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80 Comments
- paintgrl, on 09/27/2008, -1/+54How is it these people don't know that if you let any financial group regulate itself it will become greedy and corrupt with power. I can only assume they forgot the stock market crash of 29.
FTA:
Also Friday, the S.E.C.’s inspector general released a report strongly criticizing the agency’s performance in monitoring Bear Stearns before it collapsed in March. Christopher Cox, the commission chairman, said he agreed that the oversight program was “fundamentally flawed from the beginning.”
“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement. The program “was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily. The fact that investment bank holding companies could withdraw from this voluntary supervision at their discretion diminished the perceived mandate” of the program, and “weakened its effectiveness,” he added. - niradg, on 09/27/2008, -4/+45"Voluntary supervision." I LOLed, but it is truly sad. Republicans have turned this country into a banana republic.
- inactive, on 09/27/2008, -1/+11So why are we not firing all the heads at the SEC?
- afx1, on 09/27/2008, -1/+9now replace it with midgets and it becomes even crazier
- inactive, on 09/27/2008, -5/+12isn't it mindblowing how after all we've been thru there are still ppl willing to vote for mccain? this country is full of "morans" with no brains.
pic related: http://memewatch.com/thelist/archives/pix/morans.j ... - digitalhair, on 09/27/2008, -1/+8How will the people that got us into this mess resolve this???
I seem to recall a proposed 700 billion dollar bailout package (aka solution) with a clause stating that treasury secretary Paulson would not be subjected to any kind of oversight whatsoever... how ironic... - DiggzDE, on 09/27/2008, -3/+8Most people on Digg don't have the financial or economic knowledge to even begin to offer their input on a structurally sound plan to get over this. Asking the Digg community to provide "ongoing recommendations" on how to overhaul the system is like asking Digg to give you instructions on how to defuse a bomb. Most will google "financial overhaul" and quote random crap they've read or heard online while putting a few pieces of their actual 2 cents in on the matter. The end result is you being vaporized as the entire bomb blows up in your face.
Seriously, a ridiculously stupid idea. And I don't care if people digg me down for saying it because it is true. Digg is a community of (mainly) young[er], tech oriented people with little real experience in the financial sector of our country. I can guarantee half of them don't even know all of the duties of the SEC, yet alone how to fix issues relating to the lack of proper underwriting or oversight on home mortgages and loans. Honestly, to fix an issue with this, you'd need to have at least taken a few college courses on finance, economics, and the real estate market, or been involved in those sectors for a few years, minimum, so you could have the BASIC knowledge on possible ways to fix this. And most of digg does not have that experience or even close to it. - statrick, on 09/27/2008, -1/+6and you're both stupid for thinking Washington republican and democrats are two different things.
they both have to answer to the same masters - LilRabbitFooFoo, on 09/28/2008, -0/+5I think, very simply put, we just don't believe anything Bush or any of these people say anymore.
We've been lied to about EVERYTHING for 8 years. They've used FEAR of everything to manipulate us and graft trillions of dollars into their pockets and those of their friends. So, now, at this point, they should not be surprised that the American people are tired of hearing obscenely wealthy Fat Cats cry wolf.
These bankers have pocketed these profits, either in cash, or in stock values. They need to eat these losses one way or another. That is the CAPITALIST system. You keep the PROFITS. You eat the LOSSES.
And if that means some of the people who were made millionaires by this artificial scam mortgage boom aren't millionaires after this bubble bursts...so be it. Welcome to OUR world. Yeah, the one where we are all renting where we live, conserving gasoline like it was gold, and can't afford to see a doctor.
Bankers will get no tears from me. And no bailout. - teddarling, on 09/27/2008, -0/+5I don't see the government bailing out small business when they run into hard times. I don't see them bailing out car buyers that can't pay for their car loan, or bailing out people that can't pay on student loans. So why should the government bail out the idiots that can't manage their risks? Becuase they're the ones with the deep pockets that fund the politicians campaigns.
