Extreme Greed Was The Driving Force
The News Tribune reports from Washington. “Against the backdrop of tough hearings on the collapse of Washington Mutual in the largest bank failure in U.S. history, Sen. Maria Cantwell says there are signs that Congress and the Obama administration may finally be getting serious about Wall Street reforms. The Washington state Democrat’s comments came as the Capitol Hill fight over an overhaul of financial system regulations heated up with Democratic congressional leaders and the White House saying they were prepared to act with or without Republican support.”
“For months, Cantwell has been pressing to include stringent regulation of the currently unregulated $600 trillion derivatives markets. Cantwell has called the trading in derivatives ‘casino capitalism’ and warned it could lead to another economic bubble that will burst unless reined in. The hearings on Washington Mutual were timed to put pressure on Congress to act on a financial regulations overhaul. The hearings offered an inside look at a 118-year-old Seattle-based thrift that jettisoned its ‘plain vanilla’ approach to home mortgages for a high-flying ‘higher risk lending strategy,’ which produced shaky mortgages that were fed into the financial system like a ‘polluter dumping toxic substances into a river.’”
“Though senior management was aware of the problems, it did not to stop them and, in fact, offered incentives to loan officers who increased their volumes, said Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee of Investigations. At the same time, WaMu was packaging its risky mortgages and offering them to Wall Street investment firms, who in turn offered them to investors. The investment firms were also playing the derivatives markets with their mortgage securities. ‘Mortgages began to be produced for Wall Street rather than Main Street,’ Levin said, adding that WaMu and other lenders created a ‘mortgage time bomb.’”
“Last week’s hearing was just the first as the investigations subcommittee will look at the role of the regulators and rating agencies in the WaMu collapse. ‘It was a man-made economic assault,’ Levin said. ‘People did it. Extreme greed was the driving force. And it will happen again unless we change the rules.’”
“Without the changes, Cantwell said another financial crisis could loom. ‘Who knows what the next thing is they will cook up?’ Cantwell said of Wall Street.”
The Idaho Statesman. “The number of Idaho homes repossessed, the final stage of the foreclosure process, reached 1,234 during the quarter. In the same quarter of 2009, 198 homes were repossessed. Foreclosures have been suppressed over the past year by government and industry mortgage relief programs to save keep people in their homes. But as those efforts have faltered, more borrowers are expected to lose their homes through foreclosure or short sales.”
“Locally, 1 in 11 mortgages is 90 days or more delinquent.”
The Jackson Hole News & Guide in Wyoming. “Teton County property owners got good and bad news this week. The good news: Property tax estimates are going down. The bad news: Taxes are going down because real estate prices decreased in Jackson Hole in 2009, with some declines hitting more than 30 percent.”
“Most of the 12,000 notices told owners their property is worth only about what it would have fetched in 2006 or 2007. That’s a far cry from just three years ago, when double-digit increases pinched many property owners and sent tax bills soaring. ‘Assessed value went down for most people,’ Assessor Cathy Toolson said. ‘Condos probably went down the most. From what I’m seeing, it’s down to just about 2007 assessed valued, which reflects sales from 2006. I would say it’s the 2006 market.’”
“For example, a home in Polo Ranches was valued at $861,158 in 2006 and peaked at more than $1.1 million in 2008. In 2010, the assessor valued it at $863,795. Similarly, a Jackson condo was valued at $439,463 in 2006 and hit its peak valuation at $651,745 in 2008. The assessor valued it at $463,526 for 2010.”
“Some of the biggest surprises for Toolson were assessments on property in Rafter J and Cottonwood. ‘I think they’ve gone up every year consistently,’ Toolson said of the two neighborhoods that house primarily valley workers and families. ‘This year, in one year, it just went back down. It was surprising because those are the areas that have gotten an increase every year for the past several years.’”
The Mail Tribune in Oregon. “In what could be a good sign for the local real estate market, the number of houses for sale in Jackson County on April 1 declined 8.3 percent from a year ago. ‘There was a fear that foreclosures and distressed properties — which remain a large part of the market — were coming on at a pace buyers couldn’t keep up with,’ said Colin Mullane, an agent in Ashland. ‘It’s nice to see that happening so that conventional sellers are making up about 50 percent of the houses for sale.’”
“The in-migration from California fueled much of the local housing boom up into 2006, but even though the Rogue Valley might be a desirable location financial conditions have changed. ‘We had an influx of people because of the relative affordability,’ Mullane said. ‘They could take the equity from their houses and say I can live in a house that’s just as nice in Ashland or Medford for half the cost. But now there’s not the confidence they can just leave their job in San Francisco when they are not sure they can find a job in Ashland or Medford.’”
“Home prices in Medford have dropped to prices not seen in nearly two decades, deflated by a sluggish economy and a high rate of foreclosures. ‘We haven’t seen this in years,’ said Jan Esquivel, a broker. She said she is working with two clients who are looking for something only in the sub-$90,000 range.”
“The downward trend in real estate prices isn’t confined to low-end houses. Esquivel said homes that were selling in the range of $160 to $180 per square foot range are now sometimes go for $80 to $85 a square foot.”
“For $43,300, you’d hardly expect to be able to buy a house. Paul Grout paid that much for a two-bedroom, one bath fixer-upper on Jeanette Drive in west Medford on April 8. Billie Cain, who lives next to the $43,300 house, said she wasn’t surprised to learn the house sold for so little. She pointed out that it isn’t the best neighborhood in the world, and the previous owners had difficulties. ‘I think it was that cheap because it was repossessed,’ said Cain.”
“Another house a few doors down is listed at $74,900. Even though Cain believes her own home is virtually valueless because of fire damage, she’s happy prices are going down because it will make houses more affordable for young families.”
The Gresham Outlook in Oregon. “This is a great time to buy a home. Really, it is. The recession has produced a slowdown in home sales, resulting in a glutted market and increasingly desperate sellers who are cutting their prices. Interest rates remain near historic lows and builders are offering incentives to potential buyers. And until the end of the month, the federal government is also offering tax credits to both first-time and repeat homebuyers.”
“Realtor Lyn Stevens, who has a Gresham Re/Max office, is seeing and hearing from a lot of first-time homebuyers trying to take advantage of the deal before it ends. ‘I’m seeing more of the first-time buyer,’ she says. ‘If you’re gonna do it, you need to do it now. The general feeling is they’re not going to extend it.’”
