• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Trump Advisers Seek to Shrink or Eliminate Bank Regulators (1 Viewer)

A WSJ story caught my eye, Trump Advisers Seek to Shrink or Eliminate Bank Regulators


Point out the WSJ article specifically because few who work in finance (or play the market) are aware of the really bad idea of an institutional bail-in

bailin.asp_Final-a0fb7a93f6ad4bfeb354e50b6820ee50.png



Anyway just thought I'd recommend an "eye opening" documentary/book on the topic of a bank "bail-in" by a reformed wall st hedge fund manager who outlines that the system is setup to favor too large to fail financial institutions over ordinary people

 
I did just fine. You don't want to acknowledge that bad mortgage debt created that cash and that Fannie and Freddie, more than another market participants, created demand for that debt. We can leave it there.

Typical right wing propaganda.

Reality
Repeal of Glass Steagall allowed wall Street banks into the mortgage business.

Well what can they do with home mortgages? Mortgage backed securities. But who wants to buy subprime backed mortgages? Let's think about it. So they come up with what they call a CDO (collateralized debt obligation). It consist of a batch of mortgage backed securities sliced up in pieces. No way to tell what is in there. But they consisted of subprime mortgages.

Then they got the rating agencies to slap a AAA rating on these worthless securities and sold them all around the world. They created an unlimited market for these no document subprime loans. It was the roaring 20' all over. Freddy and Fanny even started buying in.

In the meantime those investment banks were buying insurance on these worthless securities. they knew they were selling crap. Couldn't really call it insurance so they called it credit default swaps. That is what brought AIG to insolvency.

All was fine with the gravy train until the fed decided things were getting a little overheated. They raised interest rates 5 times in a row and those variable rate subprime mortgages started to unravel. Brought down the house of cards.
 
To all the suckers who thought Convicted Felon Donald Trump would drain thuh swamp, you’ve been had…again.

He didn’t even try last time. This time he’s stacking his administration with oligarchs and setting up to do whatever they and their rich buddies ask of him. It is the exact opposite of draining the swamp - he’s stocking it up.
 
Trump has a whole lot of stuff he wants to pump and dump. Last thing he wants is effective regulators telling the public what he has been up to.
 
Trump has a whole lot of stuff he wants to pump and dump. Last thing he wants is effective regulators telling the public what he has been up to.

Ya have to admit TRUMP does an amazing job fooling many people into believing he is a great leader who takes decisive "action,..." this is how he was able to build up various businesses (which were run into the ground)


TRUMP also should be given credit for being "consistent"

(Sigh,... too bad for his "foolish business partners" that he is consistently short sighted and able to consistently deflect blame for his poor judgement)

Hopefully FDIC deregulation does not happen (because we the people will pay the price),...


TRUMP-crypto-deregulation-system-dynamics.png


 
Last edited:
Actually, it was the regulations put on the GSEs, more than anything else, that created the mortgage bubble. To meet their federally mandated affordable housing goals, Fannie and Freddie began accumulating non-prime mortgages. In other words, they created a market for bad debt, and bad debt is exactly what we got.
Except that there were no federal laws to enforce 'a federally mandated affordable housing goals.' It was only rhetorical politics starting with Bush II's 'Ownership society.'

The CAUSE of the wall street meltdown was traditional capitalist fraud...period. You and I do it and we go to jail. Wall street does it and they get bailed out AND bonuses.

The only difference between Madoff and wall street was that he was an individual who got caught. He was convicted and died in jail...wall street was not and didn't.

According to many studies, no GSEs and no govt,. policy had anything to do with their failures except of course, the non-enforcement of banking regulations.
 
Except that there were no federal laws to enforce 'a federally mandated affordable housing goals.' It was only rhetorical politics starting with Bush II's 'Ownership society.'
That is simply incorrect. Affordable housing goals were set for Fannie Mae and Freddie Mac by the federal government under both the Clinton and Bush administrations. Acquiring non-prime debt was a way of meeting those goals since, generally speaking, it's lower income people who most often do not meet prime lending standards for income and debt. One of the real damning facts is that F&F always bought just enough non-prime debt to satisfy those goals, and no more.

As for fraud, I agree with you that the ratings agencies failed miserably. Much of that bad debt was misrated, and that was largely a consequence of a conflict of interest. The ratings agencies, e.g. Moodys, were and remain funded by big investment houses. That said, the root of the problem was still the glut of bad debt. After F&F created the market for bad debt, the bubble was always going to burst, and it was just a question of who was holding that debt when it did.
 
