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« BAC PR fail | Main | Banning birth control »

Oct 27, 2011

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Billy Jones

And you wonder why Occupy is pissed off? From the linked article:

Ameriquest
Washington Mutual
Countrywide
Angelo Mozilo
Merrill Lynch
Deutsche Bank
Citigroup
Washington Mutual
JP Morgan
Kerry Killinger
Stephen Rotella
David Schneider
Bank of America Home
Morgan Stanley
UBS
Goldman Sachs
Magnetar
Paulson & Co
Fabrice Tourre
Standard and Poor
Securities and Exchange Commission
Federal Reserve
Christopher Cox
The Office of Thrift Supervision
Timothy Geithner
Henry Paulson
Lehman Brothers
Fannie Mae
Freddie Mac
Richard Syron
Daniel Mudd


"Morgan Stanley settled with Nevada’s Attorney General last month following an investigation into problems with the securitization process.

As part of a proposed settlement with the 50 state attorneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization."

Immunity? Immunity? What ever happened to the good old conservative hangman's rope? But no, the Republican leadership-- even Tea Party leaders-- still wants to let them all go. What ever happened to law and order? And this!

"When banks found CDOs hard to sell, some of them, notably Merrill Lynch and Citibank, bought each other’s CDOs, creating the illusion of true investors when there were almost none."

Illusion? When did playing David Copperfield become a bankster's job? What a hoot!

"The Office of Thrift Supervision, which was tasked with overseeing savings and loan banks, also helped to scale back their own regulatory powers"

"Scale back..." Men have been shot for less!

"Merrill Lynch executives helped blow up their own company ..."

and got raises? And bonuses all paid for with taxpayers' dollars?

And the results:
Fabrice Tourre went to prison... In a luxury prison, no doubt.

It's getting really hard for this old, born and bred Southern redneck to stick to that whole nonviolent meme and I'm only half way through the article...

Want to end the Occupy Movement-- kill the bastards who wrecked the economy and 99% of us will go home with nothing more to revolt against.

Ishmael

In the old days Gramm would have been tarred and feathered. Thanks to our new mindset he can retire from office and make boocoos for private industry.

BTW, if anyone makes the absurd comment again that the meltdown was the fault of Barney Frank/FreddieMacFannieMae, I will toss my cookies. Just because you say it 2,000,000,000 times doesn't make it true.

G/

How do Bill "We have a budget Surplus" Clinton & Bobby Rubin remain off the list?? Started with that MYTH....

Ed Cone

Rubin and Clinton mentioned prominently in the linked article.

Bill Yaner

I don't blame Billy one bit for going off on that article. I could feel my own blood pressure starting to go up, so I printed it out for after cocktail hour tonight when I'm more.....settled.

Andrew Brod

For what it's worth, Clinton has apologized for signing the CFMA. That may be a small thing, but has anyone else in the rogue's gallery done even that?

David Boyd

The list wouldn't be complete without mentioning the end users. Yep. All those people on the list deserve some measure of scorn, but it's dishonest not to cast a glance in the mirror when talking about this stuff.

Andrew Brod

I disagree. This was about public policy, not individual behavior. Consumers and homeowners and investors were no more greedy during the 2000s than they were at any other time in our history. The proximate cause of the problems was the array of policies that allowed their greed to blow up the economy. If the right policies had been in place, individuals would have behaved properly. This is always how it works.

Blaming home buyers has one clear effect: it takes the focus off of the bad policies.

Andrew Brod

Human greed is a constant. You might as well blame the wind for blowing or the sun for rising.

Ed Cone

Consumer attitudes about debt, status, et al did contribute to the disaster.

Those attitudes are not constant over time, nor are they completely independent of marketing and other enabling behavior.

sean

if you're not lucky enough to be raised in an environment that embraces frugality or in a home that communicate the problems with saddling oneself with debt, you tend to learn these two lessons on the fly. it seems like common sense, but so does algebra after learning it firsthand.

