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“The ripple effects of letting those companies implode would have been huge.”

justabubba

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?

People “do not really understand what we did,” said another Treasury official.
“The run was stopped, the panic was stopped, the system didn’t collapse.”
was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
 

ttwtt78640

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Leaving aside the auto industry portion of the bailiouts, what I fail to understand is that, with almost all of the bad real estate loans being ultimately guaranteed by the taxpayers, didn't this really amount to the gov't bailing itself out using borrowed money?
 

fmw

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?



was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
Of course it avoided a massive catastrophe. The fact that we didn't have a massive catastrophe proves that it was effective. Logic like that has been a government mainstay forever. An insurance company was in a financial crisis. Letting die from its own incompetence wouldn't have worked because there weren't thousands of better insurance companies ready to take on that business. We would have seen a run on banks even though there was no evidence of that. Thank God we were saved from ourselves. I'm still mad about it.
 

Fenton

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It wasn't the "banks" anyway. I know thats the generic low information take on the collapse but without Fannie and Freddie having the Capital requirements lowered down to 3% in 1995 and without Clinton appointing a bunch of Democrat Criminals to run them ( Franklin Raines ) there would have been no buyer for the crap mortgages.

Banks would have gone under in 2000.

5 Trillion total in crap mortgages and securities backed by crap mortgages when it was all said in done.

Thats what Fannie and Freddie were responsible for. And now we own that.

Fannie started turning sub-prime,alt-a and CRA loans into securities in 1997, way before they were created privately and by 2004 owned over 40% of all privately created mortgage backed securities.
 

head of joaquin

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Leaving aside the auto industry portion of the bailiouts, what I fail to understand is that, with almost all of the bad real estate loans being ultimately guaranteed by the taxpayers, didn't this really amount to the gov't bailing itself out using borrowed money?
No. Housing bubbles come and go. Those banks with bad inventory get bought up under FDIC and other federal banking regulatory provisions and life goes on.

The problem with this crisis is that the GOP deregulated CDSs (and table top brokers). CDSs spread the bad loans (initiated by unregulated table top brokers) everywhere to every bank (and even nonbanks) as they used CDSs as a purported hedge. In fact, CDSs weren't hedges but a risky derivative. People didn't know that since they were a relatively new type of derivative (which is why they should have been regulated).

So when the housing bubble burst (as they periodically do), almost every bank had CDSs in their inventory and thus there were no unaffected banks to buy up the bad banks. So government had to act to prevent a complete shut down in the credit markets which would have brought US business to a screeching halt and costs millions of more jobs than the Bush recession did.
 

ttwtt78640

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No. Housing bubbles come and go. Those banks with bad inventory get bought up under FDIC and other federal banking regulatory provisions and life goes on.

The problem with this crisis is that the GOP deregulated CDSs (and table top brokers). CDSs spread the bad loans (initiated by unregulated table top brokers) everywhere to every bank (and even nonbanks) as they used CDSs as a purported hedge. In fact, CDSs weren't hedges but a risky derivative. People didn't know that since they were a relatively new type of derivative (which is why they should have been regulated).

So when the housing bubble burst (as they periodically do), almost every bank had CDSs in their inventory and thus there were no unaffected banks to buy up the bad banks. So government had to act to prevent a complete shut down in the credit markets which would have brought US business to a screeching halt and costs millions of more jobs than the Bush recession did.
You make it appear that there was no underlying asset, which is not the case. The underlying asset was a worthless mortgage on a federally insured property loan (mortgage) in many (if not most) cases.
 

head of joaquin

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You make it appear that there was no underlying asset, which is not the case. The underlying asset was a worthless mortgage on a federally insured property loan (mortgage) in many (if not most) cases.
You've decontextualized what happened.

What happened first was a typical housing bubble burst. We get them every ten years or so, usually associated with a more than usually deep recession.

In the past it didn't lead to a larger crisis because of federal banking regulations that provided for banks that were overleveraged with bad mortgages to be bought out. This happened more or less seamlessly. No credit crisis.

But because this more or less typical bursting of the housing bubble was accompanied by CDSs, which chopped up the bad mortgages and spread them to the inventory of every bank, there were no unaffected banks available to buy out the bad banks. There was just bad bank inventories and worst bank inventories.

The key was the CDSs not the mortgage failures, which always happen.

So when the crisis hit, credit froze since all banks had CDS inventories, and the result was business failures, layoffs, and hence more mortgage failures and more credit freezes. A vicious cycle.

That's the difference. It all came down to deregulating CDSs, which was Phil Gramm's doing. Thanks conservatives, for more failed deregulatory policies.
 

jonny5

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?



was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
Theyre not considering the good that a collapse would have done, eliminating a failed system, and allowing a better system to be put in place.
 