“Most of the activity she and fellow real estate agents are seeing is in houses of a certain value. ‘We see a lot of movement in a certain price range,’ she says. ‘There’s more movement with first-time buyers — more there than with houses at $250,000 and above. Those are taking awhile’ to sell. ‘The thing right now is there’s so many foreclosures and short sales (selling for less than what is owed on a mortgage),’ she adds. ‘And I don’t see the banks helping out much.’”
“A Regional MLS report from February indicates it would take, assuming no additional houses were listed, nearly 13 months to clear the current inventory in the Portland area at the current rate of sale. ‘New houses being built makes no sense at the moment,’ says Carter Hardenbergh, managing broker with Blue Bear Lending Company in Gresham. ‘There are more foreclosures coming.’”
“Hardenbergh says the idea that unqualified homebuyers should receive ‘help’ is at the root of the problem. ‘We had a boom. Now we’re having a bust,’ he says, matter-of-factly. ‘Tax credits and other government tweaks only delay the inevitable, he explains. ‘There are still too many people living in homes that should not be. The longer the government is involved, the longer it will take the marketplace to get to wherever the marketplace should be,’ he says. ‘The longer that takes, the longer it will take for a recovery to occur.’”
“Most of the 12,000 notices told owners their property was worth only about what it would have fetched in 2006 or 2007. That’s a far cry from just three years ago…”
Let’s see, this is 2010? Ha ha, the housing bubble and bust go so fast that we are seeing time dilation (as in the special theory of relativity).
Many cities are struggling now even though, because of the time lag for property re-assessments, properties are still 20% or more over valued. How did cities and towns survive before the bubble, and why didn’t they just continue what they were doing and create enormous reserves? It seems odd to me that they are in trouble because they are going back to normal after a decade of much higher than projected revenues. They should be in their prime. Imagine if they used all that extra revenue to pay off their debt, our streets really could be paved with gold (although the blood would give it a slightly reddish tint).
Here in Colorado TABOR has helped somewhat in that regard as taxes collected here have a ceiling that can only increase with inflation and population growth. In most cities and counties sales taxes were exempt (debruced) but the sales tax rate itself requires an election vote to be raised. This kept spending somewhat in check.
That said, there still is pain here, but not of the magnitude I read about in other places.
I couldn’t agree more, Natalie. City councils and county boards gave themselves and their employees raises and fat pensions. Now we’ll suffer as police and mental health workers will be laid off.
If you research the budgets you will find in all most ever case of troubles it is because of “high pension” fees that are now coming home to Reality. The US Post Office perhaps going to 5 days instead of 6 days delivery? You guess it. They are worried about now the pensions cost and how are they going to pay for it. California and New Jersey? You guessed Pension costs? Bingo. You were right!
Cal-PERS was superfunded until the stock market crashed in 2001. Then, they had a lot of their money in real estate and RE-related paper (MBS and derivatives).
It’s not just high pension guarantees that are the problem, but the fact that they had overly-optimistic assumptions about returns. In a way, one could argue that the Fed keeping rates artificially low for most of this decade is one of the biggest reasons pension funds are having problems. They couldn’t earn the projected returns without going into riskier investments (because interest rates were too low, and this forced them to chase yield).
In my neck of the woods, the only city employees who get pensions are cops and firefighters, everyone else gets a 401K type plan. Maybe that’s why the sky isn’t falling here. Yet.
why didn’t they just continue what they were doing and create enormous reserves?
Because some neocon politician would have run and won on a ‘return this money to the taxpayer’ platform. (Of course, he wouldn’t cut spending, just taxes.)
You are exactly right, alpha.
Govt entities have a difficult time no matter what they do. If they save a lot, then they “must be over-taxing us.” But if they spend everything during the good times, they will be blamed for not saving for more difficult times. It’s a lose-lose position for them.
Grants Pass, OR
Our city administration helped lead a recall of five of our reforming city councilors last year, and with the help of several pastors from the local liberal churches, managed to vote them out.
So now we have a newly elected city council
whom the city had hoped would be more compliant to their wishes.
Last week at the second of the orientation executive session for the council, the city manager suggested that they go ahead and sign
the new labor contract for the police and fire
union. One of the new councilors looked up and
said, “NO, I WILL READ IT FIRST”, and most of the new councilors concurred. They bucked the
city on several issues that the city had hoped they could slide through.
The city looked shocked when they found out
that had jumped from the pan into the fire.
Grants Pass is such a pretty part of Oregon.
Sounds like the unions wanted the council to “Bend-Oregon”
I wish they would just pave them, the ruts and potholes are the worst i have seen since living here, plus the trucks hit them at 30-mph, and bounce and the windows and doors are starting to shake…Tell me again where is that OhBAHmaa money for infrastructure going?
our streets really could be paved with gold
Here is what I see in Florida.
I think the Obama stimulus plan has already skim-surface repaved every Interstate, highway, and pig trail in the state. No real road improvements; just skim off the surface and put down a thin repavement with new line paint that looks good. Contractor welfare at it’s best!
Amazing what a little whitewash will do. Reminds me during election season in 2004 when they opened up the turnpikes for hurricane evacuation. Not saying that was a bad thing, but the timing was awfully convenient.
I like a good screed as much as anybody, but it’s not called “skimming” the roadway. What you saw was likely a grind and overlay. It’s something you do when the pavement structure on a roadway gets old, but the existing base is still working fine. First, about two inches of asphalt is ground out. This is the “wearing course”. Then you come back and add new asphalt, usually as much as you grind out, or sometimes a little more to make the road stronger.
It’s actually a much cheaper way to rehabilitate a road than tearing the whole thing out and starting over, which costs a fortune. Asphalt does wear out, like anything would that has several thousand loadings every day for 20 or 30 years.
In my neck of the Florida swamp, we’re getting the $20 million highway ‘flyover’ that somehow went from about #23 on the regional transportation planning authority’s priority list to being considered shovel-ready.
Being Florida, I’m sure there were some huge behind the scenes kickbacks from the remaining developers in the area involved.
Tell me again where is that OhBAHmaa money for infrastructure going?
————————————————-
would it be the ACORN slush fund?
“….why didn’t they create enormous reserves?”
Because the Republicans would say that an “enormous reserve” is a sign that people are paying too much in taxes.
Because the Democrats would spend it to grease their squeakiest wheels.
Logic would suggest that they have such reserves. That, and limit expenditures on infrastructure when they are in a seller’s market.
You would have more competitive bidding, get more for the taxpayer dollar when you aren’t paying premium prices for labor/materials, and you could keep people working.
