...did you try your local Chase branch? You can even open one up with the government at Ally!
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Bill to reinstate Glass-Steagall introduced
- Thread starter Eliot Hosewater
- Start date
...did you try your local Chase branch? You can even open one up with the government at Ally!
Fanews, you mentioned several other people who were also to blame in your own post.
From credit agencies to people who were being financially irresponsible to investors who weren't doing their own homework to banks that were engaged in some shady dealings.
A lot of the country is to blame.
I forgot to mention the home builders who started building thousands of homes in the hopes of selling them leading to an oversupply.
From credit agencies to people who were being financially irresponsible to investors who weren't doing their own homework to banks that were engaged in some shady dealings.
A lot of the country is to blame.
I forgot to mention the home builders who started building thousands of homes in the hopes of selling them leading to an oversupply.
your a typical wall street ivy league fucking asshole
blame homebuilders?
Why don't you just fuck off with your bullshit lies!
It's all wall street banks and investment banks fault.
blame homebuilders?
Why don't you just fuck off with your bullshit lies!
It's all wall street banks and investment banks fault.
Quote from newwurldmn:
Fanews, you mentioned several other people who were also to blame in your own post.
From credit agencies to people who were being financially irresponsible to investors who weren't doing their own homework to banks that were engaged in some shady dealings.
A lot of the country is to blame.
I forgot to mention the home builders who started building thousands of homes in the hopes of selling them leading to an oversupply.
I forgot that the TLC channel deserves some blame for producing a show called "Flip this house" where viewers saw some bozo buy a perfectly good home, add a granite countertop, Viking stoves, and paint some walls and then sell it for 50% more.
They made it look so easy to make so much money.
They made it look so easy to make so much money.
Quote from newwurldmn:
Trefoil,
Solomon Brothers created the whole securitization market in the 80's and they were an investment bank then.
As far as commercial banks selling off their mortgages, it probably created a moral hazard as it wasn't the bank's risk. That notion of the moral hazard is part of a larger debate as to the many factors that created the real estate bubble and the eventual pop. And that moral hazard was in place for many participants in the market from banks to hedge funds to greedy mortgage brokers to house owners and speculators.
Another point to how the scale helps, most bank trading desks produced record earnings in 2008. However this was all offset by the losses in the mortgage desks. And for firms like JPMorgan the deposit base was so important. That's why investment banks like goldman, morgan, etc were offering CD's at 9%. They needed funding.
I do not think that the repeal Glass-Stegal was one of the factors that created the financial crisis. I think the talk about it is political rhetoric to push blame onto one bad
Allow me to quote myself in full, instead of being misquoted as I was by you:
Quote from trefoil:
The investment banks that went bust were able to issue mortgages only because of the repeal of Glass-Steagall. Had that been in place, they would only have been involved in the underwriting and sale of stocks, bonds, etc.
The banks, in the meantime, were prohibited from underwriting the sale of stocks, bonds, etc, which would have meant they would have been unable to try to securitize and sell off the mortgages on their books.
So, there was more to it than that table shows.
The first sentence doesn't say the ib's, like Salomon (which of course became part of Citigroup so it didn't go bust; it was bailed out) went bust because of securitization; it says they went bust because "they were able to issue mortgages". That activity was directly prohibited by Glass-Steagall to ib's.
What made the financial crisis truly breathtaking was that the same folks who could securitize the mortgages were also issuing them. That was true, after the repeal of Glass-Steagall, of the ib's and the cb's. It was like going from a propellor plane to flying an X-15. Pilots fly both, but the skills needed to fly the former are an order of magnitude less than the skills needed to fly the latter.
To be clear: what it meant was that the banks could make a loan to some schlub with nothing but the clothes on his back, and then package it up, get the rating agencies to bless that package with a AAA rating, and then sell it off to some sap (disproportionately, the sap on the other side was a German bank, which explains why Germany keeps trying so desperately from letting any sovereigns go bust; it'd mean their banks, already shaky, would have to recognize still more losses, which might mean Germany might be revealed to be not much better than Ireland or Spain in its fiscal position) with more greed than common sense.
It's not a coincidence at all that this happened less than a decade after Glass-Steagall was repealed.
Quote from newwurldmn:
I think blaming everything on the wall street banks is simplistic. There were many hands in the cookie jar.