274ina

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Let them FAIL and THROW THEM AWAY.

Just like they do to us when we "fail".


And they never paid back USA.

How does Goldman sacks pay back back $10B when they only make about $1B a year? Ummmm

more magic lies of WALL STREET.

And where are the 10,000 convictions for FRAUD in the loan markets of cars, and homes??????
 

Kal'Stang

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?



was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
Man....I sure would love to have that crystal ball that those folks have!...or wait....do I? I mean if they can "predict" what would have happened without something having actually happened then wouldn't it stand to reason that they could have predicted what did happen before it happened and have averted it?
 

Fenton

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Let them FAIL and THROW THEM AWAY.


Just like they do to us when we "fail".


And they never paid back USA.

How does Goldman sacks pay back back $10B when they only make about $1B a year? Ummmm

more magic lies of WALL STREET.

And where are the 10,000 convictions for FRAUD in the loan markets of cars, and homes??????
LOL !

Goldman Sachs ?

Fannie Mae and Freddie Mac took the American people for over 5 TRILLION.

But not a word from the typical low information Liberal about the Democrats that ran them.

Not a word from you about the Democrats who sat in front of Republican Congressional Committees during Bush's Presidency and LIED about the health of the two GSEs.

Is it because you're ignorant of the Real reason we had a Sub-Prime Bubble and Collapse or do you know the truth amd are juststicking to the script ?
 

justabubba

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LOL !

Goldman Sachs ?

Fannie Mae and Freddie Mac took the American people for over 5 TRILLION.

But not a word from the typical low information Liberal about the Democrats that ran them.

Not a word from you about the Democrats who sat in front of Republican Congressional Committees during Bush's Presidency and LIED about the health of the two GSEs.

Is it because you're ignorant of the Real reason we had a Sub-Prime Bubble and Collapse or do you know the truth amd are juststicking to the script ?
you have made a LOT of allegations
potentially interesting ones
but you have offered nothing to support those statements
how about adding cites/bases for your claims
 

Fisher

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Leaving aside the auto industry portion of the bailiouts, what I fail to understand is that, with almost all of the bad real estate loans being ultimately guaranteed by the taxpayers, didn't this really amount to the gov't bailing itself out using borrowed money?

Yes. and QE has been all about reabsorbing those loans.
 

Visbek

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Of course it avoided a massive catastrophe. The fact that we didn't have a massive catastrophe proves that it was effective. Logic like that has been a government mainstay forever.
Or: Your reaction demonstrates how difficult it is to adequately prepare for a catastrophe, because when the prep works, no one notices and/or believes it was effective.


An insurance company was in a financial crisis. Letting die from its own incompetence wouldn't have worked because there weren't thousands of better insurance companies ready to take on that business.
Yeah, too bad that's not even remotely what happened with AIG.

Most of AIG is, as you note, involved in insurance. They had a small operation in London (AIG Financial Products) that issued credit default swaps (CDS's). Initially these are structured like an insurance on an investment; if the investment fails, the policy holder receives some protection from losses. The problem is that a CDS doesn't require that you have any financial stake in the outcome -- e.g. Goldman Sachs could take out a CDS on a mortgage-backed security issued by Countrywide. In addition to changing CDS's into a form of gambling, it also increased the interconnections of the financial industry, which in turn increases the cascade effects of a major loss.

The collapse of AIG wasn't a problem in the sense that "no one would have taken up that insurance business." It's that it would have destroyed several major banks (notably Goldman Sachs), which in turn would cascade into more bank failures and cratered the global financial system -- which was exactly what produced the Great Depression.

And believe it or not, that does in fact harm Main Street -- as we already saw with the 2007 financial crisis causing a multi-year international recession. In addition to slamming the door shut on real estate sales, it cut off businesses from credit. This harms small and medium businesses far more than the large companies (many of whom are sitting on large cash reserves).

AIG made numerous mistakes. AIGFP raked in ridiculous amounts of money for years, issued far too many CDS's, and were inadequately prepared for a downturn. Their execs are arrogant and have shown little recognition of their flaws, and less remorse. That doesn't change the fact that if AIG collapsed, and received no bailouts, that would have triggered another cascade of bank failures around the globe.

I.e. you're angry because the Bactine stings, when you should be concerned about how you got the cut in the first place.
 

Visbek

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Leaving aside the auto industry portion of the bailiouts, what I fail to understand is that, with almost all of the bad real estate loans being ultimately guaranteed by the taxpayers, didn't this really amount to the gov't bailing itself out using borrowed money?
Sort of, but not really.

FNMA and FNMC were not government agencies, they were government-sponsored entities (GSE's). The federal government did control certain aspects of their business (e.g. Bush 41 signed a law that required FNMA/FNMC to meet specific low-income / affordable housing goals), and there was always an assumption that the government would bail out any GSE that tanked, but they were private entities. They were not funded by the government, and they were not included in the federal budgets.

