JayJay
383
Deregulation was a major major cause.
Breaking the wall between regular banking and investment banking to begin with.
Ratings agencies not being held accountable to properly assign risk.
Banks’ reserve requirements loosened so MBS could count as reserves because they were supposedly “as safe as cash”.
SEC and other regulatory agencies being defunded or looking the other way.
Jezcoe
384
The meddling that the government did was deregulate starting in the Clinton Administration.
Yes, the government allowed this happen, not because of anything that they did per se, but by getting out of the way.
Why does it not surprise me that you would point to less government as the cause? 
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WuWei
386
That would be unmeddling.
WuWei
387
What was never regulated never needs to be deregulated. You are using a circular argument.
Deregulation proves regulation.
Jezcoe
388
Because deregulation was one of the major causes of the Financial Crisis.
If the market was well regulated, then how in the world would AIG have been able to make a security based from money that they were getting from the payments on the Credit Default Swaps that they sold to people that were betting that the housing market was going to fail?
You do know that AIG getting caught with it’s pants down was one of the major factors that seized up the global credit market… right?
The gov’t didn’t shutdown the economy causing the great depression.
No kidding, who’s arguing to the contrary?
What does that have to do with the situation today exactly?
The GP has nothing at all in common with what happened in this instance. Lame deflection.
IG’s only investigate following a report, they can’t prevent bad acts to start with.
There is oversight here which is how the bad actors are being identified.
He’s been making the same or similar declarations now during every crisis we’ve had for two decades.
He’s proving the stopped clock analogy isn’t always true. 
Actually less government meddling wasn’t responsible; quite the opposite.
Jezcoe
396
How so?
Fannie? Freddy? The CRA?
None of what they did brought a seizure to the global credit market.
if you look at most of the major depressions in this country, most of which happened in pre fed days it was a lack of regulation that was a major cause
They were responsible for the toxic mortgage bundles that could no longer be valued which caused the collapse of the banking system.
That was strictly due to the reduced lending criteria by those entities creating millions of sub prime mortgages that were bundled together.
Banks had used those bundles as secured capital assets for decades under FDIC regulations and when FDIC could no longer value them they had to close the banks because that started a panic in the hole mortgage and banking industry and nobody would even buy them so the banks could convert them to cash.
2 Likes
Jezcoe
399
No… actually they weren’t.
The toxic mortgage bundles that crashed the economy were made by and far in the private market.
Countrywide would basically give anyone a mortgage because they knew that they could sell it to Wall Street really easily.
Those bad mortgages existed because there was a demand for mortgages from Wall Street.
There were even hedge funds like Magnetar that put together mortgage based vehicles where they handpicked the assets in them knowing that the thing would fail. That way they got to make money selling the Asset and on the credit default swap when it failed.
As for the FDIC thing. That was the pickle.
Did the FDIC cover only the lending side of the bank or the investment side?
Thanks to Bill Clinton that got muddied back in the 90’s when he deregulated the banks.
So who IS reviewing loan applications etc. for conformance and necessity?
Absolutely dead wrong. Nobody was making high risk loans in the market except through Feddie an Fannie and FHLB.
Only those underwritten by gov’t under their relaxed lending rules were being made at all.
A conventional, non gov’t backed Mortgage always has much more stringent lending criteria.
You’re just making things up now.
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Irrelevant, the Fed’s set the qualifications and standards for those mortgages.
If you meet them the banks pretty well have no choice but to write it or get sued for discriminatory lending.
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