This would require that politicians act like adults, and do a little long range planning. Neither of which I’ve seen much of lately.
Do you remember what the cities were like before the bubble? I do. I lived in SF, and NYC in the early 90s. They were completely different. The money was spent on bringing civilization to third world war zones.
“Let’s see, this is 2010? Ha ha, the housing bubble and bust go so fast that we are seeing time dilation (as in the special theory of relativity).”
A rudimentry understanding of The Theory of Relativity has become essential to all Real Estate agents.
Suppose that a RE agent locates a rare potential GF or FB. Then said potential GF or FB suddenly wises up and takes off at the Speed of Light.
The RE agent must know The Theory of Relativity to chase after said potential GF or FB and catch him. A good pair of running shoes is also helpful.
(PHYS 200 — Fundementals of Physics Yale: Professor Ramamaturi Shankar)
Thank you
mikey
I’m confused. Wasn’t pricing still close to the peak in 2006 anyway?
Exactly. These tax decreases are paltry at best.
“This is a great time to buy a home. Really, it is. … until the end of the month, the federal government is also offering tax credits …”
– Realtor Lyn Stevens
Really weally WEALLY! [stamps her foot three times and spins around with her eyes closed, then blows out candles on bday cake]
Because now is always the best time to buy. Suzanne researched this.
You do see the first three numbers of her office phone number?
This is what any clear thinking common sense person has known for years, which rules out gubmint meddlers right off the bat.
“Hardenbergh says the idea that unqualified homebuyers should receive ‘help’ is at the root of the problem. ‘We had a boom. Now we’re having a bust,’ he says, matter-of-factly. ‘Tax credits and other government tweaks only delay the inevitable, he explains. ‘There are still too many people living in homes that should not be. The longer the government is involved, the longer it will take the marketplace to get to wherever the marketplace should be,’ he says. ‘The longer that takes, the longer it will take for a recovery to occur.’”
“…which rules out gubmint meddlers right off the bat.”
Like Hitlery, for instance?
No, more like Johnny Isakson.
..Tax credits and other government tweaks only delay the inevitable..
well.. duh..
Did anyone foresee that tax credits and various govt support measures were inevitable?
“Did anyone foresee that tax credits and various govt support measures were inevitable?”
Not I. So far as I know, the all-out recent effort to prop up the U.S. housing market during the course of a real estate bust was historically unprecedented, suggesting its long term effect is unknown and unpredictable.
Do you have some evidence to the contrary?
me neither…
Some on the blog and in the news did predict a market bottom of as late as 2012, but i don’t recall anyone throwing govt support into the mix of reasons why.
This bubble’s collapse held few real surprises thus far.. one of them being government intervention.
It’s seems hardly more than an interesting detour in the expected path, but I can’t shake the feeling that govt intervention portends yet another unexpected turn…
Right here:
Comment by CA renter
2007-06-30 04:33:39
Would like to see another predictions thread.
I’ll stick with my prediction from last year…YOY housing prices, nationally, will be down 10-15% by Dec 2007. There will likely be some type of (failed) bailout attempt, which will stem the foreclosures temporarily. Recession by Dec 2007. Foreclosures rise into 2008 & national prices drop an additional 10-15% by late 2008.
The credit markets will likely be volatile & I believe there will be periods when it looks like everything will collapse, then suddenly all will seem well as more money is injected into the system (from???). Each time the credit spigot gets turned back on, though, the loose periods will be shorter and shallower than before, IMHO. Very slowly, liquidity will dry up, but it will probably take years to totally unwind.
The bottom arrives no sooner than 2010-2012, with an emphasis on 2012 (or later).
i guess a post got waylaid..
i replied no.. i know of nobody who predicted this turn of events.
It can’t be the only unexpected development in the pipeline and I wonder what related shoe is due to drop next.
I predict that the next big shoe to go thump will be CRE.
I am thinking along the lines of government intrusion into other markets for the sake of “insuring domestic tranquility” and to “promote the general welfare”..
How about government nationalizing some significant portion of the energy sector as an emergency measure… or maybe just fixing fuel prices.
Okay, just one more.
Comment by CA renter
2007-03-23 10:12:33
Agree. This will take at least 3-5 years AFTER the lending standards are tightened. We need to allow for all the FBs to run through their credit cards, family money, etc. They will try to hold on to their homes, and lenders will try to re-work many of these loans. Add in an attempted govt bailout, etc. and you have a farily large delay before things hit bottom, IMHO.
So I want to see how this will work. How many people are living in homes they shouldn’t? How many cheaper rentals are there? Whether they should or shouldn’t, how many have relocation $ available? How many have ruined their credit and will have trouble finding anyone to rent to them? Where are the ones in trouble going to live? I’d like to see numbers, too. Like XXX will have nowhere to go. Besides everyone’s culpability and ideas to make sure it doesn’t happen again, I don’t see anyone saying what to do now. And who is going to do what & who is responsible for getting things going? Not: should go live with family - we have no idea who has family, where they are & their financial status, so that can’t be a valid assumption. Lots of very smart people here, so I’d like to see a roadmap of some sort that’s based in reality. My head wants to explode when I try to think of how you can shuffle around millions of people, many with few options, many unemployed without mass chaos.
You’re not the only one whose head wants to explode…all I can point to is Greece right now…I think that’s coming to American shores sooner than later…
Tons of empty homes.. everyone will have an inexpensive place to live.
Government will support those in need.. food stamps or whatever.. no chaos.
Trashed credit will be ignored as far as financing the necessities of life..
Savings and retirement accounts will be slowly drained away. Most investment markets will level off and stagnate due to lack of funds.
Foreign housing bubbles will eventually deflate, preventing any appreciable global growth.. Tempers will rise but nobody wants to spend money on a war.
Nothing much will change around here until the government abandons the housing market .. I give it 8 to 12 months.. at which time economic realities will set in.
Then it’s worldwide doldrums.. not even a breeze.. day after day.. weeks.. months.. years..
“For example, a home in Polo Ranches was valued at $861,158 in 2006 and peaked at more than $1.1 million in 2008. In 2010, the assessor valued it at $863,795. Similarly, a Jackson condo was valued at $439,463 in 2006 and hit its peak valuation at $651,745 in 2008. The assessor valued it at $463,526 for 2010.”
I think this is outstanding! All those folks making $9 and hour (plus gratuities of course) will now be able to buy a quality property in downtown Jackson Hole and mingle with the rich folk. Thank God they’re doing everything they can to deflate this bubble.
When will the insanity end?