I say let it all go to hell and be a lesson to the world that allowing big business to run around to do whatever they want is cause for future panic. Instead of bailing these companies out, maybe they need to be putting people in prison like the WorldCom and other incidents. Hold these people accountable.
Of course, if you hold stocks in big companies such as these, then it is your duty to vote for the people that you want to run your board of directors. If you aren't doing that, then you are as much to blame when the boards and their CEO's screw up.
Maybe it's time to stop paying stock options to your CEOs and reducing salaries. We can see that these million dollar a year salaries and bonus' do no good in ensuring that a company is well run. - SpinningHead, on 09/28/2008, -0/+5I think we should get rid of all police and trust everyone to simply oversee themselves. What could go wrong?
- inhaler, on 09/27/2008, -1/+6I think your step one needs some revision. It's hard to turn down money when you have the mortgage lenders winking at you and reassuring you that you can just refinance and pay it all back. Fault rests on those who could have said "no - you still don't qualify".
- cheesegypsy, on 09/27/2008, -5/+9There were no WMD's and deregulation turned out to be a crock of *****, therefore we should let McCain be president.
Voluntary supervision is what my six-year-old would like so he could eat a pound of chocolate and turn the house into a prehistoric funhouse. Doesn't work for him and it doesn't work for those greedy bastards who got us into the mess.
I hear the right chiming in again on "personal responsibility," about how those people who couldn't afford the payments shouldn't have gotten the house in the first place. It was George Bush promoting the ownership society, and since we no longer have the engine of industry to pull our economy along it left us with only the creation of fictitious wealth and the shuffling of balls hidden under shells. We needed people building and buying houses to keep the economy moving since all of them can't be employed at Wal-Mart and Starbucks. If they were running this scam on the street they would have been arrested.
We have allowed the greedy to pick the low hanging fruit of the poor and middle class for too long now, leaving consumers in the lurch and in debt up to their eyeballs. I met a woman who worked for the ad agency of Donny Deutsch and asked her if she ever felt guilty about creating desire for things that people don't know they need until she convinces them that they do. Frighteningly she had never thought of the consequences of her ads as she paused for about thirty seconds and told me as much. Our country is in a serious ethical lapse right now and I can only hope this economic crisis is a wake-up call. - Stormwern, on 09/27/2008, -0/+4I do think Digg is smarter than the average population, but most don't have a degree in economics, so I think just explaining the problem in simple terms is a far enough goal.
Banks started selling morguages to low income households using shady contracts including lower rates the first few years. These loans were so popular with customers that banks started selling the debt on to other banks. including foreign ones, allowing them to lend even more.
Some years later, because of the prise inflation, job losses and morguages shifting to higher rates, millions of people were suddenly unable to make their morguage payments. That ofc ment the banks' cash flow were interupted, so they were forced to drive people out of their homes to try to sell them to get some income, but since so many houses were put on the market at once the prices plummeted and the only collateral the banks had to fall back on became worthless.
What the government is doing now is handing out money to the banks in return for the debt of everyone who couldn't pay their debts, meaning if they get a lower rate they might be able to pay the money back to the government in 50 years, unless ofc they will or already have declared bankruptcy, in which case we can kiss the money goodbye. - Infidelcastr0, on 09/27/2008, -0/+4They know it doesn't work, they are counting on it. When you make policy you can set up your investments to profit off of the inevitable outcome of the policy, inside information. Take Dick Cheney for instance, he set up his portfolio to do well in an economic collapse situation, to say nothing of the war profiteering. I doubt seriously that anyone on capitol hill is dumb enough buy into that Reaganomics BS, but they know it can make them rich.
- DiggzDE, on 09/28/2008, -0/+4That is like saying drug smugglers aren't to blame for the high price of illegal narcotics. That they only took advantage of the opportunity to make big money and the fact that they are inflating the price of their product because of high demand and low supply has nothing to do with it.