That is simply incorrect. Affordable housing goals were set for Fannie Mae and Freddie Mac by the federal government under both the Clinton and Bush administrations. Acquiring non-prime debt was a way of meeting those goals since, generally speaking, it's lower income people who most often do not meet prime lending standards for income and debt. One of the real damning facts is that F&F always bought just enough non-prime debt to satisfy those goals, and no more.

As for fraud, I agree with you that the ratings agencies failed miserably. Much of that bad debt was misrated, and that was largely a consequence of a conflict of interest. The ratings agencies, e.g. Moodys, were and remain funded by big investment houses. That said, the root of the problem was still the glut of bad debt. After F&F created the market for bad debt, the bubble was always going to burst, and it was just a question of who was holding that debt when it did.
You are partially correct and mostly incorrect. There were goals but only to make mortgages affordable...not houses. [housing skyrocketed] Then those goals were nothing but window dressing as there was absolutely no federal or state enforcement mechanism. No mortgage co. or broker was ever cited for NOT making these loans.

Three main mortgage brokers Countrywide, SunTrust and Wells Fargo were the most egregious settling billion$ in lawsuits. They wrote billion$ a week in shit-paper mortgages to anyone who could fog a mirror.

Then wall street bought MBSs and packaged those mortgages into MBSs and resold them continuing the fraud and then upon knowing full well they were shit...bet against the very security they sold, lying through their teeth to buyers.

I knew many mortgage cos. who never made any sub-prime or CRA [Community Reinvestment Act] loans. Only a total of 43 mortgage brokers were sued and paid billion$.

As for F&F, they bought ONLY conventional and FHA loans, almost exclusively fixed rate 30 yr. for decades. But then around 2006, F&F went corrupt and did two things, went outside to borrow billion$ and bought up million$ of that shit-paper.

FHA took over F&F by mid 2008 before the election. 6 execs. were sanctioned for fraud in a great capitalist escape hatch...non-prosecutorial agreements. No, F&F did NOT create the market for bad debt in any way.

Mortgage underwriters disregarded borrowers debt record. Isn't capitalist fraud just a precious profit center ? When was that ever not the case ?

Acquiring non-prime debt was a way of meeting those goals since but was a small part and was a deviation from F&F standard for the first time in their history and had nothing to do with law.

The bubble was bursting long before F&F bought a small portion of the fraudulent paper.

Yes, Moody's, Standard & Poor's, and Fitch awarded this shit-paper with a AAA rating and the game was on. Nothing new there as they gave the fed notes an AA rating. So they wanted a raise in profits, that's all.

Much of that bad debt was misrated, and that was largely a consequence of a conflict of interest. Partly, but was mostly a product of capitalist fraud.

In Summary: creating fraudulent mortgages for buyers...fraud. Selling them as MBSs to wall street, fraud. WS re-selling them...more fraud. F&F bought very few of these BTW.
 
The bubble was bursting long before F&F bought a small portion of the fraudulent paper.
I'll zero in on this. At the time of the crash, 75% of the nation's non-prime mortgages were on the balance sheets of Fannie and Freddie.

They did not buy only "a small portion." They created a market for bad debt because they were willing to purchase high risk loans as if they were low risk loans, something no one with a pure profit motive would do.
 
You are partially correct and mostly incorrect. There were goals but only to make mortgages affordable...not houses. [housing skyrocketed] Then those goals were nothing but window dressing as there was absolutely no federal or state enforcement mechanism. No mortgage co. or broker was ever cited for NOT making these loans.

Three main mortgage brokers Countrywide, SunTrust and Wells Fargo were the most egregious settling billion$ in lawsuits. They wrote billion$ a week in shit-paper mortgages to anyone who could fog a mirror.

Then wall street bought MBSs and packaged those mortgages into MBSs and resold them continuing the fraud and then upon knowing full well they were shit...bet against the very security they sold, lying through their teeth to buyers.

I knew many mortgage cos. who never made any sub-prime or CRA [Community Reinvestment Act] loans. Only a total of 43 mortgage brokers were sued and paid billion$.

As for F&F, they bought ONLY conventional and FHA loans, almost exclusively fixed rate 30 yr. for decades. But then around 2006, F&F went corrupt and did two things, went outside to borrow billion$ and bought up million$ of that shit-paper.

FHA took over F&F by mid 2008 before the election. 6 execs. were sanctioned for fraud in a great capitalist escape hatch...non-prosecutorial agreements. No, F&F did NOT create the market for bad debt in any way.