Bill Yaner

Devil's advocate: though we've fallen away from the once popular notion of the market always being rational, still can't we say that a prospective home buyer in one of the sprawling Las Vegas suburbs who sees constantly rising prices, friends flipping for big profits, lost "bargains" from hesitating, makes then a rational decision to finally jump in there?

And was it not the wrong headed policies of the Greenspan Fed, bank deregulation, derivatives non-regulation, and Fannie Mae and Freddie Mac exuberance which created the situation in which our hypothetical buyer found himself going into a previously unthinkable level of debt?

Gotta go with Andrew on this one. This was all about bad policies.

Billy Jones

David Boyd, I'm looking in the mirror but still can't see how I contributed to the economic disaster?

Billy Jones

Bill Yaner wrote: "Gotta go with Andrew on this one. This was all about bad policies."

Bad policies made possible by lots of payola from the persons and corporations on the above list.

I don't expect Andrew Brod to be able to look deep enough into the problem so see where the problems began but then as a professional water boy for the 1% I guess we shouldn't expect him to.

Andrew Brod

"Professional water boy for the 1%."

Man, I wish that were true! I could use the money.

Elliot

Billy, has it occurred to you that you're showing more hostility lately to the folks here who are most sympathetic to your views? No one's perfect man, but damn. I believe, as much as I disagree with some on specifics, that everyone here has good intentions. Let your genuine "opponents" be dicks and make you sound more reasonable, not the other way around.

Billy Jones

Elliot: "Billy, has it occurred to you that you're showing more hostility lately to the folks here who are most sympathetic to your views?

I'll never figure it out. I'm hostile 99% of the time but when I'm not hostile people think me hostile.

That is, except for Andrew Brod being a water boy for the 1%. Now that was hostile.

But I've yet to see or hear Professor Brod say anything sympathetic to Occupy. His comparisons to the Tea Party are little more than noise.

David Boyd

Sean brought up the drug dealer analogy for the mortgage mess we're in in comments somewhere on this blog the other day. I think that was apt. He was looking at it more from the supply side, but the demand side is important as well. The dealer must have someone to sell to. Letting folks off the hook completely who bought something they couldn't afford, whatever their motives or whatever their expectations, doesn't tell the whole story.

Billy Jones

David Boyd: So drug dealers equal banksters and drug addicts equal home buyers? Yeah, that oughta fly.

Bill Yaner  N

But here's the thing, David Boyd. What if those who bought things they could not afford did so because the whole market situation in which they did so was created by a combination of policies that was designed to stimulate demand?

Andrew Brod

I think it makes sense to invoke the legal concept of proximate cause. If we hadn't deregulated and otherwise put in place policies whose effect was to increase systemic risk, the actions of home buyers and borrowers wouldn't have been enough to cause the crisis. The array of policies in place, not the actions of home buyers, was the proximate cause of this mess.

Including home buyers in the list of the blameworthy may sate our find-the-villain bloodlust, but it effectively and incrementally lets the policies and policy-makers off the hook.

Let's keep the focus where it belongs... and where it can do some actual good.

sean

actually, db, my dealer/user analogy wasn't to lay blame on drug users at all. let me try to make it clear.

people use for any number of reasons and do a wide degree of damage to themselves (kinda like accumulating debt). some are casual users, others are addicts, and the latter need real help. locking up either of them is a losing strategy to slow down america's drug problem, as california is realizing with its overpopulated prisons. sure, users "shouldn't" use, but there are a variety of reasons that drives people to use -- lack of a job, bad relationship, no direction, addictive personality, etc.

in a similar vein, albeit a stretch of a similar vein, ever since i had my first full-time job, the most common marketed american dream meme for having a sustainable, good life has been to own your own house. in the mid-2000's, ARMs, practically overnight, became the gateway drug to that better life. hell, an all-interest 5/1 arm (the subprime deluxe, with extra mayo) is the mortgage that allowed me to "purchase" my first home here in greensboro. if it weren't for the timing of our recession, my interest adjustment might have gone up instead of being cut in half (the only silver lining to these crappy times).

