The Best and the Brightest
I’d like a simple explanation. I’d like to be able to hang it all around Phil Gramm’s neck. But, as is so often the case, it’s a lot more complicated:
Citigroup insiders and analysts say that Mr. Prince and Mr. Rubin played pivotal roles in the bank’s current woes, by drafting and blessing a strategy that involved taking greater trading risks to expand its business and reap higher profits. Mr. Prince and Mr. Rubin both declined to comment for this article.
When he was Treasury secretary during the Clinton administration, Mr. Rubin helped loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities. During the same period he helped beat back tighter oversight of exotic financial products, a development he had previously said he was helpless to prevent.
But wait – there’s more!
In the summer of 2003, leaders of the four federal agencies that oversee the banking industry gathered to highlight the Bush administration’s commitment to reducing regulation. They posed for photographers behind a stack of papers wrapped in red tape. The others held garden shears. [Director of the Office of Thrift Supervision James] Gilleran … hefted a chain saw.
Wasn’t the OTS supposed to protect us from another banking meltdown like the one in the ’80s? Not under the Unitary Executive!
This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America’s Community Bankers, and Ken Guenther of the Independent Community Bankers of America.
I think Home Depot is having a sale on pitchforks. The rest of you get some torches, and I’ll meet you in Annapolis. From there, we sail up the Potomac and find these fuckwits. No quarter.
Those WaMu ads won’t ever go away.
Right, the unregulated market in derivative debt obligation instruments was created at the end of the Clinton Administration – and the banks engineered the complete neutralization of the usuary laws through strategic jurisdiction shopping on the Clintons’ watch, engendering at least part of the credit card debt crisis at hand. Remember when credit card rates were capped at like 12 percent and the earth seemed to maintain its orbit? How come the Clintons never had the common decency to stop this kind of stuff?
“…he plans a whirlwind full-court-press mixed metaphor of a 100 days of liberal legislation masked as pragmatic middle-grounding and with all expense justified by Keynesian ‘spend out of the recession’ cant.” – prom
Agreed. He said as much in the 60 minutes interview:
“…we have to do whatever it takes to get this economy moving again, that we’re gonna have to spend money now to stimulate the economy. And that we shouldn’t worry about the deficit next year or even the year after.” – Unicron
Which, to my my mind, is more than a little worrisome in the context of root cause as explicated by fellow Paultard Peter Schiff in his role as The Man Who Saw The Future.
Which brings me back to blogen’s request in this thread:
“I’d like a simple explanation.” – blogen
As would we all. FWIW – this is the way it looks to me…
We have a problem that was created by too much government spending and lax monetary policy encouraging easy credit that precipitated too much debt, with a market distorted by the catalyst of massive government intervention to meet the social goals of permitting unqualified borrowers to buy homes they cannot afford. All taken advantage of and magnified by criminal fraud perpetrated by Wall Street while regulators had their collective thumb up their ass.
And the bi-partisan solutions being promoted now?
More government spending, more loose monetary policy to provide easier debt, and much more market distortion from massive government intervention to meet social goals of propping up failed companies and keeping unqualified borrowers in homes they cannot afford. Oh – and potentially loosening accounting requirements (mark to market) on investment banks.
Which – taken as a whole – strikes me as batshit insane.
What’s with all the negativity Moriarty? I mean WTF?
You just need high hopes…
and shorter comments.
@String Bikini Theory: You forgot nationalizing the banks. That appears to be where Citigroup is headed. So once again taxpayer dollars, plus Chinese dollars if they keep buying our crappy paper, will be bailing these irresponsible gamblers out from their bad bets. Y’know, poker is a game whose risks I think I understand pretty well, yet sometimes I lose. When I lose what I brought to the table, I walk away and that’s it — nobody bails me out.
@String Bikini Theory: I never bought a home during the housing rush even though everyone said, “oh, even with your credit, you can get one.” I am soooo glad I didn’t. Agreed that the housing boom and lax credit helped us to get in this mess, but our economy has been structured so that it is pumped only by debt spending. A .5% prime interest rate by the fed is not going to help this time.
@Hose Manikin: We celebrate long comments. It is the Stinquer way. Just like how threadjacking about VD (or anything) is an honored tradition.
@rptrcub: Agreed. This is one thing I really like about Stinquers — it’s like we’re sitting around a table, maybe enjoying some Don Julio Anejo, and the conversation goes where it will. Stories are told, arguments (respectful) had, feelings expressed, and nobody gets huffy if topics move around.