There aren’t just a few dozen or hundred or thousand foreclosures / underwater borrowers / short sales out there — there are now millions of them.
And the vast majority of them started with transactions that involved “expert” real estate brokers, bank appraisers and underwriters. (Should I start to doubt their usefulness?)
Forgive me for sounding like the pinhead from another planet, but how is lending money to someone to buy a house they can’t afford EVER a good idea?
Are there really that many people who can’t see that this just doesn’t work?
how is lending money to someone to buy a house they can’t afford EVER a good idea?
It’s all about timescales. If you’re a mortgage broker who makes juicy fees at the front end of such deals, oh it’s very very VERY good idea.
If you’re on the back end, well, then you’re the ate-up US taxpayer. This is part of why we have government regulation. Someone has to think in a longer-term than than the next quarter or the next paycheck. And regs DO last longer than the next election.
Oxide, while I’m not disparaging the need for government regulation in many areas of our lives, is that really the root cause here? Seems to me that the market never would have made many of these stupid loans to begin with if they didn’t have the backing of the government.
I see what you’re saying.
I would say that each fish in the food chain looked only one rung up, so to speak. The FB/realtors didn’t care what happened at the top, as long as he got his house from the mortgage broker at Countrywide. The mortage broker at Countrywide didn’t care what happened at the top, as long as, say, Bank of America bought the mortgage and the MB got his juicy bonus.
You don’t get to the root cause until you get to the high- level execs at Bank of America. The next rung up is Fannie/Freddie buying the mortgage from BoA. However, BoA knew that F/F were going to run out of money, and so BoA made sure of that implicit (implicit at the time) backing of the government as the Greatest Fool before they bought the mortgages.
Was there government backing during the Tulip Bubble?
Was there government backing during the countless boom/busts of the 19th century?
No, and no. The idea that government backing/meddling is the root cause of bubbles is a pleasant fantasy, offering as it does an easy answer to our problems (’gov get out= no problems’). However, a short trek through the history books will soon dispel the idea that government is required for bubbles to blow. In fact, the least bubblicious period of American history (the 40 years after the Great Depression), was the period of the most government regulation of the economy. Quite a coinkydink, no?
‘The idea that government backing/meddling is the root cause of bubbles is a pleasant fantasy, offering as it does an easy answer to our problems’
Now you’re onto a subject I think a lot about. I hear the word bubble mentioned just about every time I turn on the radio these days. But for the sake of understanding what these events are, I think it’s a mistake to throw it around.
There have only been a few true bubbles, or manias in history. Proof of this can be seen in the lack of scholarship on the matter. Usually, books on them are simply accounts. (This and that happened, and boy, wasn’t that crazy!) IMO, it’s important to distinguish between booms, busts, panics and manias. For instance, manias usually begin as a boom, and some things happen and it takes on a life of it’s own, sweeping up new people into the frenzy until some critical mass is reached. Then it collapses.
Lots of tests can be applied to what is sometimes called a popular delusion. Insanity, irrationality, in a financial sense. But a few are crucial; the idea it will never end, that trees grow to the sky. These beliefs must be very widespread for there to be a true mania, IMO. To the extent that those who question the beliefs are themselves considered insane. Bubbles always collapse; usually in a spectacular fashion that astounds participants. And why not? Their reality has been shattered in front of their eyes, and they lost a bunch of loot as well.
IMO, this mania was brought about by a confluence of factors, which resulted in true delusion on a mass scale. (Probably the biggest mania in history). Here’s where the government fits in; almost to a person, they believed too. Or they were afraid of being considered a non-believer, it’s doesn’t matter much. Either way, the regulatory functions and the laws passed were done under the spell of never ending price increases. This lead to complacency and without question made the mania deeper than it otherwise would have been. And late in the game, when this should have been obvious, there were outright crimes by some players, which the govt should have prevented, and policy mistakes for which heads should role.
If these were beanie babies, I don’t think anyone would argue with you. But the federal govt IS the housing market, to a large extent. And how they can avoid blame for this housing mania is hard for me to see. Note also; the GSE’s and the Fed are private corporations, and there was no fractional reserve banking back in the tulip days.
The most important thing to me is that we learn from this episode, see how damaging it was and desire to prevent it from happening again. That will require an honest look at a period of history that almost every foolish participant is ashamed of. Maybe the shame has yet to wear off, because I still don’t see it being assessed as it should be.
I agree the government was very involved in this bubble, that is without question. The point I was trying to make was that we had bubbles without government intervention, therefore the idea that government intervention is required for a bubble, and that without it we would have no bubbles, seems to have been disproved.
There is something about a true bubble that sweeps all opposition before it. The idea, at least, of an ‘independent’ Fed-type institution is that it can somehow stand up to the forces driving a bubble, but as we have seen, that idea doesn’t always work in reality.
I will say this, though. I think Greenspan, Bernanke, et al, were quite aware there was a real estate bubble going on. I think they ascribed to a theory (I think this because Greenspan used to admit to it) that said it was better to let bubbles run their course and pop, rather than try to impede them.
This proved to be a fatally wrong philosophy, and I think they have since become much more cautious about stating they were following it. Now they act like they, too, were taken by surprise by how things played out- and I think they are truthful when they say this. I don’t think they thought it would be this devastating to our economy. Now that they’ve seen the extent of the damage done, they’re too sheepish to admit that they knew we were in a bubble, and were letting it play itself out.
Had we had a Volcker in charge of the Fed rather than a delusional romantic Randian like Greenspan, would we have had a bubble? We’ll never know. Maybe when the time is ripe for a bubble, there really is no stopping it. But it seems to me that if Greenspan had simply followed a more traditional, rational economic philosophy, he had the power to stop this bubble. Interest rate hikes and increased enforcement of banking regulations surely aren’t impossible feats, especially when the world is lauding you as the ‘maestro’ of economics. He had the stature and authority to stop it, but lacked the good sense to do so. He shrugged.
‘I think Greenspan, Bernanke, et al, were quite aware there was a real estate bubble going on’
Read ‘Greenspans Bubbles’ by Bill Fleckenstein. He makes a detailed case that the Fed was aware of what it was doing (and/or sure as hell should have been) during both the stock and housing bubbles.
“Maybe when the time is ripe for a bubble, there really is no stopping it.”
That is kind of silly, given Volcker’s demonstration between 1979-1982 of how the Fed could chase up interest rates as high as necessary to stamp out a bubble (in that case, the bubble was in prices of just about everything consumers wanted or needed).
That is kind of silly…
I tend to agree- that’s why I semi-refuted it in my next few sentences.
