Where do you draw the line though?

CMBS or RMBS made money for "bankers". Well some bankers anyway.
http://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)

However it also drove home sales (and home building). Are the home builders responsible for people taking mortgages on houses they could not afford?

What about the realtor/broker who showed them the house?

Or the developer who developed it?

Or the appraiser who appraised the property for hundreds of thousands of dollars more in value than it is worth now?

Or the people at Freddie Mac who earnestly wanted to put lower income people in homes?

Now, you take all the money from the bankers that survived and you give it to who?

The people who bought a house, put very little money into it, and now have to give it back?

The real estate developers who lost everything? (Of which there are many)

It all sounds well and good to take from one group and give to someone else, but I think it is easy to point the finger at the bankers and not take a look in the mirror. We all did this and allowed it to happen.

That said bankers shouldn't be making big money when they are losing big money...

If Romney has earned this level of negative publicity then clearly 'he is the new front-runner' (Again!). every candidate thus far has suffered its consequence's, Bachmann's crazy tea-party rhetoric, possibly gay hubby & weird magazine picture & speaking off camera. Hermain Cain we'll just leave it there, 'you all know'. Newt and his staffing problems & taking donations of $1.6 million (that we know about) from Freddie Mac, Paul's Racists articles & letting people to die you aren't insured (As he must make his own choice?), and now coming full circle back to Santorums Bible thumping anti-gay fear-mongering & Romney taking exorbitant profit while CEO of Bain capital.

I never thought i'd see the day that when in a republican debate others on stage would voice any opposition to free market capitalism run a mock, quite an intriguing turn of events indeed.

It was not Republicans pushing the Community Reinvestment Act, it was Barney Frank and Chris Dodd. Even W warned that Fannie Mae and Freddie Mac were in danger of insolvency.

Also no one in gov't has anything to do with the cost of higher education, which has been a sore point for the '99%'. You can blame your multi-million dollar university presidents for that boondoggle.

>> ^VoodooV:

Sorry, but reality disagrees with you.
Demand for health care is not unlimited, it is finite. Sure it is a large demand, but it is quite finite. You're making a strawman argument because no one is advocating the absurd prolonging of life you're accusing others of.
News flash, we don't exist in a vacuum. We don't live in a universe where our decisions only affect us alone so your Ayn Rand fantasy utopia of everyone taking care of themselves and fuck the other guy doesn't exist..it never will.
It benefits everyone to give quality healthcare to all. We are more productive and contribute more when we don't have to bankrupt ourselves paying medical costs. We pay large amounts of money already because people don't have proper health care and don't do anything about it until they show up at the emergency room at death's door. Taxpayers foot that bill when they can't pay. So the question is simple: Do you want to pay for it now while it's cheap and easy to treat, or do you want to pay more later when it's a LOT worse and a hell of a lot more expensive.
Besides, you don't seem to mind spending other people's money and taking their lives when it comes to defense spending and invading other countries. And as the video already pointed out. We don't see Republicans sticking to their conservative "principles" and refusing Medicare/Medicaid when they need it....only when other people need it. So stop being such a hypocrite.


Most of the costs are borne by people who are retired, so I fail to see how borrowing trillions we don't have on life prolongation does anything but doom the future to crushing taxes and inflation for something the present desired but weren't productive enough to pay for. You can't do that, it's not fair, and many young people are waking up to the fact that this essentially a generational ponzi scheme with nothing in it for them. The first SS recipient contributed well below what she received and the final one will have paid in far more than they will receive in benefits. SS and Medicare, by their end, will have impoverished more people than any government programs in the history of mankind. Every naive socialist program is a sentimental black hole that accomplishes the opposite of what it intends. Fannie Mae and Freddie Mac, for example, made it easier to get a loan, but in doing so increased the price of homes and thus the size of the loan. Because suddenly you've got this "magic bottomless guarantee" to print up a loan, and now you've got damn near everyone seemingly capable of bidding up the prices. Of course, now we realize it wasn't bottomless after all, it just seemed that way for a while.