@Hose, rptrcub: also, we do breaking news events as follows:
/Breaking – “Inflammatory/funny/jaw droppingly bad” headline or teaser. (Link to media source/blog/missive from Reptillian overlords)
And apparently the motherfuckers who got us into this are using FHA loans to precipitate the next crisis:
As if they haven’t done enough damage. Thousands of subprime mortgage lenders and brokers — many of them the very sorts of firms that helped create the current financial crisis — are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.
We really need to consider where we shall locate our Stinquer’s Commune, or at least bunkhouse/apt complex/etc.
“98% of procureable women have venereal disease”
That is one shocking statistic. I am very surprised by the numbers. In my experience, the percentage is much higher.
@String Bikini Theory: I call bullshit, first, by “massive government intervention,” I take it you mean Fannie Mae? The problem was not government programs to promote home ownership, the problem was greed and corruption by the finance industry, which abused any government programs to encourage home ownership by pushing through, and assisting the borrowers in, outright fraud to make and then sell bad loans. The problem is mortgage brokers, there should be no such thing, they get their upfront fees, big money, and then sell the loan, and don’t have to deal with the risk. People should only be allowed to loan their own money, then they have a vested interest in making sure the borrowers are qualified.
The problem was deregulation, which allowed these “innovative new financial products,” all of which were nothing more than sophisticated methods used to seperate the risk from the profit. And it was the Clintons in the forefront, new democrat bastards.
And this talk of “lax monetary policy and too much government spending? Paultard much? I will give Bill credit for balancing the budget and running a surplus.
Massive trade deficits are what necessitates the fed creating fiat money. Massive trade deficits are caused by globalization, exporting manufacturing and the real wealth creation that manufacturing, actually making shit, is, and of course all the jobs. Oh, but at least free trade freed the corporations from having to deal with unions and paying living wages, and from environmental and safety rules, child labor laws, all the things big business hates. Just take the jobs somewhere where there are no laws, use slave labor, and then get the US government to start worshipping free trade so you won’t have any penalties in the way of “barrifs and terriors” when you import the slave labor products back into the US. And yeah, the Clintons were cheerleaders for that, too.
The government allowed this shit to happen, but only because the government is owned by big business. This is the result of unfettered capitalism, pure and simple, allowing the big money corporations to take control of government and write their own rules.
FHA loans are not sub-prime loans. Fannie Mae did not deal in sub-prime loans, this is something to remember. A capital infusion only a small fraction of what we are now throwing into Wall Street would have made Fannie Mae well again and for the foreseeable future.
Reminder: Colbert holiday special tonight.
@String Bikini Theory: @Hose Manikin: We can haz sockpupptz?
Thank you! The current financial crisis/clusterfuck is a symptom of the underlying problem: The total decline of the American middle class’ purchasing power over the last thirty years due to union-busting, outsourcing and globalization.
Those three strategies have made literally tens of people obscenely wealthy, while everyone else has taken on astronomical debt levels to maintain a middle class lifestyle.
Wealth has become far too concentrated in the hands of too few people, and you can’t have an economy based on consumer spending in which consumers don’t make enough to buy things. This is why people foolishly keep demanding tax cuts–even as the Treasury and state budgets implode–when what they really should be demanding are jobs that pay living wages including health care and retirement benefits.
@Original Andrew: This is my theory: the plutocratic class in the US is (are?) careful students of Marx. They understand the evolution towards a system where a few people control capital and the rest fight for jobs at wages at the margin of starvation. But, unlike Marx, they think this is a good thing, and that televised sports (I’m taking a break from the Laker game), tractor pulls, trash TV and movies etc, will distract people from thinking about why their lives are turning to shit.
Exactly. And to that end they also use religious fundamentalism, dope smokers, sex offenders, terrahists, marryin’ homos–all of which are totally irrelevant to them–as tools to further divide the public, keep our society in a state of constant hysteria and turn us against each other. It’s sad that they’re so ham-fisted and obvious about it, yet most people still fail to clue-in.
@Dodgerblue: All I know is that the financial industry is using this crisis as a pretense to loot the treasury on a scale that is absolutely unimaginable. Its the Iraq war all over again, there is a crisis, and they have used it to get us to throw money at them,, we are attacking Iraq again, when its Saudi Arabia that did it to us. They have used the “shock and awe,” a crisis, to divert the response in the wrong direction, to the tune of TRILLIONS, fucking trillions. This is money on a level that the conservsatives have been crying for years would be impossible to come up with to ensure the solvency of social security, and enact universal health care, A fraction of the sum Wall Street is now stealing from us on false pretenses would have taken care of all the various “insoluble” crisis which were threatening social programs. But in the panic of a couple of weeks of total confusion, shock and awe, they took over the treasury and convinced us all would be well if we just gave them TRILLIONS of dollars, that they are now using to go on an orgy of acquisitions, to create a complete financial monopoly. This is amazing, whats going on. Its mind-boggling. And regular working people, mark my words, will be worrying about housing and food soon. Starvation and homelessness. This is gonna be a bad recession, a depression. They don’t care.