But look at us now. We’re lying on the side of the road after our housing crash, bloodied, broke, and half-dead, for all the world to see. And what are our neighbors to the north (and in many other parts of the world) doing? Why, having a housing bubble of their own. But, of course, it’s different there. They have nothing to learn from us.
Sometimes it seems like there’s just something in the air. I’m not sure even a Volcker could hold it back. Man goes mad in groups, and comes back to his senses slowly, and one at a time.
Alpha,
Not only is it happening in other countries…it’s happening right here within our own borders.
We regularly make our rounds in certain areas in San Diego and L.A., and I can say for a fact that the bubble is back. We have learned NOTHING from the “crisis” (unless you count the belief that the govt will always come to your rescue if you fail in a large enough group).
It’s very frustrating to watch what’s going on right now.
But it was “people” who took out the loans. It’s not like most of them didn’t know what they were doing.
I agree, and this is one reason central banks can’t create manias out of thin air. It took the gullibility and greed of a great many individuals, all over the globe for this to happen.
“and hour”=an hour
Three things the gov’t needs to do:
1) regulate the derivitives market.
2) limit the amount of leverage for banks.
3) take the ratings agencies away from the public exchanges.
We will see if Obama’s speech addresses what the Dodd bill lacks.
1) regulate the derivitives market. [agreed but only as to certain credit default swaps and certain other trades - interest rate swaps should not be lumped in with them, as they are a legitimate means to create market efficiciencies]
2) limit the amount of leverage for banks. [i dont think there is a problem with reserve requirements, I think the problem is with mark-to-market]
3) take the ratings agencies away from the public exchanges. [why not just outlaw conflicts of interest and go after blatant violations, and hold them accountable for reckless modeling]
efficiciencies = efficiencies
IMHO, interest rate swaps are a way to hide risk. I’m coming around to the realization that derivatives just enable the mispricing of transparent assets because the risk is transferred to an opaque market (via derivatives). This gives market watchers a false sense of security (if they don’t see risk reflected in the prices of assets — because this risk is not visible).
I’m leaning toward either having a very small, very transparent derivatives market, or eliminating derivatives altogether. Let prices reflect true risk, so that ALL participants can better gauge potential what the market is doing.
4) Campaign finance reform (no bribing future politicians)
Ex-Senators, Congressmen and senior government officials permanently barred from becoming lobbyists.
No one serving public office (governor on up) can practice law.
All would automatically have their law licenses suspended.
“We will see if Obama’s speech addresses what the Dodd bill lacks.”
BwahAhAHAhahHAAHAHAHHAHAHAHAHAHAHAAAA!!!!!!!
What are you smokin’, dude?
Obama says he has been seriously considering these issues for at least three years. He aint no johnny-come-lately, whatever that is. It is interesting that I never heard him talk intelligently about the subject - must have been quiet thoughts.
Honestly this ought to be pretty easy to look up. Maybe a Senate memo somewhere or any one of a hundred press conferences and speeches. Obama got a LOT of votes by trotting out some 2002(3?) footage of him opposing the Iraq war.
Don’t be a sucker - The smart money defaults on its obligations!
Boston-based Beacon Capital Partners borrowed $2.7 billion to buy the Seattle-area properties and 11 others in the Washington, D.C., area in 2007, at the height of the real-estate boom. The package included the 47-story Wells Fargo Center in downtown Seattle and the 27-story City Center Bellevue in downtown Bellevue.
Now, according to a recent report by credit-rating agency Standard & Poor’s, Beacon says that in 2010, after subtracting expenses of operating the 20 buildings, its rents from the properties will cover just 20 percent of its debt payments.
And Beacon says it isn’t willing to pump any more of its own money into leasing, improving or paying debt on the buildings without a “meaningful loan modification,” according to the rating agency.
http://seattletimes.nwsource.com/html/businesstechnology/2011668875_beacon22.html
“Don’t be a sucker - The smart money defaults on its obligations!”
That’s right. We have an economy that gives a leg up to liars, cheaters and crooks. Even the top official in the IRS cheated on his taxes. Don’t be the fool that plays by the rule.
Correct me if I’m wrong, but didn’t WaMu default on its own office building somewhere a couple of years ago?
As did the Mortgage Bankers Association, IIRC.
Now that’s funny!
The WAMU Center in downtown Seattle ended up with JP Morgan (backstopped by the US Government), who sold it at a big discount to Northwestern Mutual who moved their subsidary Russell investments from their original home in Tacoma to downtown Seattle at a cut rate rent. Capitalism at its finest.
Crony capitalism at its finest!
” “This is a great time to buy a home. Really, it is. ”
Now I am convinced since they said really. Let’s see, interest rates at all time low, first time home buyer credit about to expire. Unemployment at 10% and those that are employed not getting any raises. The Google and Apple millionaires aren’t in these parts. Gee, I better give my Landlord my notice and get out there and buy. (sarcasm off)
If any one you have looked at homes in Washington county area of Oregon, sure is hard to like anything.
I rent a 2500 sq. ft. home for $1625 a month and they are not selling for $170,000 yet - but they are off their 400K peak price. Now selling for probably $270,000. A neighbor with same model as I rent is asking $370K and I don’t think they have had any lookers. Similar model sold for 280,000 last year. but, fortunately for them, “their model is different”.
I’m seeing a lot of “for sale” signs sprouting here in Tucson. I’m guessing that a lot of these new listings are motivated by a desire to sell to the tax credit crowd.
But, sorry to say, a lot of them are so butt-ugly that it will be hard to sell them in any market. I’ve bicycled by more than a few run-down dumps for sale and said, “Never been kissed.”
Slim:
Any input on what is going on in the market in Oro Valley?
That’s a bit out of my bicycling range, so I don’t know.
Slim…Does the real estate market slow down in Tucson during the hot dog days of late summer…??
Yes it does. But, for people looking to buy before school starts, summer is a good time to be looking around.
E in NJ,
I have access to the MLS right now and will take a look. Look for a report on Sat.
Lip
I was curious as to what the job base is in Medford, Ashland, and similar places.
