Really?

And yet the heavily regulated free market is a source of innovation, diversity of products, efficiency ang high value for the consumer? Where is this the case?

Define heavily regulated.

Well, its your term. In the context you used it, I'm assuming it implies the opposite of free market, meaning all industries subject to regulation of inputs, output and means of production. If that's not what you mean, please clarify.

Thhere you go again! Seems to me we did OK from 1932 until 1978 while Glass Steagal was in effect. It sure as hell hit the fan after Gramm had his way.

Your comments about Glass-Steagal are rather "rose colored". In fact, the repeal of Glass - Steagal gave the average Joe access to investment products and services in a convenient way, and probably prompted more private, individual investment and and individual interest in the financial marketplace. It empowered the individual like never before to invest for themselves, with the support of their relationship of their financial institution (bank / credit union).

You might complain about the rise of "big banks", but allowing banks big and small to build a revenue stream from selling securities trading services has helped many smaller banks and credit unions thrive as well.

Regulations have implications both seen and "un-seen". The un-seen impacts are often not noticed or publicized because the regulation's supporters don't focus on them. Volker is wrong about this, and I think reinstating Glass - Steagal is throwing the baby out with the bath water for many of the reasons noted above.

With the results seen after the repeal I would think a blind man would be able to see it was due to lack of regulations. You can not just trust people to do the right thing. Not when you figure in greed.
The banking and financial industry as a whole can never be trusted, it has been proven over and over again.
Like a great man said once...“Those who fail to learn from history are doomed to repeat it.” Sir Winston Churchill




Barney

Well at least my glasses are only rose coloured, not totally dark as yours appear to be.

Look up Brooksley Born sometime and see what all these "new financial instruments" did for us. What Greenspan, Rubin and Summers did was unconscionable.

Also note that other than loosing trade with us because we put our economy in the toilet affecting their economy, Canada did not have any bank failures. Allowing our banks to trade with their investor's money and keep the profits was rediculous. What was it some economist called it -"When they make money they are capitalists, when they lose money they are soci@lists". they kept the profits and their investirs ate the losses. Can you say Goldman Sachs?

Whell I know you are not stupid but how you can accept that line of BS is beyond my comprehension.

Here, save you some trouble.

http://www.bloomberg.com/apps/news?p...f4g&refer=home

Why does the opposite of non-regulated automatically mean heavily regulated to you?

The "new financial instruments" packaged mortgages, not individual investor's funds. Glass - Steagal would have had zero impacts on any of those practices.

Is there a "right amount" of regulation that you'd be comfortable with? How is that decided? Who would place and enforce limits on regulations?

If we want to actually cut out of control government spending, we're killing babies & old ladies.

If we'd like a smaller government, we're closing down the public schools?

Burn, straw men, burn.

HOW MUCH IS ENOUGH? What percentage of GNP?

Btw D, it seems the moderate consensous is the stimulous was a modest success.

Pete

The restrictions kept the banks from using depositor funds to gamble in the market. Federally insured by the FDIC BTW!


From an article...


The restrictions imposed by Glass-Steagall kept bank deposits, and banks themselves, at a safe distance from the markets. But that distance gradually shrank, and in the heady, free-market days of the late 1990s, Glass-Steagall itself was formally revoked.

So commercial banks — the big ones, at least — returned to the Wall Street marketplace. This time they got into trouble by engaging in proprietary trading — that is, the buying and selling of securities for their own account, particularly subprime mortgages packaged as bonds. When that market crashed in 2008, the federal government bailed out the banks, and now the president is asking Congress to bar banks from proprietary trading.

http://economix.blogs.nytimes.com/20...-volcker-rule/




Barney

Go take a look at the big Canadian banks and see what they do. Oh BTW at RBC it only cost $10 to issue a stop payment, about $40 at BofA here.

Which was why I linkedd to the article on Brooksley Born, but of course she was just a woman and we can't have intellectual giants like Greenspan and Rubin listening to a mere woman now can we.:rolleyes:

I msee you have not yet read Ryan's budget proposal.:D Oh and by the way it only reduced the debt to 4 trillion over ten years, Obama's reduces it to 3.5 but what the hell, what's half a trillion dollars.

Obama can't even herd the cats together to come up with a budget. Budget proposal? Oh sure, whip those out, but an actual budget, no way.

