Michael Bloomberg wrote:It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that.

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

Bloomberg went on to say it's "cathartic" and "entertaining" to blame people, but the important thing now is to fix the problem.

Well, he sure got some catharsis and entertainment, then!

Banks were 'pushed' to make loans. But they were not 'pushed' by anyone at DC to buy and sell CDS instruments. The ratings agencies were not 'pushed' by Congress or a President to label bundles of mortgage securities as AAA when they had sub-prime contents. And politicians do not 'push' companies into a generous remuneration scheme for the same executives who presided over near collapses and had to be bailed out.

Looks to me like Bloomberg (who is basically a Wall Street guy, not an ordinary New Yorker) is doing exactly what he criticises OWS far - blaming other people because it's convenient and not proposing any fixes.

So how do you fix the following problems:

1) An industry that went out of control and needed to be bailed out, now making huge profits (and paying out large salaries and bonuses) from differential interest rates that stiff savers.

2) A government budget that is in deficit following those bailouts, the effects of a major recession, and a preceding policy of reducing taxes while maintaining spending levels

3) A recession across the real sectors of the US economy

without looking to some changes to the way that the industry in (1) operates, or how they are contributing via tax (2) or doing something to stimulate the bits of the economy that do things rather than just push imaginary numbers around?

Danivon

Banks were 'pushed' to make loans. But they were not 'pushed' by anyone at DC to buy and sell CDS instruments.

You can add to this that Banks did push Congress to have the regulations on their reserve fund ratios reduced from 12 to 1 to 25 to 1. (Deposits plus invested capital only had to be 4% of what they loaned out. Compared to stable banking environments which demanded 10% as the upper limit and weathered the storm).
They also pushed very hard to remove the barriers between different kinds of financial instituions so that one organization could make money both from loaning money for mortgages, selling the mortgages then betting against the liquidity of the mortgage bundeled in a CSD. Basically inside trading at the expense of their various clients. And they pushed hard to change the reporting structure and quality of financial instruments in order to ease CSD trading and essentially make them totally opaque and therefore blind bets. Not investment at all.
And nobody forced Goldman Sachs to go to Greece and show them how to bundle their sovereign debt into CSDs either...
And nobody forced the financial institutions, once they became insolvent through their self enforced chicanery, to take the government bailout. But they did. As committed capitalists they could have stuck to a principal, gone under and let the government or someone who still had liquidity, pick up the mortgage assets in bankruptcy. Maybe the Chinese would eventually have owned all those mortgages at 10 cents on the dollar... However those executives needed to protect their phonmey baloney jobs with their outsized commissions . So they asked for and took the bail out.
Bloomberg knows better...

It is is disturbing that we are still having to debate the cause of the financial crisis. Wall Street and their apologists are getting away with muddling the issue. Yes, the push to lend to less qualified buyers played a small part in the crisis. But it was financial instruments that were not properly understood and regulated that caused the crisis. Investment banks like Goldman Sachs made a lot of money by being able to package a large amount number of sub-prime loans, cutting them up so that the top tier (those that only be affected if there were a large number of defaults) would be AAA (and thus commercial banks could park their money there and count that investment against capitalization requirements). Of course, the rating agencies should not have rated these investments AAA but they did not properly understood these new financial instruments and of course they get paid by Wall Street so they are not exactly independent, are they? The last thing that was done was that AIG would insure against default of the securities through a credit default swap and it was Goldman Sachs that initiated the actual financial crisis by calling in something 14 or 15 billion of these "derivatives" on AIG.

My post got beat by Ricky P. Thanks for the interesting post, Ricky.

We can certainly blame the politicians for relaxing the rules, and for supporting 'light touch' regulation of the remaining rules. But that still doesn't exonerate financial services companies from making the epically bad decisions that didn't just hit them, but affected the world. Not bailing them out would have been a disaster too, given that banks were huge and globally interconnected.

But what are they doing now? Are they paying us all back? Are the people involved getting downside of the risk-reward equation? Or are they just trying to carry on as normal and avoid all reponsibility.

The mantra of "it is all DC's fault" is wearing pretty thin. Freeman is right that it's utterly bizarre that we have to debate what happened leading up to the 2008 bailouts. What happened is that a lot of people did stupid things. Some were politicians. Many were not.

Would have loved to see the results from such a referendum on the bailouts in America.

danivon

Some were politicians. Many were not.

ANd never learned from the past. When reagan relaxed banking rules three years later the SAvings and Loan disaster occured. That was an enomous bailout too.

Yes, politicans passed the laws. But they were lobbied hard by the biggest patrons to their campaign war chests...

Perhaps the greatest reform to politics would be an end to funding of politcal campaigns by privatre donations. Allow each taxpayer to, through their tax filing, allocate a certain amount of money (their share of the public purse investment in the politcal process) into whichever political campaigns they like. Hey, even allow corporations the same.
After all, politcal donations are tax deductible so its really already public financing. This just allows true democratic distribution of the funds...

rickyp wrote:Perhaps the greatest reform to politics would be an end to funding of politcal campaigns by privatre donations. Allow each taxpayer to, through their tax filing, allocate a certain amount of money (their share of the public purse investment in the politcal process) into whichever political campaigns they like. Hey, even allow corporations the same.
After all, politcal donations are tax deductible so its really already public financing. This just allows true democratic distribution of the funds...