In a perfect world you may be able to say that it wasn't the individuals fault, it was the system's fault for allowing them to do it, but we aren't in a perfect world. Everyone is to blame for their own personal actions. And that includes the flippers. They got into the business specifically because they saw an opportunity to exploit a system that was in need of some sort of additional control. As a result, they ended up causing their own problems because of it.
The price inflation of homes was caused specifically by high demand for housing at the time. Flippers increased that demand as well as the prices by taking some of the supply out of the main market and using it to their own advantage. It isn't wrong per say, but to push the blame entirely off of them isn't correct. It had an affect on the housing market and helped lead to where we are today with the economy. (Whats really sad is even Bush knows this as he stated to that fact in his own address to the nation about the economic crisis).
I guess we know at least one person on the planet stupider then Bush.
I think you need to learn some more about the economy before you start spewing your crap. Even using basic high school education level "supply and demand" makes it clear that your statement is wrong. Which is really sad. - jboom65, on 09/27/2008, -0/+3So...they were under voluntary supervision - that's the reason. If you have the time check this presentation out:
http://www.businessjive.com/
It will give you a idea of how f'd up the system is... - McMahon9, on 09/28/2008, -0/+3Your two cents was more like 20 bucks
- inactive, on 09/27/2008, -4/+7Are you serious? Can you not see that by allowing financial companies to do whatever they want to maximise their own profits (including give mortgages to people they KNEW could not repay them) we not just allowed this to happen, but actively encouraged it?
If you allow an institution free reign to do anything it feels it can get away with to maximise profits, it is just common sense that it will do anything it can get away with to maximise profits.
How can you possibly STILL defend this crap?
With the ***** that is happening RIGHT NOW, you still claim deregulation is not to blame? Really???
REALLY??? - DiggzDE, on 09/27/2008, -2/+5No *****, Sherlock!
- trer, on 09/27/2008, -1/+4Most people who ***** up this majorly on the job are fired.
- jodimcmullen, on 09/27/2008, -2/+5It's the reality of our situation, readable and from an impecible source:
http://www.truthout.org/092508F - dialectical, on 09/27/2008, -1/+4You are missing the price equilibrium problem on ALL stocks due to corruption at the DTCC. It IS the problem.
- NSResponder, on 09/28/2008, -0/+3"He forced regulation down Wall Street’s throat because their “self-regulation” obviously caused the financial collapse. "
Well, that's the propaganda line, anyhow.
The stock bubble in the 1920s was fueled by cheap credit issued by the Federal Reserve banks. Bernanke has even admitted that the fed was responsible for the great depression.
-jcr - AgmLauncher, on 09/27/2008, -2/+5You do realize that it's the Democrats' asinine ideals of a utopia where the government provides for everyone that got us into this mess in the first place, don't you?
Do some fact checking
http://en.wikipedia.org/wiki/Community_Reinvestmen ...
Basically, Clinton and the democrats said Fannie Mae and Freddie Mac were LEGALLY OBLIGATED to give out loans to people who couldn't afford them, or who were financially irresponsible.
Now look where we are. Thanks Democrats! Keep on trying to provide for the poor and create your state-controlled utopia. It worked for Soviet Russia so why not......oh wait...
Oh and btw, in 2003, Bush (yes, imagine that, BUSH) decided that Fannie and Freddie needed more regulation. Don't you DARE blame Republicans for this mess. The Democrats are the ones responsible ;) - Infidelcastr0, on 09/27/2008, -0/+3NO, the CRA is not to blame for this. Most of the bad loans occurred in '05-'06, many of them not CRA related. Mortgage brokers were scraping the bottom of a tapped out barrel at the height of a speculative bubble. Furthermore the problem was severely compounded by the unregulated market for mortgage-backed debt securities, such as credit default swaps, which was a retarded idea to begin with, courtesy of Phil Gramm.
Also in 2007 the SEC, in typical republican rubber stamp fashion, removed the uptick rule, which prevented shorting on a down-tick. This rule has existed since the depression and prevents short attacks to drive a stock down. Since then, subprime-exposed financial institutions, such as Bear, Lehman, AIG, WAMU, Merrill, etc, have been relentlessly attacked by shorts, which hurts their ability to raise capital, which is exactly what they needed to do in order to deal with their balance sheet problems.
