Mitt Romney's halo

[Chairman Bill]

... the banks were forced by a left-wing government to lend to people who didn't qualify for loans ...

Which left-wing government was that? The Republicrats & Democans are both right-wing parties. So did Hugo Chevez have that much influence on  the US banking industry? Or was it all Castro's fault?

[Bryan Conner]

The financial world doesn't have any ears because they are consumed by greed. As to tangoing then it was the bankers responsibility not to lend to people who can't repay. Do you lend to everyone who asks you for something? No you make a decision on suitability.

I do not lend to everyone that asks, and I also do not borrow something that I can not return in due time.  I have to determine the suitability for myself.  Just because someone will lend me something does not mean that I need to borrow it.  I can not fly a helicopter, so why would I borrow one?

  I worked myself out of $18,000 of credit card debt and I do not blame anyone but myself.  I applied for the credit, I used the credit, and I paid the "stupid tax" (tax or charges for my own stupidity).  All of the people that took out sub prime mortgages either did not read the loan terms or did not understand them....but obviously, they signed vowing to repay the loan by the terms outlined.  Now, they are paying the "stupid tax".  We all are paying the "stupid tax" in one form or another.

[jeremypayne]

You're right, Walter, but it happens again and again -- not just about politics, about anything controversial.

But from what I've seen in the past we all stay friends. One or two exceptions, including dalethorn, whom I mentioned in another post. Dale just plain lost it. If I get some time I'll go back and find a couple of his final posts before he was thrust into the darkness.

I still love you, Russ.  X-)

I think your brain is stuck in some republican TV commercial, but I still love you. ;-)

[jeremypayne]

but the root problem was a left-wing government mandate. I know the propaganda you read will never tell you about that, but if you do a bit of digging you can find the truth.

As someone who is MUCH closer to the center of the action, I am going to wholehearterdly disagree.

The root of the problem was unregulated greed.  Guys making $10-100 million a year making bets that paid them huge sums of money when they paid off ... but leaving the rest of us to pick up the tab when the luck finally ran out.

I don't think you really understand what happened in finance in the first part of 21st century.

The subprime debacle shouldn't have mattered.  We should have been able to shrug it off if all that went south was a pile of mortgages ... It wasn't the bad mortgages that sunk the banking system ... It was all the 'side-betting' that allowed the synthetic market to grow without any connection to the real world.

I actually think a big part of the issue (ironically) goes back to the Clinton surpluses.

The burgeoning market for credit derivatives needed "pure yield" for its alchemy ... And long-dated Treasury Securities were relatively scarce as Clinton started paying down the debt.  Banks started treating 'credit-enhanced' mortgage-backed securities like they were Treasuries.

The underlying assumption was that a credit-enhanced mortgage-backed security and a Treasury bond were basically the same credit.  That combined with a bunch of cowboys in London thinking that AIG's AAA credit rating was a bottomless pool equals a disaster of historic proportions.

The sad part is that we bailed out the assholes who made the mess at the expense of those who really did nothing wrong.  Too many people lost homes and jobs for no reason while plenty of assholes who made the mess and live in $10 million apartments got to keep almost everything.

[RSL]

Thanks, Jeremy, I'm glad to know we're still friends -- friends who disagree on some stuff.

Believe it or not I think your summary of the situation is pretty accurate. You mean there's greed out there? WHO KNEW? But yes, the wolves moved in as soon as they saw the herd was unguarded. The big question is: why was the herd unguarded?

I gather you've never heard of Fannie or Freddie, or the fact that both outfits are set up in such a way that any profits they make belong to their shareholders and any losses they take belong to the taxpayers. At the moment their taxpayer-backed liabilities run to about 5 trillion. And even though you're "someone who is MUCH closer to the center of the action" I guess you haven't realized that certain rating agencies were certified by the government and that if you want to have dealings with the government (or Fannie or Freddie) you need to accept the judgment of those agencies. And finally, I guess you don't know about the expansion of the Community Reinvestment Act and the pressure the act puts on banks to make "affirmative action" (subprime) loans.

But when you get into the fact that "banks started treating credit-enhanced mortgage-backed securities like they were Treasuries" you're right on the money. What you left out is that banks were able to do that because the government-backed rating agencies rated those securities as if they were Treasuries.

And I agree 100% with your final paragraph.

[RSL]

Which left-wing government was that? The Republicrats & Democans are both right-wing parties. So did Hugo Chevez have that much influence on  the US banking industry? Or was it all Castro's fault?

Hi Bill, Your post raises the question: what are you chairman of? Could it be the local Communist cell?

[Chairman Bill]

Hi Bill, Your post raises the question: what are you chairman of? Could it be the local Communist cell?

I am Chairman for Life, of the Brislington People's Liberation Front (BPLF), and nothing to do with the People's Front for the Liberation of Brislington. Splitters! <hawk, spit>

[jeremypayne]

Russ ... If you believe its was the ratings agencies steering the banks wrong, I believe you've got that backwards.  I worked at S&P for five years ... Nothing to do with Ratings, but I was there.  If anyone was doing the steering in that relationship, it was the banks and other issuers from what I could see.  I used to be a banker, too ... I've seen the inside of both sides of that equation.