Mortgage underwriters disregarded borrowers debt record. Isn't capitalist fraud just a precious profit center ? When was that ever not the case ?

Acquiring non-prime debt was a way of meeting those goals since but was a small part and was a deviation from F&F standard for the first time in their history and had nothing to do with law.

The bubble was bursting long before F&F bought a small portion of the fraudulent paper.

Yes, Moody's, Standard & Poor's, and Fitch awarded this shit-paper with a AAA rating and the game was on. Nothing new there as they gave the fed notes an AA rating. So they wanted a raise in profits, that's all.

Much of that bad debt was misrated, and that was largely a consequence of a conflict of interest. Partly, but was mostly a product of capitalist fraud.

In Summary: creating fraudulent mortgages for buyers...fraud. Selling them as MBSs to wall street, fraud. WS re-selling them...more fraud. F&F bought very few of these BTW.
May I recommend "The Big Short" by Michael Lewis? It's a book that covers the history of this entire intentional disaster.

Also, technically not fraud. Unlike stocks, derivative bonds are not regulated.
 
May I recommend "The Big Short" by Michael Lewis? It's a book that covers the history of this entire intentional disaster.

Also, technically not fraud. Unlike stocks, derivative bonds are not regulated.
Oh yes they are regulated and are in fact securities, hence the name...mortgage backed securities. I watched the Big Short and it pissed me off as it should everyone.

To say there was no fraud means you are either a wretched banker or haven't been paying attention.
 
Oh yes they are regulated and are in fact securities, hence the name...mortgage backed securities. I watched the Big Short and it pissed me off as it should everyone.

To say there was no fraud means you are either a wretched banker or haven't been paying attention.
I was talking about the book. It goes into far more detail. I'll have to get around to watching the movie.
 
May I recommend "The Big Short" by Michael Lewis? It's a book that covers the history of this entire intentional disaster.

Also, technically not fraud. Unlike stocks, derivative bonds are not regulated.
I loved Liar's Poker.
 
what follows is an extended version of the OP (that connects the dots),...









Personal Asset Safety in Financial Institutions

While "asset" accounts at banks and brokerages offer convenience, they aren't entirely risk-free. Understanding the potential issues is crucial in a second TRUMP administration.



Lessons from the 2008 Crisis

The 2007-2008 subprime mortgage crisis exposed vulnerabilities in the financial system. Banks readily issued loans to borrowers with shaky creditworthiness, motivated by short-term profits and regulatory loopholes. This risky behavior fueled a housing bubble, masked by complex financial instruments like credit default swaps (CDS). CDS are essentially insurance contracts on bonds, but unlike traditional insurance, sellers weren't always required to hold sufficient reserves to cover potential losses.

The film "The Big Short" depicts characters who recognized the unsustainable situation. They saw the "house of cards" built on subprime mortgages and profited by betting on its collapse. These bets involved buying CDS from institutions like Lehman Brothers, which ultimately failed due to the unsustainable practices.


Regulations: A Balancing Act

Financial regulations are implemented in response to past crises. The history of "bucket shops" demonstrates the dangers of unregulated derivative markets. These were essentially gambling dens where investors gambled on stock prices without actually owning any shares.


The Glass-Steagall Act, enacted in 1933 after the Great Depression, aimed to prevent banks from engaging in risky investment practices. Its repeal in 1999, through the Gramm-Leach-Bliley Act (GLBA), allowed for increased financial institution consolidation. While deregulation can spur economic growth, it also carries risks. Proposals to loosen regulations, particularly regarding FDIC insurance, require careful consideration of potential consequences. Former FDIC chair Sheila Bair, for example, warns against eliminating FDIC protection.




The Looming Threat of "Bail-ins"

Another cause for concern is the possibility of "bail-ins," where banks might seize a portion of depositor funds during a financial crisis. This practice, while controversial, is legal in some situations.

bailin.asp_Final-a0fb7a93f6ad4bfeb354e50b6820ee50.png



Additionally, the use of complex financial derivatives like CDS remains widespread, creating a potential global "ticking time bomb" estimated to be worth trillions of dollars.



Conclusion:

Financial literacy regarding personal asset safety and potential risks within the system is crucial.


Trump said during his campaign that he would take control of the FED, so no surprise. But maybe they realize that once that is done, a recession is inevitable after a short boost in the economy and are trying to do it in a more covert way? Interesting; maybe it fools someone.
 

Users who are viewing this thread

Back
Top Bottom