@rptrcub: Next time one of my guy friends is about to do something stupid with a girl he’s just met I’ll be sure to advise him as such: “KYPIYP, dude.”
@Promnight: Funny thing how there’s $2 trillion lying around when the military and Wall Street want it.
@Original Andrew: Oops, I forgot the religion thing. Who wrote “Pie In The Sky When You Die”? Woody?
Breaking — Citi gets a taxpayer bailout! Now, about those pesky auto companies that actually make stuff . . . .
Now I am hearing crazytalk about Citi. First, that from the start, Citi and BOA were the only two banks that were going down the shitter, but that Paulson told them they all had to take bailout money so that the public would not know which ones were failing and wouldn’t start withdrawing deposits and shorting the stock. That would be what, manipulation of the market?
And its being mentioned that Citi is largely owned by the Saudi royals, thats who is really getting this bailout.
Too bad the Saudis don’t own the big three, I guess.
@Prommie: “Too bad the Saudis don’t own the big three, I guess.”
Wait for it. Possibly fronted by the Chinese. It makes perfect sense — they want us to keep buying their oil.
$2.8 MOTHERFUCKING TRILLION! I can’t stop myself, I am making the Howard Dean Noise, Bleeeeaaaarrrrrrgggggghhhhhhhhhhhh! I am stabby, real real stabby. How come the whole country isn’t stabby? Can anyone say “General Strike?” Stabby, stabby. I know where the motherfuckers live, those motherfucking motherfuckers stealing this money. Rumson and Fair Haven and Short Hills and there’s lots in Connecticut, too.
Nov. 24 (Bloomberg) — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
@Prommie: My doc wants me to get the colon ca screening, the probe, the wand, whatever the hell it is they do to check for polyps and the like. There’s a history, you see, so they say it is a GOOD IDEA.
My problem is that I find myself having momentary thoughts of “a bout of ca (can’t bring myself to write it out, nope not yet) right now wouldn’t be bad. Sympathy. Pain. Painkillers. Possible death.”
It’s the economy, stupid. Got me thinking about how my own mortality ain’t such a bad thing.
Only thing worse than a colonoscopy is a colonostomy.
Every other hillbilly around here who gets pulled over is found to be have oxycontin in his or her possession, why can’t I have any?
“Paultard much…?” – prom
Well, yeah. But I should have been paying more attention to Paul. Particularly Ron Paul’s economic adviser during the campaign – Peter Schiff.
You want to ignore the role of the Fed’s and the GSE’s in creating this mess? Believe what you want. Here is the the Wikipedia entry which is reasonably concise in unraveling the connection. Yeah its Wiki, but this article has no caveats and is well referenced and footnoted. Was greed and fraud in Wall Street and corrupt mortgage brokers a big factor? Absolutely. But the crooks needed someone to sell this shit to. There had to be a market for pre-packaged shit with a pretty shiny bow on it. That market was created and encouraged by the GSE’s as matter of public policy.
“Increasing home ownership was a goal of the Clinton and Bush administrations. There is evidence that the Federal government leaned on the mortgage industry, including Fannie Mae and Freddie Mac (the GSE), to lower lending standards. Also, the U.S. Department of Housing and Urban Development’s (HUD) mortgage policies fueled the trend towards issuing risky loans.
In 1995, the GSE began receiving government incentive payments for purchasing mortgage backed securities which included loans to low income borrowers. Thus began the involvement of the GSE with the subprime market. Subprime mortgage originations rose by 25% per year between 1994 and 2003, resulting in a nearly ten-fold increase in the volume of subprime mortgages in just nine years. The relatively high yields on these securities, in a time of low interest rates, were very attractive to Wall Street, and while Fannie and Freddie generally bought only the least risky subprime mortgages, these purchases encouraged the entire subprime market. In 1996, HUD directed the GSE that at least 42% of the mortgages they purchased should have been issued to borrowers whose household income was below the median in their area. This target was increased to 50% in 2000 and 52% in 2005.
