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buffalo
Guest
Did this act repealed under the Clinton administration setup the recent financial failures?
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Corki
Guest
Wasn’t that the act that restricted interstate banking? I am intrigued. How would this lead to financial failures?
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buffalo
Guest
Lots of blame to go around in crisis
…What had happened? Some seeds of the current crisis were planted in the late 1990s, when Congress and President Bill Clinton reshaped the financial landscape. They removed Depression-era barriers between commercial banks and investment firms and allowed the creation of financial behemoths where, years later, the risks of underwriting risky subprime mortgages were somewhat hidden.
…What had happened? Some seeds of the current crisis were planted in the late 1990s, when Congress and President Bill Clinton reshaped the financial landscape. They removed Depression-era barriers between commercial banks and investment firms and allowed the creation of financial behemoths where, years later, the risks of underwriting risky subprime mortgages were somewhat hidden.
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buffalo
Guest
Effect on the economy - hype or real?
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1ke
Guest
No. Glass-Steagall didn’t set up the recent financial failures.
The Clinton Administration precipitated the advent of this problem by a combination of the *repeal *of Glass- Steagall (Gramm-Leach-Bliley Act) and regulations requiring mortgage companies to lend to low-income and minorities or face stiff fines and penalties (a policy started by Carter but put on steroids by Clinton).
Requiring mortgage companies to lend to risky clients led to those companies looking for ways to mitigate their risk-- enter mortgage backed securities, derivatives, and all these other financial instruments now collapsing.
It was BAD policy on the part of the Clintons-- whose cronies got RICH and are now the “economic advisers” of another certain democrat.
And the current administration and the do-nothing Congress didn’t help matters. They had an opportunity as far back as 2005 to step in before it got to this point. And didn’t.
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rwoehmke
Guest
In my opinion the lack of oversight does not lie with the executive, but on the congress which formulates and passes these bills. I don’t think any of the problems came about because of an executive order by the president belonging to either party. So pinning the tail on the head donkey or the elephant really doesn’t wash. The question to ask is which members of congress were responsible. 
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Hortense
Guest
If GS were still in effect, Bank of America would have been prevented from resuing Merrill Lynch this week.
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stinkcat_14
Guest
My question is why were the mortgage companies so eager to comply with the wishes of the government? Most of the time when business firms are required to do something that they don’t want to do by the government, they drag their feet and implement the new requirements at the minimum level required by the government.
But the financial services firms jumped into subprime headfirst. So they really cannot blame the government for their stupidity.
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GratefulDad
Guest
1ke, This pretty much what two very well respected Business Economist said this weekend.
Bob Brinker, Host of “Money Talk”
bobbrinker.com/
A. Gray Schilling
www.forbes.com/shilling.
It’s interesting to note historically things started under Carter.
- Appointed dozens of Pro Abortion Judges.
- Bailed our Chrysler
- Started FEMA
- Started lending to low income wage earners
- Stood by and watched Iran be taken over by Radical Islamist.
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stinkcat_14
Guest
Can you provide a link to what they specifically said?
Of course the relevant question is: What percentage of subprime loans were made because they needed to comply with government regulations and what percentage was made purely due to greed? The business press focused on the lucrative nature (as it was perceived back then) of the subprime market, not the fact that the government would be mad at mortgage firms if they didn’t make subprime loans.
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rwoehmke
Guest
Let us not forget that when Glass-Steagal was repealed, it was a bill introduced by Republican individuals in both houses and passed by both houses which at the time had a large enough Republican majority to override any veto by slick Willi. Both parties share the blame and neither is unspotted. Like it or not, FDR and the Second World War led us out of the Great Depression. My family was able to eat because my Dad found a job with the WPA. The Works Progress Administration provided work to the unemployed by using them to build up our infra-structuire, roads, sidewalks, public buildings, etc. It kept many people from going hungary.
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Al_Masetti
Guest
Mark Levin discusses all the gory details on his radio program www.marklevinshow.com and click on audio rewind.
The program for this past Friday was excellent. And he covers the details of this issue at the beginning of the program.
Levin refers to the Community Redevelopment Act:
en.wikipedia.org/wiki/Community_Reinvestment_Act
The program for this past Friday was excellent. And he covers the details of this issue at the beginning of the program.
Levin refers to the Community Redevelopment Act:
en.wikipedia.org/wiki/Community_Reinvestment_Act
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Ruthie
Guest
I’ll admit, up front, to being fairly ignorant about economics.
What I see here is in agreement with 1ke. The deregulation of banking that happened under Clinton gave the banks the ability to sell their mortgages to the big national conglomerations that arose from that deregulation. (I myself, when an excellent risk, had my mortgage sold 4 times within 6 months!)
Add in the mandate to make high-risk loans, and it was a disaster waiting to happen. Make those high-risk loans, bundle them with better ones and sell them to a big conglomerate.
Plus realtors and mortgage brokers got together and profited from getting loans for people who basically had no ability to pay. They bent the rules as far as they could without breaking them, then took their commissions and got out. They left the buyer and loan companies on the hook.
The people taking out the loans also carry some blame. I have a family member who managed to get 3 mortgages on her place, amounting to about twice its value. Nobody could tell her (and we tried) that it was a recipe for disaster. It was. She lost her place and now she’s as poor as a church mouse, and can’t even get a credit card.
The old HUD program worked well to get poor people into houses. How? It was based on down payments of $500, and ability to pay!
Ruthie
What I see here is in agreement with 1ke. The deregulation of banking that happened under Clinton gave the banks the ability to sell their mortgages to the big national conglomerations that arose from that deregulation. (I myself, when an excellent risk, had my mortgage sold 4 times within 6 months!)
Add in the mandate to make high-risk loans, and it was a disaster waiting to happen. Make those high-risk loans, bundle them with better ones and sell them to a big conglomerate.
Plus realtors and mortgage brokers got together and profited from getting loans for people who basically had no ability to pay. They bent the rules as far as they could without breaking them, then took their commissions and got out. They left the buyer and loan companies on the hook.
The people taking out the loans also carry some blame. I have a family member who managed to get 3 mortgages on her place, amounting to about twice its value. Nobody could tell her (and we tried) that it was a recipe for disaster. It was. She lost her place and now she’s as poor as a church mouse, and can’t even get a credit card.
The old HUD program worked well to get poor people into houses. How? It was based on down payments of $500, and ability to pay!
Ruthie
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