Here’s Medford;
Company Classification # of Employees
Lithia Motors Inc. Auto-Truck Dealers 3,500
Asante Health System Health System 3,000
Harry & David Direct Mail Merchandisers 2,000
Rogue Valley Medical Center Hospitals 1,638
Providence Health System in Southern Oregon Health Systems 1,300
Medford School District 549C Schools 914
Boise Plywood Mills 875
Jackson County County Government 874
Southern Oregon University Colleges & Universities 600
Amy’s Kitchen Food Manufacturer 450
Rogue Valley Manor Retirement Communities 450
Wal-Mart Stores Department Stores 450
Cascade Wood Products Lumber Mills 425
VA Southern Oregon Rehabilitation Center Government & Government Agencies 418
City of Medford Government & Government Agencies 405
Knife River Materials General Contractors 400
Sherm’s Market/Food 4 Less Grocers 360
Big R Stores Farm & Ranch Supply 350
Rogue Community College Colleges & Universities 309
Costco Wholesale Wholesalers 305
Embarq Communications 275
Jackson County Health and Human Services Health Care Clinics/Facilities 270
Southern Oregon ESD Education 260
Southern Oregon Headstart Schools 258
Oregon Shakespeare Festival Festivals/Special Events 250
Goodwill Industries, Southern Oregon Employment – Training & Placement 232
PremierWest Bank Banks 204
Seven Feathers Hotel & Casino Resort Casinos/Resorts 201
Rogue Federal Credit Union Credit Unions 190
Musician’s Friend Musical Instrument Sales 180
Associated Fruit Company Fruit Packers/Processors 175
Mail Tribune, The Newspapers 162
Sierra Pine Ltd. - Medite Division Wood Products 158
CDS Publications Printers 150
Rogue Valley Physicians Physicians & Surgeons 150
Qwest Utilities 150
Safeway Stores Grocers/Grocery Stores 143
Home Depot Home Improvement 140
Community Works Non-profit Organizations 135
Rogue Regency Inn & Suites Hotel/Dining/Banquet 130
FTD Florists 120
J.C. Penney Company Department Stores 120
Medford Rehabilitation & Healthcare Center Nursing & Convalescent Homes 120
Rogue Disposal & Recycling Sanitation 120
Sabroso Company Fruit Packers/Processors 120
Ontrack, Inc. Alcohol & Drug Treatment 119
Central Oregon and Pacific Railroad Railroads 118
Pacific Power Utilities 110
Ramada Medford Motels/Hotels 102
ALSCO - American Linen Division Linen & Janitorial Supplies 100
Avamere at Three Fountains Retirement Communities 100
Batzer, Inc. General Contractors 100
Diamond Lake Resort Resorts 100
Lowe’s Home Improvement Warehouse Hardware – Retail/Wholesale 100
Providence Home Care Home Care 100
Red Lion Hotel Motels/Hotels 100
Running Y Ranch Resort Resorts 100
Ashland Food Cooperative Grocers/Grocery Stores 100
YMCA - Rogue Valley Family Youth Organizations 100
Building and selling houses, silly!
“Against the backdrop of tough hearings on the collapse of Washington Mutual in the largest bank failure in U.S. history, Sen. Maria Cantwell says there are signs that Congress and the Obama administration may finally be getting serious about Wall Street reforms.”
Perhaps I am unfairly pessimistic, but I still expect sham financial reforms with no material effect on the status quo of a rapacious and unbridled Wall Street that is gradually tearing the American economy limb from limb.
IMO, financial reforms are important, but I see the Fed and the GSEs being more important regarding housing and bubbles. But I find it curious that so much attention has shifted to wall street, when there were plenty of greedy SOBs involved. Speaking of Jackson Hole:
‘For (Broker) Ron Miller, and many like him, the Jackson Hole real estate market is a cash cow, a golden goose, with an unlimited future. ‘You don’t have to sell a property to realize gain,’ Miller says. ‘You can get a new appraisal and borrow against the property and then go buy more properties. And when you borrow the money back, a lot of people don’t realize when you go get an equity loan it is not a taxable event. So you’re better off pulling a million dollars out of a property, tax-free, and buying more with that.’
‘In Jackson, the market doesn’t really go down,’ said (realtor) Linda Walker. Broker Ryan Olsen agrees. ‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’
‘I’ve always been amazed with this market,’ David Viehman says. Viehman compiles an in-depth look at real estate trends in the Jackson Hole area. ‘I’ve been in real estate for 25 years and I still think, ‘This is crazy. Why would anybody pay these kinds of prices?’ To make ‘those’ kinds of profit, would be the pat answer.’
http://thehousingbubbleblog.com/index.php?s=planet+jackson+hole
“…but I see the Fed and the GSEs being more important regarding housing and bubbles.”
Good point. I suppose one could construe the whole Wall Street inquisition as a side show to take the attention off the root cause of the housing bubble. I still believe an audit of the Fed to get to the bottom of their Wall Street connections and their myriad failed attempts to make the American economy dance like a puppet would be highly informative regarding the process of bubble formation and collapse.
‘a side show to take the attention off the root cause’
Yeah, if you watch the media, they carefully construct ‘public opinion.’ And it’s rarely digging into serious issues. It’s interesting to watch congress ‘grill’ CEOs, pretending to to seek justice and make reforms. Wall street and the subprime, (then IO/neg am, etc) derivative machine didn’t kick into gear until 2002-03. The mania was well under way by then. When I started this blog in late 2004, the GSEs were already overcome by ’scandals.’ Who was in charge of these rats? And wasn’t the Fed in full bubble denial mode, with the foot on the money pedal, at the same time?
“It’s interesting to watch congress ‘grill’ CEOs, pretending to to seek justice and make reforms.”
Only if you enjoy Grand Kabuki Dance; there is no accounting for taste.
I’d like to see some so called victim FBs grilled. Maybe by one of those TV judges. I’d watch that one. I’m sick of them all blaming everyone else. They could have cared less about any fraud anywhere when they bought - they thought they were putting one over on the world and would get something for nothing quickly. Most were purposefully ignorant.
Goldman Sachs boss and trader to testify
By Stephen Foley
4:00 AM Friday Apr 23, 2010
Lloyd Blankfein, the chief executive of Goldman Sachs, is considering making a high-risk appearance in front of a congressional hearing, alongside the 31-year-old trader at the centre of allegations Goldman misled clients over toxic mortgage investments before the credit crisis.
The pair are believed to have agreed to testify before the end of this month, to demonstrate Goldman has nothing to hide over a mortgage deal in 2007 that led to civil fraud charges against the firm last week.
Goldman’s partner in the mortgage deal, the hedge fund manager John Paulson, who made US$1 billion ($1.4 billion) from the bet against the US housing market, is also mounting a public fightback.
In a letter to his fund’s outside investors, made public yesterday, he defended its role in the deal, saying Paulson & Co had acted transparently and in good faith. Unlike Goldman, Paulson & Co was not charged with any wrongdoing.
