Obama XI: Turn And Face The Strange

[ScoobyDoo]

Re: Obama XI: Turn And Face The Strange

I don't think it will go away completely (nor do I think it should go away completely). However, I do think it will be means tested, which will remove the pretense that it is a retirement savings or pension plan of some type; it will be revealed in its full glory as the wealth redistribution scheme that it has always been.

It's rotten at wealth redistribution. Rich people stop paying in at 100,000 dollars. Why is that so difficult for people to understand? It's not being paid for by the rich. Never has been.

 

[geezer]

Re: Obama XI: Turn And Face The Strange

Not really. This one's on one side.

Not really. Most of the problem with the real estate crash (a huge part of the problem) stemmed from over regulation pushed by democrats- Reid, Frank, Clinton and others passed new regulations forcing the banks to make bad loans to people who didn't have a prayer of paying them off. Those loans were bundled together to supposedly decrease the risk, but crappy parts make a crappy whole. The real estate crash that followed was a huge part of the problem, all caused by over regulation of banks.

 

[ScottM]

Re: Obama XI: Turn And Face The Strange

Not really. Most of the problem with the real estate crash (a huge part of the problem) stemmed from over regulation pushed by democrats- Reid, Frank, Clinton and others passed new regulations forcing the banks to make bad loans to people who didn't have a prayer of paying them off. Those loans were bundled together to supposedly decrease the risk, but crappy parts make a crappy whole. The real estate crash that followed was a huge part of the problem, all caused by over regulation of banks.

Uh no. To the contrary, Clinton signed a bill in the last days of his tenure which effectively allowed swaps, and other derivatives to be traded with no government oversight. As much as CRA may have had a small part in selling loans to less-than qualified borrowers, a larger part of the problem was a overall failure to oversee the systemic risk that created most of the problem.

Ratings agencies rated MBS and CDOs filled with crappy loans "AAA" and they were sold to pension funds, mutual funds, etc. These same instruments were later re-securitized, bundled into other CDOs and the risks spread. At some point these ratings were lowered, and many buyers were forced to sell into a depressed market, post cash collateral, etc. IMHO, and I've been part of this game for years, most of the problem was related to the fact nobody thought they had "skin in the the game". Passing rotten asset-based securities and various derivatives around was like a game of musical chairs. At some point the music stopped, and most of the chairs collapsed.

For as much as the SEC, CFTC and Congress seem to be on the ball the past few months, you have to wonder where these clowns were 4-5 years ago.

 

[geezer]

Re: Obama XI: Turn And Face The Strange

Uh no. To the contrary, Clinton signed a bill in the last days of his tenure which effectively allowed swaps, and other derivatives to be traded with no government oversight. As much as CRA may have had a small part in selling loans to less-than qualified borrowers, a larger part of the problem was a overall failure to oversee the systemic risk that created most of the problem.

Ratings agencies rated MBS and CDOs filled with crappy loans "AAA" and they were sold to pension funds, mutual funds, etc. These same instruments were later re-securitized, bundled into other CDOs and the risks spread. At some point these ratings were lowered, and many buyers were forced to sell into a depressed market, post cash collateral, etc. IMHO, and I've been part of this game for years, most of the problem was related to the fact nobody thought they had "skin in the the game". Passing rotten asset-based securities and various derivatives around was like a game of musical chairs. At some point the music stopped, and most of the chairs collapsed.

For as much as the SEC, CFTC and Congress seem to be on the ball the past few months, you have to wonder where these clowns were 4-5 years ago.

Obviously you are more knowledgeable than me with yer fancy acronyms and yer letter ratings. But isn't the root of the problem still that the "crappy loans" were (if not prescribed) encouraged in the first place?

 

[Priceless]

Re: Obama XI: Turn And Face The Strange

Obviously you are more knowledgeable than me with yer fancy acronyms and yer letter ratings. But isn't the root of the problem still that the "crappy loans" were (if not prescribed) encouraged in the first place?

Excuse me, sir. Seeing as how the V.P. is such a V.I.P., shouldn't we keep the P.C. on the Q.T.? 'Cause if it leaks to the V.C. he could end up M.I.A., and then we'd all be put out in K.P.