You've successfully convinced me that you really, really want health care at some future untold person's expense. The populace as a whole is resisting taxes. Their money has been devalued so thoroughly that they can't budget in broad tax increases today, so what makes you think the future can? It's also true that employers are not poor people. We've had nothing but more and more government involvement in this sector and, just like education, the costs have risen with how much the government is able to tax and borrow. I used to work for an online college called Kaplan. Kaplan's price IS what the government takes and loans. Why would they price below that? You just don't seem to understand how markets work. Look at something like LASIK and PRK aren't covered by private or public insurers. It's had nothing but price declines and quality improvements. Look at computers, constant price declines and quality improvements. When people are forced to spend their own money, the fear and greed offset works. When they're spending a pool of forcibly appropriated funds, they lose sight of its true cost to them and the future and become reckless.

Oh, and I'm not a Republican in favor of military adventures. I sympathize less with that nonsense than I do with you. I understand that public roads are of lower quality than toll roads, but I'd rather we bear that cost for the simplicity of not having to dick with toll booths. Everything governmental has that dynamic, but I say the government should be completely disallowed from borrowing in excess of revenue. If you want something now, pay for it now, the end. If you can't raise the revenue, don't cry about it and don't steal from the future.

And yes, demands are infinite. Austrian economics 101. You offer someone everything on earth for $100, they'll probably take it. Problem is, supply ISNT infinite, so the price will never be that low. If you found some way of making planets full of shit cheap and abundant, you'd see that demand is indeed infinite.

These borrowers knowingly made bad loans to people who didn't understand the contract

In the early 90s the banks were arguing AGAINST repealing Glass-Stegall. Politicians partnered with some big finaincal houses like AIG and started accusing mid-size & small banks of racism ala "red-lining" to grease the political skids for a repeal. In most instances there was no racism of any kind. Banks simply did not give loans to people that couldn't afford them. But poor, urban areas had higher percentages of minority populations - and so out whips the race card...

I lived in the 70s and 80s. I know how hard it was to get even a 30-year loan in those days. But literally overnight banks had to start giving out loans to people who traditionally would not qualify. Instead of making money on the interest of the LOAN, banks were expected to make profit by bundling & selling the mortgage. The government promise was that if things went sour on the borrower end, Freddie Mac & Fannie Mae would paper it over. It worked fine for about a decade. But you can't sustain a market when your only customers are poor people in homes they can't afford and property flippers taking out 2+ extra mortgages more than they can realistically pay for.

The bank's job isn't to be your daddy, or to lecture you about whether you should or shouldn't get a loan. If a person walks into a bank, then as long as they qualify under the rules which are established by government then the bank doesn't have much choice. When people qualify, the bank issues the loan or they open themselves to discrimination lawsuits. It's a Catch-22.

Your outrage should more properly be targeted at the government. Have them re-institute Glass-Stegall. Force them to tighten up the requirements on who can/can't get a loan. Make it so people who shouldn't get loans CAN'T get them and that banks aren't allowed to do it. Join the rest of us racist, evil, red-lining conservatives who think loans should only be given to those who can actually afford to pay them off. But prepare yourself for a tongue-lashing from every neo-liberal leftist group under the sun, because clearly your bean-counting logic is pure neo-con white hatred, right? Oh - and especially prepare yourself to get excoriated by guys like Barney Frank who was one of the principle engineers of this whole "UFFOWDABLE HOWSEING!" mess.

This sure does feel biased.

It's almost as if this video is trying to conflate income tax with building roads and infrastructure. But we should know zero income tax goes to that.

The housing bubble was bad, but was it the fault of private lenders? The lenders take their cues from Freddie Mac and Fannie Mae, which are both FEDERALLY SPONSORED! If Freddie and Fannie aren't lending, then banks don't lend. We also know the Federal Reserve create arbitrarily low interest rates that inflated the housing bubble.

This video brings up specious arguments.

Hmmmm...
Seems to me like the President is just trying to slide off the blame for an economy that is, at best, slowly recovering - at worst it's sliding fast. While his historic Health Care Bill goes into effect it really doesn't do much to combat a 9.9% unemployment, and worsening state and global economics. Freddie and Fannie continue to drain our coffers:
http://www.france24.com/en/20091225-fannie-mae-freddie-mac-unlimited-public-funding-2012-real-estate
and our government focuses more on social issues (like racial profiling and illegal aliens) than fiscal.
Granted that without a Democratic controlled house and senate nationalized health care would never have passed, but aside from Obama promising to focus on the economy like a laser beam - nothing has really happened to boost our economy in 2 years. All I've seen is the rapid printing of money to shore up fast eroding programs.