Fabrice Tourre was the only Goldman employee also named in the SEC’s lawsuit. In an email sent weeks before he sold the mortgage investment vehicle, he wrote: “The whole building is about to collapse … Only potential survivor, the fabulous Fab[rice] … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those [sic] monstruosities!!!”
Lloyd Blankfein sold his soul to the devil years ago. There is no lie too big for him to tell. He’s already rehearsed his next big one.
I don’t know much about Jackson Hole other than it’s suppousedly fancy, expensive and different there.
Then again, places like Jackson Hole have been know to turn into a Black Hole when the all the bills come due.
“Doh!… hide Marge…Here comes the Rent Man now”
Didn’t the Donner Party make a pit stop in Jackson Hole?
Just for appetizers…..
+1, but like, ewww.
No the Oregon/California trail went over South Pass which is quite a bit south of Jackson.
“Then again, places like Jackson Hole have been know to turn into a Black Hole when the all the bills come due.”
These places with their ostentatious mansions, and virtually no livable wage jobs, are destined to become relics of the housing bubble and all it’s insanity. In 100 years, people will be scratching their heads, wondering how such places came to be out in the middle of nowhere.
Speaking of abandoned mansions, low wages, et. al. have any of you ever been in the Upper Peninsula of Michigan? It used to be a rich persons destination. There are amazing empty resorts up there where very rich people used to go. There are Opera houses where Europe’s divas used to sing. It’s all long gone, but the remains are still there. It’s hard to believe today that so much wealth used to be there.
Jackson Hole is mostly faux-western-rustic stuff and attracts the new-new-money crowd (compared with Sun Valley which is the old-new-money crowd). The town of Jackson can’t expand north since it abuts Grand Teton Nat. Park. Jackson’s about the only expensive town in WY, most of which is very undeveloped and populated by ranchers and oilfield workers. Trivia note…WY is the least populous state in the US (around 400K IIRC).
“Last week’s hearing was just the first as the investigations subcommittee will look at the role of the regulators and rating agencies in the WaMu collapse. ‘It was a man-made economic assault,’ Levin said. ‘People did it. Extreme greed was the driving force. And it will happen again unless we change the rules.’”
These gloomsters are completely missing the bright side of the picture:
1) JP Morgan Chase was able to add WaMu to its consumer banking portfolio.
2) A larger, more monopolistic JP Morgan Chase is well situated to profit during the economic recovery. These profits trickle down to ordinary Americans, benefiting us all!
3) My WaMu ATM card still works just fine, so long as we have any money in our JP Morgan Chase account.
Where is the downside?
That one was a bit too transparent.
Transparency is what makes the American banking system superior to its international rivals.
The FIRE models and picture can always be framed and presented to look “good” to idiots.
That’s how we got in this freakin’ mess.
Ooops…they !
I had a bunch of money in WaMu at the time.. it would have been difficult to convince me there was no potential downside.
Sure, things turned out OK.. several large banks remained stable. At least one had the capacity to absorb WaMu.. but it was a matter or luck.
and i doubt your WaMu card still works.. I think 4-15 or 4-20 was the cutoff. The new Chase card is operative.
I haven’t tried my card out since a couple of days ago (think it was between 4-15 and 4-20)…
Are you talking debit or credit? My WAMU debit card certainly still works, as do my checks. Probably time to get new ones.
The downside is that I can’t get more than about 1% interest on savings.
Think of the low interest on your savings as the flip side of a rapid recovery in the banking sector, and you will feel much better.
no seriously, who the heck ARE you?
The newest T R O L L.
It’s “hopeful” our favorite troll.
(A.K.A.: Professor Bear, no?)
Think of your money tucked away safe and sound in the bank as opposed to it evaporating before your eyes had you spent it on property.. and you’ll feel much better.
Can one of the Southern Oregon HBB’ers shed any further light on Ashland? I’m still thinking that’s where my next house will be, prices have clearly headed down but I’m hoping they’ll go lower still over the next 2-3 years.
Ashland got crazy expensive goosed by all the California money…Thats gone Bye-Bye…There is no serious job generators (University & the Hospital) I think are the biggest employers…They have limited growth so that does help support prices somewhat…I would just start taking their local paper so you can keep daily tabs on it yourself…I think you are in Northern California right ??
And you’ll love the paper’s name: The Daily Tidings. When I first heard the name, I thought the lady who said it was being sarcastic.
Yes, I’m in Marin, you know, God’s Country -);
I saw prices go up like a rocket, started visiting Ashland around the time I sold my house in 2004. People from CA and FL were throwing money at houses. Of course the locals couldn’t compete with the equity locusts, and ended up in Medford. I had the impression that Ashland was very dependent on outside money (second home, eventual retirement, etc) to keep those prices propped up.
I’m keeping watch on the MLS and the local paper, for sure.
“couldn’t compete with the equity locusts…”
And yet, you want to be one of them?
No offense, but coming from Marin (and the BA in general) I think you’ll be bored out of your gourd in Ashland.
emorywheel dot com
The Time Has Come to Break Up the Banks
By James Sunshine Posted: 04/19/2010
(Cartoon by Yoo-Jin Jung/Staff shows hammer of Financial Reform smashing Megabank of America)
Everyone remembers the day after the economy tanked. There were calls for the heads of Wall Street bankers on Capitol Hill, and Americans watched as the job market shriveled, while the very individuals and institutions that caused the mess were propped up by tax dollars. Day by day, new reports of fraud and corruption by respected firms were released. Banks were acting like casinos and growing larger so that if their bet was on tails and heads came up, they’d hold the country hostage for more money to keep on playing.
It was only a matter of time, most people thought, before Washington would re-regulate the banks and bring charges to the individuals who knowingly misled the market and brought the world economy to its knees.
That time has come — maybe. Last week, two things happened that might signal the age of Wall Street taking hostages has ended. The Securities and Exchange Commission (SEC) announced that it would be filing charges against Goldman Sachs, the Wall Street monolith that came out of the ‘08 crisis shinier than its executive’s golden bathtubs.
The second is that Senate Majority Leader Harry Reid announced he would push the Senate to move forward on Wall Street reform, with or without Republican support.
Republicans have not been helpful on this, nor for that matter any other measure supported by Democrats and the president. Doing so would give the president wins, and that can’t be allowed to happen. The Republicans’ aim has been to use this issue to their advantage in hopes of repeating the health-care reform debacle. In fact, their strategy is an exact six-step replica:
Step 1: Find a Senate committee chairman tasked with writing the legislation and slow down the process by dangling one or two Republican votes in front of him.