In addition, many of the mortgages are not necessarily going to default, but because of all that has happened, nobody wants to touch them, which is why the treasury wants to step in and buy all these undesirable securities. Lastly a lot of idiots took out credit they couldn't afford, they share the blame. - mshtml, on 09/27/2008, -2/+5Translation: More government control is needed to fix the government ***** ups. The new control will lead to even greater government ***** ups with more controls imposed in the future.
- craighoxton, on 09/27/2008, -0/+3Most financial regulatory bodies couldn't get laid in a whorehouse. Who regulates the regulators? Why it's one big circle-jerk.
- govsucks, on 09/28/2008, -0/+3A stack overflow exception has occured with your pathetic collective.
Would you like to:
A) Ignore B) Report to Microsoft C) Allow Government to ***** you AGAIN D) Return to our founding principles and be not only FREE but responsible for you own actions and failures.
D...enter. - NSResponder, on 09/28/2008, -0/+3The fed is the perp. The perp had many accomplices, but the fed is still the perp.
-jcr - inactive, on 09/27/2008, -2/+5you miss the point, ralphodag. They gave the mortgages, and then sold them off in packages to other financial institutions, thus passing off all risk, for maximum profit.
This is the whole problem now. No-one knows who has these 'black hole' packages, so no institution is willing to loan to any other institution, so the whole bubble collapses.
This is the whole point of the mess we are in now. Does no-one bother to actually watch/read the news any more?
Christ, no wonder we're so *****. - oldgal, on 09/28/2008, -0/+2You forgot the part about the Fed keeping interest rates low out of fear of inflation. If they had not done this interest rates would have gone up, and housing prices would have stabilized or gone down a bit and the money would not have been there to lend. The whole thing is a synergistic cluster thingie based on greed, stupidity, poor to criminal business practices, abdication of fiduciary responsibility by mortgagees, mortgagors, rating agencies, government agencies, John Q, public, congress, financial institutions...ad nauseum.
- thepoliticalcat, on 09/28/2008, -0/+2I believe that it is rapidly becoming apparent that, in addition to failing to inform borrowers of the possible maximum payments on their home loans, lenders, realtors, and other workers in the housing sector employed a series of unethical and often illegal practices, including overvaluing property prices, devising and marketing complicated financial instruments to borrowers and pressuring often ill-informed borrowers into accepting ludicrous terms. As a person who has been subjected to such, I count myself fortunate in that my parents raised some mighty cynical children. Had I been a mite more trusting or less cynical, I might be one of those unfortunate homeowners today. Meanwhile, please note that CEO compensation rises every year and CEOs are accountable to no one, filling the boards of the companies that they run with friends and acquaintances who owe them favours. All oversight is removed, remuneration is not tied to performance, and when the inevitable collapse occurs, we all rush to blame the poor schnook who didn't know what that 45-page document in three-point type was saying because three people who stood to gain money off his/her signature were breathing down his/her neck with comments like, "I'm sorry, Mr./Ms. Schnook, that offer is not available after 5 pm today. Tomorrow's rates are expected to be higher."
- Richandler, on 09/28/2008, -0/+2Prescribing drugs for the pain doesn't cure the disease.
- inactive, on 09/27/2008, -1/+3So the American taxpayer will now give $700 Billion to a private entity with no public input, debate or oversight and people think that this will fix the economy. Wow, one week of work from Congress, one bill, and $700 Billion will completely fix the U.S. economy over night. Riiiiight.
You people need to look at the past bailouts and so called loans to private corporations and see how much we got back out of that? If you look at history, those bailouts and "loans" cost more than the original price tag and we were lucky if 50% of it was paid back and it solved nothing because the Big Three Automakers are still in trouble and the banks are still in trouble. - jackhowitzer, on 09/27/2008, -1/+3So..lack of oversight contributes to collapse, so lets give them tons of taxpayer money to bailout...with NO oversight! Grade A plan.