 

[Red Cloud]

Re: Obama XI: Turn And Face The Strange

Excuse me, sir. Seeing as how the V.P. is such a V.I.P., shouldn't we keep the P.C. on the Q.T.? 'Cause if it leaks to the V.C. he could end up M.I.A., and then we'd all be put out in K.P.

Amazing how you manage to add less to the debate than I do, and I'm not even trying to add to the debate.

 

[huskyfan]

Re: Obama XI: Turn And Face The Strange

I don't know anyone in my generation that's counting on social security being around when we hit retirement in 40 years. My guess is that's at least one future liability that will fall off the books at some point.

Soc Sec won't be around, but health care will?

 

[trucker]

Re: Obama XI: Turn And Face The Strange

Obviously you are more knowledgeable than me with yer fancy acronyms and yer letter ratings. But isn't the root of the problem still that the "crappy loans" were (if not prescribed) encouraged in the first place?

The bottom line is that if Wall Street wasn't around to ultimately purchase these crappy loans, the banks never would have made them. The banks had no risk. If the banks had to hold on to the loans there is no way they would have made them, regardless of prodding by the government.

Wall Street and the Credit Rating agencies are the most guilty in this whole mess, IMO. Elected officials from both sides of the aisle take some blame for creating an environment where this was allowed to happen but Wall Street and the Credit Agencies actually created the crisis.

 

[Red Cloud]

Re: Obama XI: Turn And Face The Strange

Soc Sec won't be around, but health care will?

Of course - they don't have to give health care to everyone the way they have to give Soc Sec to everyone.

 

[ScoobyDoo]

Re: Obama XI: Turn And Face The Strange

The bottom line is that if Wall Street wasn't around to ultimately purchase these crappy loans, the banks never would have made them. The banks had no risk. If the banks had to hold on to the loans there is no way they would have made them, regardless of prodding by the government.

Wall Street and the Credit Rating agencies are the most guilty in this whole mess, IMO. Elected officials from both sides of the aisle take some blame for creating an environment where this was allowed to happen but Wall Street and the Credit Agencies actually created the crisis.

Correct. Well said.

 

[ScottM]

Re: Obama XI: Turn And Face The Strange

Obviously you are more knowledgeable than me with yer fancy acronyms and yer letter ratings. But isn't the root of the problem still that the "crappy loans" were (if not prescribed) encouraged in the first place?

The so-called "subprime" market makes a handy target for some since they were among the first to fail, but the reality is that mortgages across the board have become problematic, even in wealthy areas. We have higher rates of foreclosures in the $2M+ range in Orange County than we do in more blue color counties. Affluent, or formerly affluent, people were just as likely to treat their homes like ATMs, and then go into foreclosure or walk away, as some person in "the 'hood". In many cases these loans were made by unlicensed or lightly regulated brokers and mortgage bankers who bore no risk, since they could sell them up the food chain. Since nobody retained any risk, or had their comp tied to overall loan performance, there were no incentives to underwrite or buy loans accordingly.

 

[MinnFan]

Re: Obama XI: Turn And Face The Strange

The bottom line is that if Wall Street wasn't around to ultimately purchase these crappy loans, the banks never would have made them. The banks had no risk. If the banks had to hold on to the loans there is no way they would have made them, regardless of prodding by the government.

Wall Street and the Credit Rating agencies are the most guilty in this whole mess, IMO. Elected officials from both sides of the aisle take some blame for creating an environment where this was allowed to happen but Wall Street and the Credit Agencies actually created the crisis.

I would argue that if there wasn't the implicit guarentee of the gov't behind the loans most of this trading would never have happened.

 

[Plante26]

Re: Obama XI: Turn And Face The Strange

The bottom line is that if Wall Street wasn't around to ultimately purchase these crappy loans, the banks never would have made them. The banks had no risk. If the banks had to hold on to the loans there is no way they would have made them, regardless of prodding by the government.

Wall Street and the Credit Rating agencies are the most guilty in this whole mess, IMO. Elected officials from both sides of the aisle take some blame for creating an environment where this was allowed to happen but Wall Street and the Credit Agencies actually created the crisis.