I dunno Rob, I don't believe any of them.

Voinovich said recently that if Congress can't do their job - pass a budget - they shouldn't get paid :)

Pete

The best argument yet for eliminating the regulators. I'd much rather deal with someone that I know is striving to maximize his position than someone that changes positions at the whim of politics.

How can you honestly believe that our economy should be without rules? I have a distrust of the Government but a even more profound distrust of Banking, Financial Institutions and Big Businesses. Government is mostly controlled by people wanting to be re-elected and it seems will do and say what ever it takes to make it so. Where the others are motivated by profits and the bottom line.

It should be very evident the average citizen in the U.S. is being taken advantage of by them all. But at least the Government is somewhat accountable via elections. What recourse does the citizen have against the others if there are no rules?

BTW you then think it is OK for the banks to gamble with FDIC insured funds in the stock market?


Barney

Isn't every loan that a bank makes a gamble?

Yes, but that don't mean it's okay to get stupid with it.

Dave

Sure. And the same business priorities to generate return business, build assets, and maintain a stable portfolio of risk dictates a bank's actions on the securities side of the business.

What it boils down to is the removal of Glass Steagal and the protection it guaranteed to the regular banking customer was that the treasury ended up being raided by the scumbags on Wall St. when the shit hit the fan in 2008. Guess who got hurt? The same regular schmoe's who found all their taxes gone up in smoke. Explain to me why there are no funds left to maintain basic infrastructure. To pay for education. Firefighters. Police. Then the idiots on the right claim it's the unions that are bleeding us. WTF is that.

"The Glass-Steagall Act separated the powers of commercial and investment banking, which insured that banks would not take too much risk with depositors' money. After the repeal of Glass-Steagall, greed won out over prudence and banks did indeed take too much risk with their depositors' money. Between 1999 and 2008, Wall Street became less like the fabled financial district and more like the Las Vegas Strip. Even the regulation that still existed didn't seem to be working."
http://bizfinance.about.com/od/curre...ial_Crisis.htm


Allowing the banks to get so big that they can bring down the economy is never a good thing. Now they are even bigger for the next time. Because I see no real reason not to believe there will not be another one.



Barney

+1

Not an effing thing has been done to prevent next time. :(


Carl

Nah, regular shmoes who didn't allow themselves the temptation of over-reaching on mortgages they probably knew they couldn't afford while gambling on an already inflated real estate market were the ones that got hurt.

Why was the real estate market in inflated? Cheap money and a mortgage industry pressured by the Feds to make loans to folks would couldn't afford to pay them back.

Before we take another look at Glass - Steagal, let's get rid of the leftist tool that really greased the skids for this mess: the Community Reinvestment Act.

http://articles.businessinsider.com/...mortgage-rates

One of the problems is those of us who were smart with our money and did not cause the problems are now paying for the ones who made the mess.
How can regulations that prevented calamities up to the point of removal be blamed for the fall that occurred?
The reason the loans were made was for the fees the banks were making period. As long as home prices were going up the system worked for the banks it was smooth sailing. The banks knew exactly what they were doing. Knowing all the time when it hit the fan the government would foot the bill.





Barney

I wish the righties, or at least those overly enamoured with a dream of a free market, would wake up to the reality that there is an incredible imbalance of power and knowledge between the banks and the regular guy investor. John Q Public didn't have a clue that the time they got approved for the big mortgage, someone in the system was gaming them to make a quick buck. And building a house of cards that would bury the little guy.

I know I have said this before, but how is a little guy, who maybe takes out one mortgage in his whole life, supposed to understand a mortgage document pages long, that has been poured over by an army of the banks lawyers, and written in a way that makes it nigh onto indecipherable to that same little guy?

It has been amply documented that mortgage brokers and lender fudged the details (read facts) on many, many loan applications. Given our mortgage system they took their "points" ($$$$$) and ran. The resulting securitzed mortgages then turned into derivatives cause the meltdown.


The CRA did not say that they had to be crooked, it was really aimed at the practice of red lining. Our mortgage system is what you free marketers like to call a moral hazard, the miracle is that it did not happen sooner.

Yeah but folks tend to get careless when gambling with other people's money. Especially if they know the FDIC will cover their bets.

