Concern for the poor is not Communism, Pope says in homily [CWN]

[ProVobis]

Also, the government had no role in Lehman Brothers going belly up either.

They didn’t but it was almost expected that Paulsen would bail them out after having done so for Bear Stearns. I will agree that the repeal of Glass-Steagal had something to do with the collapse of the 2008 bank crisis but it was perhaps more notable in 2001 as the banks were shorting the very stock of companies they had lent money to. Jim Cramer, not someone I admire very much, but he did make a point of it back in 2002 or so. Without the repeal of GS, banks would have not been allowed to do anything but lend money. No oil speculation, no shorting of stocks, none of those things. These types of regulations seem to be okay as the banks through the Fed et al, have a distinct advantage over the rest of the investment world. Different than say, you and me speculating in stocks and commodities.

 

[CHESTERTONRULES]

I knew you’d say this.

Repeal of Glass-Steagall Caused the Financial Crisis

The repeal of the law separating commercial and investment banking caused the 2008 financial crisis.

usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis

It was the capitalist who lobbied congress to repeal Glass-Steagal.

It was capitalists who lobbied congress to get tax loop holes which allowed them to invest overseas while getting tax credits for doing so, at the cost to Americans who lost their jobs.

The US government and presidency are owned by capitalists who create the laws that allows them to avoid paying taxes.

Jim

Wrong.

It was government backing of loans which led institutions to take excessive risks.
In addition, courts forced banks to make risky loans in minority neighborhoods,

 

[ProVobis]

Wrong.

In addition, courts forced banks to make risky loans in minority neighborhoods,

And at low interest rates. Someone has to absorb the risk and the losses.

 

[stinkcat_14]

Wrong.

It was government backing of loans which led institutions to take excessive risks.
In addition, courts forced banks to make risky loans in minority neighborhoods,

What percentage of loans originated were the ones the banks were forced to make?

 

[JimR-OCDS]

The truth is there were many causes of the financial crisis and it is difficult to determine which one is most important. If it were just banks giving loans to poor people it would have been a minor speed bump, since there are not that many poor people and they don’t buy the expensive houses. The problem is, even the jumbo lenders went under and the government had no way to force them to make loans. Also, the government had no role in Lehman Brothers going belly up either. I do agree that big corporations have disparate influence on our policy making. Nobody is representing the little guy to the government.

Also keep in mind, AGI insured the risks the banks took, but they didn’t have the money to cover the liability when it came due, so the government had to step in, ala too big to fail.

Jim

 

[stinkcat_14]

Also keep in mind, AGI insured the risks the banks took, but they didn’t have the money to cover the liability when it came due, so the government had to step in, ala too big to fail.

Jim

And nobody can say that AIG was forced to issue those credit default swaps, there undoing was entirely their own fault and nobody else’s. The bailout of AIG was one of the most unjust things that the government has done in a long time.

 

[SWolf]

And nobody can say that AIG was forced to issue those credit default swaps, there undoing was entirely their own fault and nobody else’s. The bailout of AIG was one of the most unjust things that the government has done in a long time.

Yup. Some banks became more equal than others under the law.

 

[Sirach2]

JimR-OCDS:

Heck, who caused the economic collapses in 1929 and 2008? Not the government, but the unregulated banks and investing firms.

Has anyone ever considered that God may have “allowed” the collapses? Several programs have been on TV lately warning that another major economic disaster may arrive in September this year. Jonathan Cahn’s best-seller, The Harbinger, explains the Shemitah, known to the Jews as Divine Judgment every 7th year occurring in the month Elul, (September).

1994 - Bond market and savings banks collapse
2001 - Nine-Eleven and economic crash
2008 - Stock market crash, economy severely impacted.

He has warned this may be the worst one of all.

 

[CaptFun]

**Hi! Here’s my new T-shirt idea! **

Concern for
the poor is …
https://encrypted-tbn2.gstatic.com/...EC_4lOFakZO262yR6FzCH2UF4KcYZ_7d4X_gQa7OD6N7Q
– Pope Francis

A moral, economic climate change I can believe in!