so am i to blame for buying in?

i mean, even though it should have seemed too good to be true to a family making $40k a year to be able to own a $200k house, they do see all the same real estate commercials geared toward the upper class. they get the same real estate inserts in their papers. how can you blame the buyer for feeling the need to own, or for caring about the chemical make-up of the american dream "drug" or, most importantly, for trusting institutions that, historically to most, were trustable?

the analogy falters as, IMO, the war on drugs isn't one that can be won (unless drugs are legalized, priced cheap and taxed), but good policy / regulation can ensure that this type of financial meltdown never happens again.

polifrog

Once again Brod is at odds with himself:

This was about public policy, not individual behavior. Consumers and homeowners and investors were no more greedy during the 2000s than they were at any other time in our history.

as opposed to:

If we hadn't deregulated and otherwise put in place policies whose effect was to increase systemic risk, the actions of home buyers and borrowers wouldn't have been enough to cause the crisis.
David Boyd

You can't discount personal responsibility so cavalierly, AB. More choice and easier credit are good things. That they're handled with respect or handled irresponsibly is, in part, cultural and thus can be influenced. See Greece/Germany.

Also, there's one thing I can't square in your posts, AB. You seem to have a low opinion of people's ability to take care of themselves, but you have a great deal of faith in the ability of government to create regulation that does it for them. You're counting on the people we place in those roles to behave rationally and wisely with everyone's best interest at heart. Why would that subset be better at taking care of themselves, much less everyone, than the general population?

I know, Sean, that in your analogy you weren't laying blame at the feet of the users. But it's a part of the analogy nonetheless. Marketing is a powerful tool. Keeping up with the Joneses is a powerful influence on behavior. But all of us have the means to resist. Many of the folks who were burned during this crisis will not behave the same way in the future with regards to credit that they did this go round. I dare say that many will be much more skeptical of the claims of their real estate agents when they buy another house.

Just so we're not confused here, the folks who enriched themselves at the expense of the taxpayer by taking their profits but laying off the losses on us are criminal. Making institutions not too big to fail from now on should be priority one. But also in the priority line has to be an expectation that people look after themselves a little better.

Andrew Brod

I'm not discounting personal responsibility. I think it's important; I think it's great. So go ahead and blame the borrowers all you want, but at the end of the day we will have gotten precisely nowhere. People do what they do, even when they're hectored by well-meaning people like you.

If we want the public conversation actually to accomplish something (and maybe we don't!), it's got to be about policy. That doesn't require "faith in the ability of government to create regulation" (and nice red herring there, by the way), it just requires a little common sense.

If blaming the borrowers can be done alongside sensible policy making, then fine. Just as you can't stop people from doing what they do, you can't stop blamers from blaming. It's what they do. My concern, though, is that blaming the borrowers takes some of the focus off policy. That's what we're doing already, and we'll pay for it again the next time systemic risk blows up the economy.

Andrew Brod

Also, regarding:

"You seem to have a low opinion of people's ability to take care of themselves, but you have a great deal of faith in the ability of government to create regulation that does it for them."

The regulation I'm talking about is that which prevented large-scale systemic risk in the financial sector from the 1930s until the 1980s (when the S&L crisis provided a foreshadowing of how bad things could get); and I guess a bit longer into the 2000s.

So I don't need faith. I just need to look back on what actually happened in the last century.

sean

agreed, db. once burned, twice.... well, they won't get burned again. and to your point, i just don't understand the point of even wasting time on buyers in this conversation. i mean, they've already suffered their loss, what else do we do, round them up and jail 'em? they might have been going after fool's gold, but it was "legal" fool's gold.

establishing proper regulations should be the goal to stem future events. but if we're talking going after criminal activity (as the OWS crowd seems to be), the only place to look would be in the sector that found "innovative" ways around the few remaining regulations in play. there have to be a number of players who stepped outside those admittedly limited lines.

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