Step 2: Break off negotiations with said chairman after time and political capital have been used up on trying to obtain two Republican votes.
Step 3: Have every member oppose the bill and compromise toward the bill, even if it’s exactly what the party was proposing just a year earlier.
Step 4: Make up stuff about the bill in hopes that American rage and distrust towards Washington, as well as a unified yet untruthful message that elicits confidence, blinds the people’s common sense — perhaps claim that a parent will be killed, or that tyranny has come or that Wall Street will be bailed out again.
Step 5: Have the House pass a bill while Democrats are fighting among themselves. Step 6: Win in November.
It’s a very simple and cynical strategy that has served the GOP well thus far. And like most successful strategies, the GOP is using it once again in an attempt to kill Wall Street reform. When the SEC charged Goldman, conservative commentators screamed that it was evidence of tyranny because it was so conveniently timed to coincide with Reid’s announcement to push forward on Wall Street reform.
Republican strategists and congressmen sought to tie Goldman with Obama. How they hope to do this is still a mystery to me, as it was the SEC under Obama’s watch that brought charges against a company the Democrats have been assailing for months. And it’s also worth noting that the crime’s Goldman is charged with would have been perpetrated under on Bush’s watch. But hey, if Glenn Beck can make people believe that Teddy Roosevelt was a commie, anything is possible.
“The in-migration from California fueled much of the local housing boom up into 2006, but even though the Rogue Valley might be a desirable location financial conditions have changed. ‘We had an influx of people because of the relative affordability,’ Mullane said. ‘They could take the equity from their houses and say I can live in a house that’s just as nice in Ashland or Medford for half the cost. But now there’s not the confidence they can just leave their job in San Francisco when they are not sure they can find a job in Ashland or Medford.’”
I don’t know how anyone ever had the confidence to leave a job in San Francisco and find one in Medford. Unless they’re gas stations attendants or working at Target, in which case buying a home is a dumb idea anyway, there are no comparable jobs. The mere idea of such is laughable. It isn’t a broken model, it is a model that never existed. The Ashland and Medford economies have been stuck in a depression for decades. It’s no surprise that $60,000 houses are back. If the economy is any indication, they’re back to stay.
Back in the 1990s, I went to trade school in Ashland. I was under the impression that, other than the Oregon Shakespeare Festival, there wasn’t much of an economy there.
They were planning to live off the interest on all that equity.
No offense to Lisa’s plans, but I say good riddance. Ashland/Medford is no different than, say, Redding except with the Shakespeare festival. I really don’t get why it’s a goal for Californians to move there. Not much else to do there. Maybe a few (less than 5) good restaurants.
Prices might be half of what they are in SF, but some of the houses just 1.5 years ago in town (easy walking distance to downtown) were listing at $750k. Friggin’ ridiculous. If I bought a house 10 years ago in SF, I’d much rather have access to what is in SF. If you want Ashland, go see a play, eat at Thai Pepper…on vacation.
Now might be a great time to short Goldman Sachs, as the reality that the world has changed has not yet emerged from the denial stage.
Opening Remarks April 22, 2010, 5:00PM EST
A Message to Wall Street’s Fabulous Fabs
Goldman will survive, but the expectations have changed
By Michael Lewis
BW Magazine
… what is the reason for being so unconcerned for so long with the consequences of your actions? The masses deserve to know, for instance, how you became blinded to the very simple difference between right and wrong. The more moralistic among them will ask the question mainly to fuel their own outrage, the more tactical will ask the question because they sense that the financial system doesn’t function unless you have the incentive to think in these terms—and you clearly do not. What begins as an effort to change your business may well end up as an attempt to change your soul.
Just as there was a time when people could smoke on airplanes, or drive drunk without guilt, there was a time when a Wall Street bond trader could work with a short seller to create a bond to fail, trick and bribe the ratings agencies into blessing the bond, then sell the bond to a slow-witted German without having to worry if anyone would ever know, or care, what he’d just done. That just changed.
http://www.washingtonexaminer.com/opinion/columns/Goldman-rallies-for-Obama-in-Wall-Street-_reform_-90957879.html
Why Goldman is cheering on Obama’s Wall Street-enriching “reform.”
Wall Street reform is great for fundraising purposes!
Wall St gives much to lawmakers in reform debate
Thu Apr 22, 2010 5:45pm EDT
* Lobbyists hold fundraisers for 10 key senators
* Democratic Senator Schumer is biggest beneficiary
* Senate Republican leader McConnell is second
By David Morgan
WASHINGTON, April 22 (Reuters) - Democrats and Republicans in the U.S. Congress may want to look tough on financial reform in front of voters but that has not stopped them from filling their re-election war chests with plenty of Wall Street cash.
The political action committees of six Wall Street banks spent the first quarter of 2010 giving handsome donations to Republicans and Democrats who are critical to passing legislation that could determine the future of the U.S. financial sector.
The banks — JPMorgan Chase (JPM.N), Wells Fargo (WFC.N), Citigroup (C.N), Bank of America (BAC.N), Morgan Stanley (MS.N) and Goldman Sachs (GS.N) — gave about $106,000 to 12 members of the Senate and House of Representatives who sit either in leadership positions or on the committees that forged the measures.
The sum is 40 percent of the $272,000 that the same institutions donated overall to political campaigns and committees between January and March.
But it is only a tiny fraction of the more than $30 million that has flowed into campaign coffers from the PACs and employees of banks, securities firms and finance companies since the 2010 election cycle began on Jan. 1, 2009, according to the Center for Responsive Politics, the non-partisan watchdog that tracks the role of money in U.S. politics.
Wall Street lobbyists this year have hosted fundraising events for at least 10 senators who sit on the banking and agriculture committees, which have advanced separate pieces of financial regulatory legislation, according to the Sunlight Foundation, another money in politics watchdog.
Senator Blanche Lincoln, chairwoman of the agriculture panel, decided to stop accepting contributions from Goldman’s PAC and employees now that the Securities and Exchange Commission has charged the firm with civil fraud, allegations Goldman denies.
But she already has plenty of money from the financial sector. The Democrat has received $7,000 from the Goldman PAC during the current campaign, part of $920,935 that has flowed into her re-election coffers from securities and other financial institution PACs and employees.
“The contributions have no impact on Senator Lincoln’s public policy decisions,” Lincoln’s campaign said in a statement.
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