent, I don't have to look in this thread any more now.

I wouldn't necessarily call them the left, or include everyone on the left, with them. Many politicians believe that all americans should own homes because home owners value property rights more. That's in a sense not leftist.

[Zkribbler]

Originally posted by Lancer
This is great. We're all agreed that this whole mess is a case of the left using home mortgages that could never be repaid to buy votes among the poor? Yes?

I seem to recall a certain President of the United States, when running for re-election in 2004, touting the high percentage of home ownership achieved under his presidency.

[Patroklos]

Patroklos: Yes or no: "I believe that the New York Times and other members of the media as well as members of Congress have lied to us about changes in regulation."

The New York Times are just wrong but it is a fact they are not above straight lies, the media claims both depending on the segment. But hey, its not like either of them have bothered to provide concrete examples either.

Again, Veyesan, what regulations were changed to facilitate the crisis? If the NYT told you which ones, feel free to tell us. Until you do this you are in truther territory.

I wouldn't necessarily call them the left, or include everyone on the left, with them. Many politicians believe that all americans should own homes because home owners value property rights more. That's in a sense not leftist.

ALL politicians like high ownership rates when it suits their purposes because they pretend home ownership = prosperity = I did a good job.

It is stupid, and people need to get over it.