Their job was, in short, to buy up mortgages and MBS's. Due to market pressures, they expanded into subprime. Due to their market model, they were the last person holding the bag. This is not to absolve them of their mistakes, misjudgments and errors -- only to point out that "bailing out Fannie and Freddie" was not, in fact, "the government bailing itself out."

Bailouts to AIG also were not "the government bailing itself out." They were basically bailing out the banks, hedge funds, and others who had taken out CDS's via AIGFP.

Most government lending is done in the form of bonds and T-bills. None of these would have been wiped out in a bank meltdown. It's possible that someone could have lost track of the bond-holders in an epic meltdown like Lehman, but that would have harmed Lehman's creditors, not the government.

The bailouts weren't handled perfectly, e.g. they definitely should have wrung more concessions out of the banks they saved. However, the net effect was saving everyone's bacon, not the government bailing out loans to itself.
 

Fenton

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you have made a LOT of allegations
potentially interesting ones

but you have offered nothing to support those statements
how about adding cites/bases for your claims
Lol....I've posted proof of the Democrats complicity over and over and over....

You want a City start in Chicago, when our President as a Plaintiffs Attorney went around accusing and suing banks for supposed "redlining" ( discrimination)

Valerie Plame was neck deep in the perpetuation of the false narrative of redlining and made millions from it.

ACORN ran adds in the Chicago Sun Times encouraging people who had bankruptcy's, and forecloures, who had no money in the bank and no steady employment to contact them if they wanted a Home Loan.

The informations out there.
 

Kushinator

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Lol....I've posted proof of the Democrats complicity over and over and over....
No, you source right-wing blogospheres. Pure normative rants!

You want a City start in Chicago, when our President as a Plaintiffs Attorney went around accusing and suing banks for supposed "redlining" ( discrimination)
Taking deposits in a specific community and then denying them credit (based on address) is a form of discrimination.

Valerie Plame was neck deep in the perpetuation of the false narrative of redlining and made millions from it.
Name dropping doesn't support your position. You cannot force a bank to lend.

ACORN ran adds in the Chicago Sun Times encouraging people who had bankruptcy's, and forecloures, who had no money in the bank and no steady employment to contact them if they wanted a Home Loan.
You have no problem providing a source for this accusation?

The information's out there.
What is your excuse?
 

head of joaquin

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Or: Your reaction demonstrates how difficult it is to adequately prepare for a catastrophe, because when the prep works, no one notices and/or believes it was effective.



Yeah, too bad that's not even remotely what happened with AIG.

Most of AIG is, as you note, involved in insurance. They had a small operation in London (AIG Financial Products) that issued credit default swaps (CDS's). Initially these are structured like an insurance on an investment; if the investment fails, the policy holder receives some protection from losses. The problem is that a CDS doesn't require that you have any financial stake in the outcome -- e.g. Goldman Sachs could take out a CDS on a mortgage-backed security issued by Countrywide. In addition to changing CDS's into a form of gambling, it also increased the interconnections of the financial industry, which in turn increases the cascade effects of a major loss.

The collapse of AIG wasn't a problem in the sense that "no one would have taken up that insurance business." It's that it would have destroyed several major banks (notably Goldman Sachs), which in turn would cascade into more bank failures and cratered the global financial system -- which was exactly what produced the Great Depression.

And believe it or not, that does in fact harm Main Street -- as we already saw with the 2007 financial crisis causing a multi-year international recession. In addition to slamming the door shut on real estate sales, it cut off businesses from credit. This harms small and medium businesses far more than the large companies (many of whom are sitting on large cash reserves).

AIG made numerous mistakes. AIGFP raked in ridiculous amounts of money for years, issued far too many CDS's, and were inadequately prepared for a downturn. Their execs are arrogant and have shown little recognition of their flaws, and less remorse. That doesn't change the fact that if AIG collapsed, and received no bailouts, that would have triggered another cascade of bank failures around the globe.

I.e. you're angry because the Bactine stings, when you should be concerned about how you got the cut in the first place.
And all this boils down to the fetish for deregulation having gripped Congress such that CDS's weren't regulated -- thanks particularly to Mr. Conservative, Phil Gramm.

More evidence that the core principles of conservatism are an economic fiasco.
 

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LOL !

Goldman Sachs ?

Fannie Mae and Freddie Mac took the American people for over 5 TRILLION.

But not a word from the typical low information Liberal about the Democrats that ran them.

Not a word from you about the Democrats who sat in front of Republican Congressional Committees during Bush's Presidency and LIED about the health of the two GSEs.