 

[ProVobis]

And nobody can say that AIG was forced to issue those credit default swaps, there undoing was entirely their own fault and nobody else’s. The bailout of AIG was one of the most unjust things that the government has done in a long time.

As the Chinese representative said to Hank Paulsen (per “Too Big To Fail”) “Sometimes the relationship between private industry and the government is not so simple.”

 

[CHESTERTONRULES]

What percentage of loans originated were the ones the banks were forced to make?

I have no idea. But a tiny percentage can ruin a bank.

If a bank makes 1% profit on a loan, then 1 default out of 100 will wipe out a bank.

 

[Inisfallen]

Wrong.

It was government backing of loans which led institutions to take excessive risks.
In addition, courts forced banks to make risky loans in minority neighborhoods,

I assume you’re talking about the Community Reinvestment Act. This is flat-out not true. It’s nothing more than a tired old Fox News talking point.

The Fed itself says:

The small share of subprime lending in 2005 and 2006 that can be linked to the CRA suggests it is very unlikely the CRA could have played a substantial role in the subprime crisis.

Along any measure of the severity of loan delinquency or the incidence of foreclosure, the loans originated under the NWA [a CRA umbrella program] program have performed better than subprime loans.

Two basic points emerge from our analysis of the available data. First, only a small portion of subprime mortgage originations is related to the CRA. Second, CRA-related loans appear to perform comparably to other types of subprime loans. Taken together, the available evidence seems to run counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis.

The claim that the CRA had anything to do with the financial crisis of a few years ago is revisionist history, right up there with the claim that government interference with the economy cause the Great Depression, or that Franklin Roosevelt and his New Deal programs prolonged the Depression.

Absolute nonsense.

 

[Inisfallen]

I have no idea.

Then maybe you shouldn’t make assertions about what percentage of what kind of loans caused the financial crisis? Just a thought.

 

[ProVobis]

If a bank makes 1% profit on a loan, then 1 default out of 100 will wipe out a bank.

At high-risk and low interest charged, you’ll have a whole lot of banks wiped out. And that’s exactly what happened.

 

[Inisfallen]

These types of regulations seem to be okay as the banks through the Fed et al, have a distinct advantage over the rest of the investment world. Different than say, you and me speculating in stocks and commodities.

Especially since the banks are speculating with your money. Or, even worse, my money.

 

[ProVobis]

Especially since the banks are speculating with your money. Or, even worse, my money.

And they wonder how oil went from $20 a barrel in 2001 to $147 a barrel in 2008, just in time for the banking collapse. Seems like the banks got what they deserved. Too bad it took the rest of the economy down with them.

 

[Inisfallen]

If a bank makes 1% profit on a loan, then 1 default out of 100 will wipe out a bank.

This doesn’t make sense. It’s not that simple. It all depends on the amount of the loans, and the term of the loans, and when the loan goes into default. A loan can go into default even if the bank has already made a profit on the loan.

If a bank makes 99 loans of $1 million each, and one loan of $100,000, and the 99 loans perform well at 1% interest, and the $100,000 loan goes into default at some point, the bank will do just fine.

 

[stinkcat_14]

This doesn’t make sense. It’s not that simple. It all depends on the amount of the loans, and the term of the loans, and when the loan goes into default. A loan can go into default even if the bank has already made a profit on the loan.

If a bank makes 99 loans of $1 million each, and one loan of $100,000, and the 99 loans perform well at 1% interest, and the $100,000 loan goes into default at some point, the bank will do just fine.

It also depends on how much is lost one the loan as well. If a $200k mortgage goes into foreclosure the bank does not usually lose $200k, the loss is offset by whatever it can recover in the foreclosure auction.

 

[ProVobis]

It also depends on how much is lost one the loan as well. If a $200k mortgage goes into foreclosure the bank does not usually lose $200k, the loss is offset by whatever it can recover in the foreclosure auction.

I think it was Bernanke who suggested to Paulsen (or someone suggested to Bernanke) that the Fed buy up all the foreclosed property and burn it, thereby driving existing property prices higher. Imagine the turmoil that would have created.

 

[philipl]

Because it ensures everyone gets healthcare and education instead of just the wealthy.

Here is your exact quote from a post. Your words of “just the wealthy” is not factual.