I would argue that if there wasn't the implicit guarentee of the gov't behind the loans most of this trading would never have happened.

Spot on, MF. Fannie & Freddie control 90% of the secondary mortgage market, and have assets 45% greater than the largest bank in the U.S., and yet people are still going to argue that it was Wall Street's fault? If there is a crisis of confidence, it should be in the GSEs ability to function in a fiscally-responsible manner.....especially since it was their paper that made up the majority of failing CDSs/MBSs. And then consider that Barney Frank, Chris Dodd, Nancy Pelosi & Co. blocked over a dozen attempts by the Bush Administration to reform Fannie/Freddie, and you can see which party was complicit in letting this debacle occur.

 

[Kepler]

Re: Obama XI: Turn And Face The Strange

I would argue that if there wasn't the implicit guarentee of the gov't behind the loans most of this trading would never have happened.

It's pretty explicit now, too.

Now that we're not all running around thinking the entire global economy is going to implode*, it's tempting to wish we could rerun it and just have let them burn. Stewart's Daily Show segment really can't be topped. "These ****in' Guys."


(* Unless you're Iceland. Or Greece. Or maybe Portugal soon. Uh oh...)

 

[trucker]

Re: Obama XI: Turn And Face The Strange

I would argue that if there wasn't the implicit guarentee of the gov't behind the loans most of this trading would never have happened.

You may be right to some degree but if you are refering to Fannie and Freddie, they were a very small part of the overall problem.

If you are refering to the government bailouts of the banks, who knows. Were the traders who were making the wild bets on whether these financial instruments would suceed or fail, sometimes leveraged at 40 times or more, thinking, if I bet wrong the government will bail out my firm? Hard to say. My opinion is that the bigger problem is the incentive structure for Wall Street executives is set up in a way to encourage excessive risk taking. The employees taking the risk are playing with their firm's money and if they bet right they can become extremely wealthy. if they bet wrong, the worst that happens is they lose their job.

I would argue that at least three things need to be included in any reform bill.

1) If a bank sells a loan, it has to be kept whole. It can't be sliced and diced so no one knows what is in any of the financial packages.

2) Leverage must be limited. When firms are betting 40 or more times their exisisting capital, it is a recipe for disaster.

3) Negative amortization loans should be abolished. These are interest only loans where the borrower does not even pay the full interest each month so as time goes on they owee more and more.

 

[Kepler]

Re: Obama XI: Turn And Face The Strange

3) Negative amortization loans should be abolished. These are interest only loans where the borrower does not even pay the full interest each month so as time goes on they owee more and more.

That's legal? Yikes. "I owe my soul to the company store."

 

[trucker]

Re: Obama XI: Turn And Face The Strange

Spot on, MF. Fannie & Freddie control 90% of the secondary mortgage market, and have assets 45% greater than the largest bank in the U.S., and yet people are still going to argue that it was Wall Street's fault? If there is a crisis of confidence, it should be in the GSEs ability to function in a fiscally-responsible manner.....especially since it was their paper that made up the majority of failing CDSs/MBSs. And then consider that Barney Frank, Chris Dodd, Nancy Pelosi & Co. blocked over a dozen attempts by the Bush Administration to reform Fannie/Freddie, and you can see which party was complicit in letting this debacle occur.

How did Dodd, Pelosi and Frank block Bush and the Republican congress from 2000 - 2006?

 

[MinnFan]

Re: Obama XI: Turn And Face The Strange

I apologize if this has already been covered, but its worth pointing out.

Economists say the stimulus didn't work

From IBD: Don't try this again

 

[trucker]

Re: Obama XI: Turn And Face The Strange

That's legal? Yikes. "I owe my soul to the company store."

It sure is. I believe, and hope these types of loans have stopped since the crisis occurred but they are still legal as far as I know.

 

[Plante26]

Re: Obama XI: Turn And Face The Strange

How did Dodd, Pelosi and Frank block Bush and the Republican congress from 2000 - 2006?

....and Company. Read to your little heart's content.

Pretty good synopsis on the rabid defense of the status quo by the Dems. And we all know how that turned out.......