Is it because you're ignorant of the Real reason we had a Sub-Prime Bubble and Collapse or do you know the truth amd are juststicking to the script ?
fanny and feddie where the puppets of Goldman sacks, and the country wide CEO. "recless endangerment" a book explains it all.
 

clownboy

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?



was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
You know they've only taken some time to gin up these figures and get them out there because they will want to do it again at some point in the future.
 

Fenton

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No, you source right-wing blogospheres. Pure normative rants!
You know better Kush and does a Youtube video's showing Democrat law makers lying to a House Committee qualify as a source from a Right-wing Blogosphere ?



Taking deposits in a specific community and then denying them credit (based on address) is a form of discrimination.
THAT is one of the most desperately STUPID things I've ever read, period. On the Internet, in a News-Paper, on a Bathroom Wall. I mean ever, and you're intelligent enough to know better.

So lets say I have poor credit, no steady job and no down payment and a repossession to boot.

OR I read this Chicago Sun Times Article from 1995 and gave ACORN a call ‘You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.

By your definition I should be able to qualify for a Mortgage simply by going down to a bank and opening up a savings account in my " Community " ? Because if they take my money and secure it and pay me interest but refuse to loan me 150k to buy a House that I can't afford, THAT'S "Discrimination " ??

DISCRIMINATION is inherent to lending for OBVIOUS reasons, as long held standards gave lenders the freedom to safely invest their capital. Those standards also prevented economic bubbles by limiting cash-flow to those who were most likely to adhere to their contracts. To those who had proven they were responsible enough to enter into a 30 year contract. And those standards had nothing to do with the color of someone's skin.

Well, not until the Democrats manufactured the massive false narrative of redlining.

When I bought my first home the guy at the bank said there are basically three questions a bank has to consider before making a loan.

1) Can he Pay ? ( Income Amount, Job History, Other Current Expenses )
2) Will He Pay ? ( Credit History )
3) If he Doesn't Pay Can I make Him ? ( Collateral )


Those standards were corrupted, manipulated and redefined via Government mandates through Clinton's Home Owners Strategy and through his DOJ which targeted banks with threats of legal action if they did not comply with their solution for the false narrative of "redlining"

And AGAIN, if there was actually " Discrimination " in lending,( there wasn't ) that is people were being refused home loans solely based on the color of their skin, WHY did they have to lower lending standards to fight it ?

It such BULLSH** from you people, listening to you try to justify down what were obviously bad policies because you've got some f**kin generic anti-Conservative cross to bear.

Why objectivity isn't a option for you is I suppose none of my business, but it's a damn shame you don't consider it.
 

Dr. Chuckles

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that is treasury's prediction about what would have happened without the bank bailout

do you believe that is a legitimate expectation?



was it worth the cost?

is it true that the net cost at present only amounts to $3 billion remaining unpaid?

Massive $238 billion financial bailout 5 years ago ‘avoided catastrophe,’ only $3 billion has yet to be paid back: Treasury | The Raw Story
I have no real issue with the bailouts. Where I find fault is the failure to address the "too big to fail" scenario, and work preventing the need for future bailouts
 

vesper

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Leaving aside the auto industry portion of the bailiouts, what I fail to understand is that, with almost all of the bad real estate loans being ultimately guaranteed by the taxpayers, didn't this really amount to the gov't bailing itself out using borrowed money?
Yes. The bailouts have been all about bailing out federal and state governments, and special interests to the Democrat party such as unions, huge grants to education, and federally funding the green energy sector.

While the Treasury bailed out Fannie and Freddie the states through Porkulas received 200 billion in bailout money.

If memory serves me correctly the banks were forced to take the TARP money, some did not want to. Then they were charged 5% interest the first five years then the rate goes up to 9% which is this year.

The Obama administration did a shakedown on the 5 biggest banks and collected 25 billion which was to fund one of his many programs to aid those who had faced foreclosure. The money was divided among the states but only 27 of them used it properly. The rest either put it into their general funds or like Jerry Brown of California put the money into the public union employees pension fund. His state received 800 million and only the public employees benefitted from it.
http://www.nytimes.com/2012/05/16/business/states-diverting-mortgage-settlement-money-to-other-uses.html?_r=0
This country's problems aren't just the fecklessness of the federal government but the growing number of irresponsible states. Some of them have become so anti business over excessive corporate taxes and costly environmental regulations that businesses either fold or move to another state where they are more business friendly. Of course that results in these states having unemployment rates well above the national averages and more on government assistance. These states tend to have a problem meeting their obligations over Medicaid and public employees benefits especially retirement pensions. They also tend to have sanctuary cities for illegal immigrants that put a strain on the state budget. Personally I am tired to be made to pay for the stupidity of others.

Here is a link for anyone interested in watching the status of money being repaid by bailout recipients.

http://projects.propublica.org/bailout/list/simple
 
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