Now with businesses collapsing and federal/state tax revenue declining, we have to implement tax incentives that will create growth in both big and small business and cut back on the union pensions and social programs for the short term. This creates jobs, and revenue.
It took years but Gov. Schwarzenegger has come to this same conclusion in California.
http://gov.ca.gov/speech/15164/

But I have little hope that anything will get fixed as long as politicians remain in power.
Oh and go see waiting for Superman:
http://www.waitingforsuperman.com/
http://www.youtube.com/watch?v=LEf-vJZOj4M&feature=player_embedded

>> ^Psychologic:

I can see why the Tea Partiers dislike Paul... his speeches must confuse the hell out of them.
Free Market = Good
Corporations = Bad
Corporations -> part of the Free Market
More Regulation = Larger Government
Less Regulation = Stronger Corporations?
Medicare/Social Security = Bad?
It's much simpler to think that corporations are the victims of big government and that the budget can be cut significantly without touching entitlement programs.


You and several people in this thread seem terribly confused about his viewpoint, so maybe a libertarian like myself can help you. The "free market" is a term tossed around a lot. What we mean is essentially mutually agreeable trade between producers and the right to make contracts. We believe in courts to adjudicate disputes, penalize and deter fraud, enforce (not interpret) the constitution, etc.

The key oversight for most Dems I talk to is that they want to police/regulate effects rather than eliminate the policy that is producing those effects. I despise "goosing" laws that attempt to reward/induce one legal behavior over another legal behavior, indiscriminately, across an entire populace. I also despise laws that offload one party's risk onto another. Most of the time, I think they're created by well-meaning people who think goosing the populace is their job only to have their goosing backfire. Even if they recognize it was their fault after the fact, a politician will always say the problem is not what they did, but what they didn't also do.

The best analogy I can think of is some cops throwing a bunch of candy on the street, then using the subsequent accidents to justify full-time crossing guards at every intersection. Those are unproductive jobs which can only exist at the expense of private ones. A libertarian sees that the ROOT problem is the policy of throwing the candy in the street, not the accidents it begets. Without a central bank price fixing interest rates well below where the market would have had them, the true risk of borrowing would have been realized, and demand which fueled creative lending wouldn't have existed. Banks naturally do not want to loan money unless they believe they are going to be paid pack, but the GSEs called Fannie May and Freddie Mac were buying and standing behind subprime loans on a massive scale from the commercial banks originating them. The whole concept behind those GSEs is based on the socialist policy that home ownership is more American than renting. That needing a downpayment and good credit before an institution will lend is discriminatory to poorer people. Which is just ridiculous, because that's prudent lending.

And what do they do after the whole thing? Another goosing. Bailing out the failed banks with money from everyone, including their small competitors who were looking to replace them. When you penalize good behavior and reward bad behavior, you create a self-fulfilling loop. I see people who voted for the heavily lobbied, popular, liar candidates and they are POed at CEOs of TARP recipients giving themselves huge golden parachutes. What did they think was going to happen when you gave these idiots MORE money? They are compounding the mistake, over and over and over again.

If you understand Paul's perspective, then you believe that most of our problems, our debt, our military empire, our recurring speculative bubbles, is not from a lack of government intervention, but too much of it in key places. No domestic currency is allowed to compete with the dollar, interest rates aren't set by the market, banks get blanket federal insurance on deposits so they don't have to compete on safety of those deposits. We have subsidies, a concept that presumes a politician spending someone else's production is more effective than the producer himself. We have different tariffs for different industries. It's not that companies are innately bad, it's that we have failed to create a constitution that could not be subverted by rogue judges. You can't be influenced into exercising a power you don't have. Once a judge interprets something to say "yeah, you can do that so as long as you say it's for the general welfare," then the government becomes a conduit for corporate welfare that it wasn't beforehand. People don't understand how powerful the government is. They literally have the power to take money from you by force. It's a necessary evil that they have that ability. That is why it is so god damned important to define and restrict its functions so that groups or businesses don't use it as a conduit to gain an unfair advantage, tapping into involuntary appropriations in what is supposed to be a free/voluntary marketplace.

much regulation stifles innovation and growth, but there are behaviors and practices that are strictly parasitic or needlessly risky which should be reined in

The history of the housing meltdown is long and tortured - but it began in the 70s under Carter and culminated in the 90s under Clinton. When Clinton's admin repealed Glass-Steagall it lit a slow fuse on the economy which finally blew in 2008.