Are you saying Fannie and Freddie didn't do anything wrong using their ACTUAL government issued put?
Are you saying that the government wasn't to blame for their lack of oversight on Fannie and Freddie?
What about the individuals who used their houses at ATM machines to buy ipods and BMWs?
What about the mortgage brokers and real estate agents who got their cut everytime a house was flipped?
What about the growing wealth in other parts of the world who couldn't get enough of these mortgage bonds?
What about Hank Paulson for arbitrarily protecting one bank and letting another one fail?
What about the hedgefunds that were buying all these securities?
Bank trading desks are like Proctor and Gamble. They create a product and try to get people to buy it. People then decide if they want to buy it. If people didn't want to buy houses and if investors didn't want mortgage backed bonds and if the government didn't have it's own social agenda to promote home ownership this wouldn't have happend.
while others were complicit...
I see the question like this... the banks asked americans who wants free money?
... we will give you free money and we pretend we are giving you the free money at market rates but we are really just pissing away our future investors money and the tax payers money. Will sell it to you at 95 cents on the dollar since we have to pay mortgage brokers to pretend the borrowers can pay it back.
then we will take our cut, pay warren buffets company to call it AAA and then sell a pile of IOUS and overvalued assets to our pension fund buddies and state employees at seriously inflated prices.
We will also get the chinese to buy 1.5 trillion of it because the fed will just switch it out to bonds for the later. (we do after all own the FED)
we will get others to buy the stuff by spending crazy cash on the buy side buyers and then promising then crazy jobs on the sell side once they screw their fund investors out of billions by buying this crap.
and then when the house of cards collapses we help our buddies from harvard biz school fleece the few remaining idiots out of billions by pretending he did not hand pick the shit he was shorting. I am speculating here but Of course our brother in law has large positions in our buddies fund and his ventures just may have been funded by our bonuses.
Then when we are just about toast.
We will call our other buddy with the same last name as hedge fund buddy and ask him to get congress to bail us out so we can still get our bonuses.
Quote from trefoil:
Allow me to quote myself in full, instead of being misquoted as I was by you:
The first sentence doesn't say the ib's, like Salomon (which of course became part of Citigroup so it didn't go bust; it was bailed out) went bust because of securitization; it says they went bust because "they were able to issue mortgages". That activity was directly prohibited by Glass-Steagall to ib's.
What made the financial crisis truly breathtaking was that the same folks who could securitize the mortgages were also issuing them. That was true, after the repeal of Glass-Steagall, of the ib's and the cb's. It was like going from a propellor plane to flying an X-15. Pilots fly both, but the skills needed to fly the former are an order of magnitude less than the skills needed to fly the latter.
To be clear: what it meant was that the banks could make a loan to some schlub with nothing but the clothes on his back, and then package it up, get the rating agencies to bless that package with a AAA rating, and then sell it off to some sap (disproportionately, the sap on the other side was a German bank, which explains why Germany keeps trying so desperately from letting any sovereigns go bust; it'd mean their banks, already shaky, would have to recognize still more losses, which might mean Germany might be revealed to be not much better than Ireland or Spain in its fiscal position) with more greed than common sense.
It's not a coincidence at all that this happened less than a decade after Glass-Steagall was repealed.
I didn't know that you could get a mortgage from Goldman Sachs. I agree with your sentiment about the risk being cut up. I'm just saying that the banks weren't the only ones at fault. There were a lot of complicit people involved in that process.
Starting with the homeowner who assumed he could pay back his mortgage on real estate appreciation (levered infinity to zero), to the mortgage underwriter who had no skin in the game because he knew he could flip the mortgage to the end user in Germany who was estatic that he could borrow at 1% and buy these mortgage backs that were yielding anywhere from 5% to 30% based on the tranche he bought and he levered up 50:1 (DB's leverage ratio in 2008 was 50:1, lehmans was 30:1). And the rating agencies allowed the German bank employees to justify the risk.
Everywhere there was leverage on leverage on leverage. The banks while complicit weren't the only ones to blame.
Securitization has been around for 30 years. Savings and Loans were securitzing loans as were Fannie and Freddie. Perhaps mortgages shouldn't be allowed to trade at all. Mortgage rates will be a lot higher and property prices a lot lower but maybe that is a desirable outcome.