By 2008, the GSE owned, either directly or through mortgage pools they sponsored, $5.1 trillion in residential mortgages, about half the amount outstanding. The GSE have always been highly leveraged, their net worth as of 30 June 2008 being a mere US$114 billion. When concerns arose in September 2008 regarding the ability of the GSE to make good on their guarantees, the Federal government was forced to place the companies into a conservatorship, effectively nationalizing them at the taxpayers’ expense.”
Yeah. I call that a market distorted by massive government intervention. You call it whatever you want.
@Dodgerblue: @Prommie: @Original Andrew:
No argument about spending trillions we don’t have. Trillions on the war. Trillions of new discretionary spending and entitlements by the Bush administration. Trillions on bailouts. Trillions of new spending promised by Obama. Every bit of has to be borrowed. A lot of it from China. This is the result:
BTW – what ever happened to the ark?
I do have one additional bit of bad news for you guys. Your guy won. Your party is running the government. It’s my turn to sit on sidelines and kvetch.
@String Bikini Theory: Your posting raises a question for me. Why is home ownership considered the end-all be-all of U.S. ‘Merikun existence? I mean, I wanted to buy my own place because I was sick of absentee landlords letting houses fall into crap condition and spending my own money to fix them up, but seriously, why? The mortgage brokers ARE evil, though, when Mr. SFL and I were trying to buy a place, they were totally trying to convince us to lie about our incomes and get way more money than we could afford. We were also mocked by some of our friends for being so “old fashioned” and buying a very small place for 20% down, when we could put 2% down and get a much larger place. So glad we did what we did.
Also, don’t underestimate the cult of GET RICH NOW and FLIP THIS HOUSE – because if there’s something that Americans love, it’s getting something for nothing.
“We can haz sockpupptz?
I am against it. It demeans the conversation. Hose should be banned.
“We can haz sockpupptz?
Why not? As long as the puppets are accurate reflections of a split personality. A doctor’s note should probably be required.
@Hose Manikin: are you married to SBT or are you his alter ego fighting for control of his mind? Either way you entertain me greatly.
@String Bikini Theory:Not that I don’t heart you, too.
@String Bikini Theory: Well what do you know, Limbaugh is right after all when he says its all the fault of the Clintons forcing Fannie and Freddie to give mortgages to teh shiftless blacks and the dirty immigrants. Thanks for straightening me out. Good old Doctor Paul, master of vaginas and monetary policy.
@Prommie: Can we give our wandering Libertarian at least 48 hours to recover from his locating us always-rebelling Stinquey Cynics People’s Front/People’s Front of Cynic Stinques before going after him?
@SanFranLefty: Oh sure, take the new guy’s side. Next you’ll be praising his food porn.
@Prommie: I love your food porn. I’m just in den mother mode this morning. I’m mediating a drama in my homeowners association today, so I’m in mediator mode.
@SanFranLefty: Can’t blame the regular citizens for thinking that they could get away with making money the way the rich do, they don’t know the rules, the first being that only the rich can do that.
In 2006 40% of all home purchases were investment or vacation homes.
Or, I should say, “speculation,” not investment. There’s a difference. Our problem as a nation, the systemic problem affecting our economy, is that noone invests anymore, they only speculate.
Remember reading about the evils of real estate speculation in first year property class? How it was considered such an intrinsic evil courts would void contracts, take all manner of action to stifle and thwart speculators. Cause speculation is evil.
@Prommie: But to Dr. Paul, “speculum” is next to godliness.
@Prommie: Paul-Man, Master of the Vadgiverse.
@rptrcub: I didn’t mean nothing by it. Hey String Bikini Theory, I didn’t mean nothing by it. I never argue when I have any ego value in it for me. I wasn’t trying to win, just playing. Come back. We need libertarians around here, from all accounts, I am a left-libertarian, just get me going about PC speech codes and special interest politics.
Please. You are missing it. I didn’t want to have to disclose this, but Prom and I have an understanding. Whenever either of us brings up the word “vagina” in a political discussion, we are acknowledging that the other has won the argument and there is nothing more to say. It is kind of a safety word. Helps save face and permits a graceful disentanglement.
I would never attempt to compete with your extraordinary talent in painting a sensual picture with words evoking every sense and emotion around an exquisite meal.
However, I am not above taking a shortcut and simply posting a picture of Dos de cabillaud roti sur sa brandade de morue,Jus de viade a la tapenade verte that we enjoyed at Restaurant l’Enclose de la Fontaine in Nimes, France last June.
Look, you are going to have to choose. I don’t understand the problem. It should be obvious that SBT has serious issues. Not the least of which is an extreme case of Thread Separation Anxiety and a pathological inabilility to commit to future threads, even days after everyone else has moved on.
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