I was going to point out that I'm not so sure who actually caused it, but I damn well know who's going to pay for it.

But you beat me to the draw.

And as a thought, whenever I rolled an IRA last year I was offered 1% on 30 months and .75% on five years...so it looks like the smart money boys are figuring on us picking up the tab for some time into the future.

Chas

How can anyone making 3K a month expect to pay a $2k a month mortgage?

I'm not saying the brokers had nothing to do with it, but come on.

Pete

I know when we were getting into the market for a house, the message we got from several sources was buy as much house as you possibly can, because you fix your costs, and you expect income to go up relative to what you are spending on the house. Fortunately, we didn't, but I'm cautious by nature. That's not to say those who took such advice were fools, though. And they were advised by people who allegedly knew more about the market than they did.

Regards,

D-Ray

When it's $1,500 for the first five years and then, your assuming, you can sell it off before the payments go up.........But, the market tanks in the meanwhile.

I know. I saw it coming too. That's why I sold off the last one on '05 and got out. What got me was the fact that all I saw being built was McMansions. No one was interested in the 1,200 sq.ft. Rancher. The normal progression from "starter" to McMansion had been upended. And when the loan officer and real estate agent started pressuring me to buy something way over my head, I smelled a rat.

Dave

You don't have to understand the entire document. All you have to understand is that bankers are crooked and don't give a shit about you, and if it sounds too good to be true it probably is, and life is tough and you gotta work your way up. This is something everyone should know by the time they're 18. Those who still don't get it should pay dearly to learn the lesson. Unfortunately, we get to pay and they learn no lesson.

Live and don't learn, that's us!

Pete

A.R.M. and having well schooled smoke blowers talkin' incessantly about how they could simply convert to a fixed rate - funny how when things took a swift downturn ala the musical chair game the unschooled never had a chance for a chair as the band was playin' the bankers score. What's really amazing to me is that the bail out hasn't changed a thing. Legislation needed to revive Glass Steagall is being rendered impotent and too big to fail is worse than it ever was.
I'm just a underachieving idjit in the housing repair game but I certainly saw the shitstorm coming when our little stucco crackerbox doubled it's value in the space of five years. I was chicken littleing it in 2005-6. I guess a simple handyman has a gift of prescience as I shreaded every bank offer of easy cash in their home equity shell game. It wasn't just the newbs to the homeowner game that got bent over. I guess my cynical bent saved me the first time around but I'm not so sure I'll survive this next go round that's coming. Wall St. ain't done bending everyone over.
Heh, if I can still afford to be payin' my ISP, I'll be able to claim prophecy once again. Something to look forward in my gloomy golden years. Sorry for the shitassed rant, but things aren't lookin' so fuckin' rosy for me through no fault of my own.
Don't bother tryin' to convince me that I backed the wrong horse in the last election cycle 'cause it was an easy decision to vote against McCain because of Palin and her supporters.

Well, McCain IS still alive...

:)

And derivatives still aren't regulated!

So you're saying, I should seek economic advice from the trades? I like it! 'truth in the working man'. :D

They tried to get me to spend twice as much as I wanted, I wasn't buying it. Very fortunate I didn't or I would've lost it sure. Came very close as it was. Good on you though for seeing it. I didn't, I was just being a miserly pollack, and I fully expected to have yearly appreciation, or at least some in 7 years.

I hope your situation gets better.

Pete

What gets me is here we have this mortgage system that was designed by thieves for thievs, yet nobody seems to want to change it.

How many of you ever re-negotiated to get a better interest rate/ Each time you do you must buy more Title Insurance at $400 a pop. Are you aware that the commission rate is 80%, so the title company takes $320 right off the top.

Thanks Pete, Bob. ps Once my shoulder is better it's back to the grind. I've always underpriced the competition so never have really lacked for work. Some might say I lacked business acumen but they're renters once again. Miserly, hah. I've got so much kraut flowin' thru my veins that I hoard copper pennies. Lack of vision, I guess. Maybe nickles are where I should concentrate my holdings.:rolleyes:

Yeah, equity ain't worth the sand it's built on, although it was strange how many Jags and Mercedes we're showing up in the middle class neighborhoods round these parts. I'm of the mind to drive anything I own until it's a wheezing dented up wreck before trading up to someones castoff. :D