A traditionally liberal idea that Barack Obama sent to hell in a handbasket. Not only did he not use public financing, he destroyed the system. With the financing he gets, he has no interest in being a reformer.

I think cutting all salaries in DC to the median income of American citizens and eliminating all expense funds would go a bit farther. Why? Because it would stop the professional politicians from simply accruing riches via the public trough.

Back on topic: I'd love one of you liberals to tell us all how the violence, drugs, disregard for public health and safety are worth these pathetic "protests."

steve

Back on topic: I'd love one of you liberals to tell us all how the violence, drugs, disregard for public health and safety are worth these pathetic "protests."

If the protests contribute to fixing the system where the financial collapse caused by the gaming of the regulatory system by primarily Wall Street Financiers can be avoided...
That is by reinstating and improving regulation that they lobbied hard to have removed and changed ...along with reinstating and enhancing banking standards ,
then surely a little incovenience is worth it...
The amount of distress and damage inflicted upon tax payers by the gods of finance greatly out weighs any incoveniences of the OWS bums.
Now, you'd say "But how are these protests achieving anything in this manner?"
And the answer is that obviously they've focussed a laser light on the causes of the collapse. Revisionists, like Bloomberg, are busy trying to paper over the problems and causes...but OWS serves as a constant reminder. More people may have genuinely learned about the rather esoteric regulatory rules and the ways they were gamed. More people will be better informed about why the problems occurred. A better informed public and electorate is always a good thing.
So thats a rationale for why its worth the trouble.
And its particualrly important to have a constant reminder becasue the media and public have a short attention span and because folks like Bloomberg want to revise history and others want to change the subject and pretend that somehow we're in this mess for other reasons.

http://www.huffingtonpost.com/2011/11/02/tonye-iketubosin-arrested_n_1072367.html

Nice inconvenience. Perhaps molestation of mentally disabled children is acceptable also? All so the OWS agenda is continued to be sallied forth? RickyP, please call it what it is. The drugs, violence, disregard for public health and safety are WRONG! Do not minimize the rape of an 18 year old as acceptable as long as the OWS agenda is implemented.

That is sick...

Any of you still excited about Herman Cain's candidacy?

RCP average has Cain up by +2

A former sexual deviant and Fed board member is heading up tea party interest in the GOP.

I have only claimed excitement in his "no nonsense" straight-forwardness. The Tea Party likes the fact that he is non establishment. IF he has sexually discriminated, then it is a no brainer no vote for me. I can call reprehensible behavior when it is happening. Nice try at deflection, Neal. This is an OWS topic, not 2012 hopefuls.

Don't tell me that you support RickyP's position. That would come as a minor (and I mean minor) surprise.

Doctor Fate wrote:Back on topic: I'd love one of you liberals to tell us all how the violence, drugs, disregard for public health and safety are worth these pathetic "protests."

While I don't call myself a liberal, I'll take a shot. You're mixing the act of making mass political protest with who's out there and what they do when they're protesting or not.

I love mass political protest. I think the power of getting a 1,000,000 people out in the streets of Washington DC is great. Reminds us all of the power of the people. I was there a number of years ago when, I think it was the Promise Keepers, descended on our capital. It was nuts and I couldn't agree with much about it, but I liked the fact they were there and were making themselves heard. Democracy is and awesome thing and mass protests are fantastic way of getting a message out. OWS is attracting a crowd that is far less clean cut than the "Promise Keepers," who are folks that may be used to getting into trouble, but it's still a mass protest. Not a 1,000,000 people, but it is all over the place and it is persisting much longer, even through the snow we had! That's cool, not pathetic, and the costs you've brought up earlier, that's one of the many inefficiencies of having a democracy. That's a big part of America and it's great.

bbauska wrote:The Tea Party likes the fact that he is non establishment.

I'd say someone who has served as a Fed member and enthusiastically endorses the Federal Reserve as an institution is not what I consider non-establishment. But that's me.

As far as your reference to rickyp, maybe it would help if you quoted him. I haven't seen him endorse violence against anyone in this thread. There certainly have been people in this thread who have endorsed violence, I just don't recall him doing that, but maybe I missed that. If rickyp has been condoning violence that's bad. I'd hope all of us would be for the arrest of any Wall Street rapists.

Honestly I start losing interest in the Tea Party or OWS when the hoi poloi start joining up in large numbers. I just want to be left alone and leave others alone in return, and any amount of federal government just exists to impose itself. State and local government is enough government for anyone's good.

I am all for mass political protest. It needs to be done within the boundaries of law and the boundary of decency. Is the OWS following those basic formats?

Not hardly.

Very easy Neal.

Steve asks if the protests are worth violence, loss of safety and drug use.

RickyP says: "then surely a little inconvenience is worth it..." and "So thats a rationale for why its worth the trouble."

I contest that rape is neither an inconvenience or worth the trouble caused for the victim or society. Support (tepid or otherwise) is wrong.