Congress (both Dem & Repub) wanted more people "in houses" because it got them votes. AIG and other financial houses lobbied for the changes because they saw they could make money by selling financial packages. I remember VERY well in the 90s the rancorous debates on this subject. People who opposed the repeal of Glass-Steagall were labelled by political opponents as 'evil rich fat cats' who 'oppressed the poor' and who wanted to 'deny the American dream to the working class...'

Do you remember that rhetoric? I sure do. They were able to argue very strongly that they were doing a GOOD thing and that opposing them made you a lousy, slimy, no-good dirtbag who hated the working poor.

So the law changed, and ALL BANKS (not just the lobbyists) were forced to deal with new market realities. If you didn't complete - you died. So they opened up financial options for 'the poor' they never would have DREAMED of messing with before. Now the poor could get loans. But in most cases the 'poor' SHOULDN'T have gotten loans because they couldn't afford them. But everyone was told, "Don't worry - Freddie Mac & Fannie Mae will get your back." So they did it anyway not because they were irresponsible or malicious. It was what they were TOLD to do because that's what government wanted, and as such it created a marketplace reality they couldn't avoid.

Moreover, it wasn't just the poor for whom financing got easier. The middle class could make a quick buck by flipping multiple properties. Speculation went wild. Housing prices skyrocketed. People got rich quick for virutally nothing. It was all going great until people overseas finally decided they couldn't keep make money on financial packages built on poisonous debt forever. POP!

I'm hesitant to lay the blame for this all on 'risky practices' of 'parasitic financial companies'. They played a big part - very true. But I've always said the housing problem was a THREE part problem. I list the problems here in order of culpability...

1. Government arranged the banquet and set the table.
2. Financial houses provided the food and sold the meals.
3. Stupid consumers gorged themselves on food they didn't need and couldn't afford.

Most people ONLY look at #2. I think that is a foolish & myopic approach that ignores the most important player (government) and gives a free pass to #3 (consumers).

Then when they bite, you exploit them with all of the things written in the fine print in that contract they signed.

People keep acting like bank credit with interest is some 'secret'. Everyone knows that credit cards have high interest rates and fees. When a bank hits you with fees then you pay off the balance and cancel the account. Or (better) never run a balance and you'll never have a fee. Or (best) never borrow money from a bank. It isn't complicated.

Also, some are acting as if banks should behave like altruists. It's as if you are pretending the world is Bedford Falls, that banks are the Building & Loan, and bankers are George Bailey. No no no... Customers must walk into the bank with the mindset that they are dealing with Mr. Potter. Banks sell a useful, but dangerous product. If you are smart and careful you can come out well. If you are stupid and careless you will lose every time. Pretending that banks should act like friendly charities is foolish.

I don't know why the government hasn't made strict guidelines as to how a bank must conduct itself.

They did. The government was the entity that opened the 'free money' floodgates by repealing Glass-Steagal because they wanted more people buying homes & cars. Banks were cool with it because it allowed them to be one-stop-shops, repackage debt into paper commodities, and government promised Freddie Mac & Fannie Mae would cover it all. Government set the table & provided the food. Banks sold the tickets to the banquet. Customers gorged until they ruptured internally. Three parties were involved, and the blame is shared by all three equally.

I'm just saying the government needs to protect those less savvy about credit and debt and keep the banks from exploiting these poor fools.

I'm all for the concept, but how do you implement it? Force everyone to take a class or sit down with a lawyer before they can get a loan? I don't think that will help except maybe 1 case in a million. Almost no-one goed to banks with the delusion that they don't have to make payments or incur interest.

I volunteer time as a sort of career/money counseller to help people out of financial trouble. I've sat down and explained the whole 'never borrow money because of interest...' formula very patiently and clearly. It doesn't matter. People hear the speech, and turn right around and get in debt to the gills buying crap they didn't need. They don't want to sell the stuff and pay the bill either. They want someone to pay the bill or absolve the debt so they can keep their stuff. That's just the way human beings are. So forcing banks to sit people down and go through a "here is how debt & interest work" education is helpful, but will not make the problem go away.