- kephas, on 09/28/2008, -0/+2Perhaps it's just the part of Hawaii where you live, but Hawaii as a whole seems to be very pro-Obama. From all the polls I've seen, Hawaii is strongly on Obama's side:
http://www.americanresearchgroup.com/pres2008/HI08 ...
http://www.electoral-vote.com/evp2008/Pres/Graphs/ ...
And the McSame/Tranny sticker is a bad idea... stooping to their level and all that junk. - ufoninja, on 09/28/2008, -0/+1yes the CRA enacted in 1977 is responsible for housing bubble in 2007-8. makes perfect sense! ... or you are repeating the lame fox news talking point of the day.
show me the numbers bee-yoch! how many defaulted loans were granted by this CRA? huh? what percentage?
[citation needed] - ATCclears, on 09/28/2008, -0/+1Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 700 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson - thepoliticalcat, on 09/28/2008, -0/+1Diggzde, you don't know what you're talking about, sad to say. You seem to subscribe to the notion that the majority of computer users/internet users are 20-somethings. Yet, if you look at the research, the majority is actually largely composed of 40-60-somethings. Not exactly your low-income untutored inexperienced demographic, yes?
In addition you ought to, perhaps, read a little more Nouriel Roubini and a fewer WSJ/conservative think-tank "scholars." You might find that you're basing your opinions on things you learned in college some decades ago that have since been superseded by new theories and statistics and information. In addition there are some interesting theories currently being tested about the common wisdom and the wisdom of groups as enabled by Web-2.0 networking/sharing. - oldgal, on 09/28/2008, -0/+1Crisis Management 101 (over simplified):
1) Scope the problem - make sure the problem is understood, not just the symptoms. In medical terms this means find out what is bleeding and if that is the problem or merely a synptom.
2) Stop or circumvent the immediate problem - don't let the problem get worse. In medical terms it means apply a tourniquet and stop the bleeding. In terms of this situation it means stop making high risk loans (it sounds like this is happening accidentally because there is no money left to lend). Stop bundling loans into securities because we obviously have no way of rating the risk (I think this is still happening because I am being inundated with reverse mortgage come-ons). It also could mean stop allowing foreclosures (moratorium with an automatic reset of variable loan rates to last reset or origination rate)
3) Clean up the current situation - mop up the blood off the kitchen floor. The bail outs to date fall in this phase.
4) Formulate and implement a long-term fix - do the necessary surgery. In this case it means take the necessary steps to insure this doesn't happen again, all the while identifying potential unintended consequences and eliminating or mitigating them.
5) Hold a post-mortem to identify actions that could have been taken to arrive at a more satisfactory or earlier resolution.
6) Prosecute the innocent and promote the guilty (it is after all the corporate way)
For the current problem I think we started in step 3 and are still in step 3 (with maybe a little step 6 thrown in for good measure) - I am not an economics expert, so hopefully I am wrong. Skipping steps 1 and 2 generally leads to unanticipated unintended consequences in steps 4-6. - mountainweb, on 09/29/2008, -0/+1"voluntary supervision program", yeah right, a crook is going to tell you before he robs the bank which will then discourage him from robbing the bank! Only slightly more intelligent than trying to blame in on McCain but not much.....
- govsucks, on 09/28/2008, -0/+1Wow, what a surprise, the government doesn't think it has enough control. The government not only encouraged these loans it COERCED them. Now people here on Digg are gonna cheer when the very people who caused the problems tell you they are gonna fix it if they just have more power. Are you people are just dying to be lemmings or what? I can push you around and take your ***** all ***** day just like government, common over you collectivist idiots.