[Slobodan Blagojevic]

... both outfits are set up in such a way that any profits they make belong to their shareholders and any losses they take belong to the taxpayers...

And people complain of the lack of true bi-partisanship!

Here we have an example of a perfect compromise: Republicans got what they always wanted (profits), and Democrats got to use taxes to promote something! 

[Chairman Bill]

The privatisation of profit, the socialisation of debt. Not what I think of as a 'mixed economy'. Makes you wonder how a purely capitalist system would cope when all the banks go tits up.

[RSL]

No system is going to be able to "cope" with that, Bill, not communist, socialist, capitalist. . .

But what's even scarier is what's going to happen as the US has to monetize it's debt. Thanks to Bernanke we may see a revival of the Weimar Republic right here at home.

[RSL]

Russ ... If you believe its was the ratings agencies steering the banks wrong, I believe you've got that backwards.  I worked at S&P for five years ... Nothing to do with Ratings, but I was there.  If anyone was doing the steering in that relationship, it was the banks and other issuers from what I could see.  I used to be a banker, too ... I've seen the inside of both sides of that equation.

Jeremy, I believe what you're saying. I don't doubt that the banks were steering the ratings, but by getting what essentially were government-sponsored rating agencies to pretend crappy securities were at the same level of security as Treasuries bankers could pretend they were in better shape than they were. Greedy people, including bankers, like the poor, are always with you, but the government's fingerprints are all over this fiasco. Don't get the idea I'm blaming one party for this. Both should hang their heads in shame, though Barney Frank's and Chris Dodd's heads should be way, way down. At least Chris got caught with his hand in the Countrywide till. Barney's still running free.

[Rob C]

Has it escaped everyone's attention in this little skirmish that banks are not political parties? They are blameless of our vote?

Banks have thrived under all colours of freely elected governments. My bank managed to pay me a reasonable interest under all the mixtures of government that we've had in the UK since the 50s, not that I had more than a token bank book at the time, you understand; but once I began to work, got married etc. and the life-struggle began, we did manage to make deposits and gather some interest, however tiny it was because of the relatively tiny capital concerned. Now, I don't even care if the wretched banks send a statement: I know as well as they do what's left, and I know just as well that there's bugger-all happening to stem the outward flow. A pension and a little bank interest was just enough to maintain a reasonable standard of living; take away either factor and it's simply a matter of time.

So, I blame the banks for their part, I blame the governments, and especially the left ones, for being too weak to face down the massive public services that drain the country dry. I do believe in a National Health system; I do believe in a State Pension and I think these principal features could all be maintained very well if expenditure were controlled and not allowed to become abandoned to the whims and whines of the people running the games. I also think that the time has long passed when Britain should have understood that charity begins at home. We have blown zillions trying to be all things to all foreign parts. I believe we are still sending vast sums of money to India, which has an enormous economy of its own, yet unbelievable class differences at the same time; had we no slums, no one-parent families and all the other human disasters that we do, then helping others would be a different matter: we might then be able to afford it. Hell, we don't even manage to buy the affections of those we think we might be helping: they still hate us, many of them. How many dollars was that that Pakistan gets from the U.S.A.? And they love you too?

Rob C

[Slobodan Blagojevic]

... We have blown zillions ... helping others...

It shall be noted that countries do not help other countries, especially not out of the goodness of their (collective) heart... ever. Countries invest in protecting their national interest. They do, occasionally, engage in PR, mostly to mask the former.

[jeremypayne]

It shall be noted that countries do not help other countries, especially not out of the goodness of their (collective) heart... ever. Countries invest in protecting their national interest. They do, occasionally, engage in PR, mostly to mask the former.

How about when the Greeks came to the Turks' aid after that big earthquake?

[Slobodan Blagojevic]

I meant to add a caveat about humanitarian add, but that would only distract from the gist of my message. Besides, humanitarian aid, e.g., in case of natural disasters, is not something Rob was talking about.

[jeremypayne]

Banks

... what you think of as a bank still exists, but that's not what's being discussed here.

That's retail.

We're talking wholesale finance here ... Not depositor-financed - financed by capital markets.

[Craig Lamson]

 We also should have given debt relief to homeowners and not just the banks.

What about us poor slobs who worked hard, and paid off our montage?  Now i get to pay for some else's too?

[jeremypayne]

What about us poor slobs who worked hard, and paid off our montage?  Now i get to pay for some else's too?

Nope, that's not at all what I said.  As it stands, mortgages can't really be restructured.  I think bankruptcy courts should be able to restructure mortgages.  Instead of only foreclosure, there would an option available to work things out and keep people (families) in their homes.

But keep thinking this is all about someone trying to rip you off ... You'll find that to be mindset with all kinds of positive karmic goodness.

[Dale Villeponteaux]

Doesn't look anything like an egg, does it?

The original veggie was off-white and quite small.