The only sure fire way to 'protect these fools' (as you put it) is to have the banks use a means-testing system by which they deny credit to 'risky borrowers'. "Sorry - we're not lending you money for your own safety." That's a recipie just asking for a lather-rinse-repeat of the whole 'red lining' accusation in the 90s. Can't win for losing. Banks are 'evil' if they expect to be paid back.... Banks are 'evil' if they refuse to lend money to people who can't afford it... Nice catch 22.

Oh...and Fannie Mae and Freddie Mac ARE NOT government institutions.

That is another fucking lie that's been rammed down our throats.

They are SHAREHOLDER owned and SHAREHOLDER controlled.

They are no more a part of our government than the Federal Reserve.

If the insurance companies can't deny care, can they at least charge whatever they want? I tend to agree with Throbbin... if someone goes shopping for care only after they get sick, than it isn't health insurance they are after, it's cheaper immediate care. If I'm a health insurance company, and someone I know requiring treatment has to be offered a plan, I make that plan cost at least as much in the short term as I know I'm going to be spending. If we were to then go ahead and effectively force the insurance company to subsidize their care, the insurance company will quickly go out of business as it needs to fear insolvency, a public provider does not. That's exactly why libertarians complain about the public option distorting the marketplace, and they're exactly right.

What I fear will happen with this "public option" is that it will become a dumping ground for unprofitable customers. Much in the same way Fannie Mae, and Freddie Mac became dumping grounds for unprofitable debt obligations. So, we'll still have huge profits and overhead going to private insurance firms, while the tax-payer is footing the bill for all their losses.

That's why I'm an unapologetic single-payer proponent. Get us all into the same pool.

^ You're not making much sense to me either. The banking industry is one of the most highly regulated markets in existence. Regulate it an inch more and you might as well nationalize the whole thing.

If you want to find the biggest culprits behind our "collapse in credit" and the subprime mortgage crisis, look no further than the Fed, Fannie Mae and Freddie Mac.

It's not reasonable to ignore how distorted the financial and banking markets are, and blame only the market itself, instead of the government created agencies which are causing massive distortions, for any problems that arise.

Seeing how you're in Britain you might not remember that President Bush tried to regulate Fannie Mae & Freddie Mac a few times and the democrats stuffed him. Which we all know was the final piece of hay that broke the camels back. The start of it was the Community Reinvestment Act which forced banks to loosen their loan requirements so that anyone could get a loan.

>> ^enoch
how is reducing government size going to affect the "culprit" of america's current financial crisis?since when did goldman-sachs and the federal reserve become government agencies?


You're kidding, right? The Federal Reserve is as much a creature of government as any other agency or department that was brought into existence through legislation, granting it exclusive power over our nation's currency. The only remotely "private" aspect of the Fed is its secrecy and lack of oversight (something not even private companies fully enjoy anymore).

The subprime mess was only possible because of Fannie Mae and Freddy Mac.

In an economy, it's the private sector that is productive, and the public sector mostly lives off of that production. In a recession, we need more savings and productivity to grow ourselves out of it, but that won't happen if govt keeps expanding and spending/borrowing even more money than it already does, because that adds even more of a burden to the productivity that we need to dig ourselves out of this hole in the first place.

>> ^Mashiki:
Generally when dealing the a persons health you don't want "price competition" you want to aim for best service at reasonable price for the public dollar.

Price competition is *exactly* what allows any kind of push for quality of service at lowering prices, you can't have one without the other. What is a "reasonable" price anyway? Can you appreciate the irony of a bureaucrat deciding whether a price is reasonable dealing exclusively with other people's money? There is no question that the market process is a far superior judge of what prices should be than even the smartest and most well informed group of bureaucrats could ever be.

If there is one overriding issue with the current round of debates in the US over "healthcare", is that they want to have it at the federal level for one and all. Sorry, bad idea. Hell it's a terrible idea.

That's a good point: If 100% socialized healthcare were ever implemented in the US, it would be better (less worse) if it existed at the state level as opposed to federal. That would institute a faint glimmer of competition between the separate systems, and people would be able to "vote with their feet", which is terribly ineffective, but better than being completely helpless.