- lofispy, on 09/28/2008, -0/+1I find it funny that all the same people here who are the first to scream about how corrupt the government is can within 5 minutes turn around and truly believe the same government can regulate the free market and handle our health care. So, which is it? Are they corrupt, or are they your fuzzy teddy bear who will keep those scary boogie men on Wall St. from eating you in your bed? Does anyone else not see this? How can you expect the same government who has monumentally ***** up everything its ever touched to handle these task? Maybe if instead of expecting the government to tuck you in at night and make it so you never have to think for yourself, we can acknowledge that is was as much the fault of uneducated consumers and people looking to keep up with the Jones' despite the fact they had no money as it was the financial sectors fault. Because after all, just like democracy, for a true free market to work the people have to be smart enough to vote with their heads and pocketbooks instead of falling for every snake-oil salesmen that comes to town. In fact, while I am certainly not recusing Wall St. for its incessant greed, but you could make the argument that that greed was fueled by the greed of the people at large, which in turn led to downward spiral where both sides of the coin played equal roles in whats happening. But instead, as usual, the second something bad happens, nobody wants to look at their own actions as being part of the problem, they just want to blame the most convenient party around and pretend like their angels....so yes, lack of oversight was definitely one of the factors of all this, but that doesn't necessarily mean the concept of the free market is flawed. Because quite frankly, free markets and democracy walk hand in hand, to attack one is to attack the other, like it or not. But then again, not that any of you care, I truly believe if Digg represented this country as a whole we would be a socialist state in a minute....not that there's anything wrong with that...but thats not what made this country great, just because our politicians have twisted the meanings of capitalism and democracy to benefit their rich buddies doesn't mean that the original context of these ideas weren't the greatest things man has ever enacted politically. So instead of screaming for more regulations and governmental instrusion into out lives...just maybe we should be looking at how to return to the original ideas of our forefathers....just a thought...
- p9s50W5k4GUD2c6, on 09/28/2008, -1/+2I don;t disagree that this crisis (the result of a series of problems) is complex.
But there are some exceedingly experienced and insightful individuals on Digg. When viewing this issue from an ITinformation management perspective, this community is as good as any.
Have you been hearing any better solutions the the root cause of this problem. All I hear from the government and the media is rampant confusion. - MelvinSchlubman, on 09/27/2008, -3/+4The phrase "voluntary regulation", when used by gov't officials, should legally be required to be written as "voluntary regulation (wink, wink)".
- DiggzDE, on 09/28/2008, -2/+3Luckily for you randumbusername, I am not working in the financial sector but rather the legal sector. I just happened to have plenty of financial training since in college most basic business law majors lie within the realm of FRL (Finance, Real Estate, and Law). So anyone getting involved in any of those career tracks will get a nice mixture of education on all three. As it is, you are wrong with the need for the government to "prop" up any bit of the financial sector. The government's job is supposed to only be supervision. Massive direct financial influence should only be a last resort. Talk about blowing ***** out of your ass, you are far from right in any way. I bet you were one of those people who actually thought Fannie and Freddie was run by the Federal Government.
As it stands, you would be no where without people in financial or legal positions. Without it you wouldn't have a working economy, you wouldn't even know how to properly file your taxes (assuming you aren't a low income jackass who makes less than 13k a year and only needs to fill out a few lines, which you probably are) and you wouldn't know how to properly represent yourself or deal with any legal issues without our help. All that information that you may think you can just google off the internet had to have been made somewhere and at some time by people with financial or legal schooling.
randumbusername is exactly the kind of person who if left with any real say in how the country or our economy is run, would end up ruining the rest of it for everyone else. Always thinking he knows more than others even when the proof is right there in front of him that he doesn't. Ignorance is bliss only when it's effects aren't pushed onto others. - NSResponder, on 09/28/2008, -0/+1"I don't see the government bailing out small business when they run into hard times. "
More than that, government puts up significant barriers to starting small businesses, and regulations on any line of work always favor the biggest companies in the market.
Consider for a moment, why it's not feasible to issue stock to start up a restaurant or a bowling alley. The cost of complying with the SEC registration requirements make it pointless to offer shares to the public unless you're trying to raise tens of millions of dollars.
-jcr -
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