The True Causes Of The Debacle
A weekend topic on housing finance. The New York Post, “Jamie Dimon got Bear Stearns for a bargain price — and he says he’s still paying for it. Seven years after the financial crisis, the JPMorgan Chase boss now says he totally regrets buying the teetering Wall Street firm — at the urging of the government — for a steep discount. Roughly 70 percent of JPMorgan’s $19 billion of mortgage-related legal bills stems from the acquisition of Bear Stearns and another faltering firm, Washington Mutual, during the financial crisis, according to Dimon.”
“Dimon also said that another financial crisis was inevitable and floated his ideas for how it would play out. ‘The trigger to the next crisis will not be the same as the trigger to the last one — but there will be another crisis,’ he wrote. The next crisis would bring even more ‘volatile markets,’ he said, in part because stricter regulations would make banks less likely to lend and inject liquidity in times of trouble.”
“He said recent activity in the Treasury markets is a ‘warning shot across the bow.’ The government securities moved an alarming 40 basis points on Oct. 15 — ‘an event that is supposed to happen only once in every 3 billion years or so,’ he said.”
From Reason. “Eight years after the nation’s financial system began its rapid slide into calamity, we all know why. Greedy Wall Street operators, aided by the repeal of the 1933 Glass-Steagall Act and only feebly regulated by the Bush administration, ran wild in the pursuit of greater profits for the rich. Eventually many big banks failed and were bailed out by taxpayers. But in 2010, President Barack Obama and the Democratic Congress took bold action to create powerful new government regulatory machinery. Still, much more regulation is needed to forestall future damage.”
“This narrative of the economic debacle is heavily promoted in the mainstream media and by regulators. But in Hidden in Plain Sight, financial scholar Peter Wallison argues that the story is laughably false. Worse yet, he says, the true causes of the debacle have not been dealt with, and there is every reason to believe that the same thing can happen all over again.”
“During the early Reagan years he was general counsel of the Treasury Department, where he learned a lot about markets and regulation. Happily he was not a participant in any part of the 1997-2009 financial disaster that is the subject of this book. He was, however, a member of the largely misguided Financial Crisis Inquiry Commission of 2009-2010, and he dissented from that body’s final report.”
“Wallison sharply attacks the ‘false narrative’ of the financial crisis offered by activists, politicians, and regulators with a direct interest in sweeping new regulation. We would have done much better, he writes, ‘if the narrative about the financial crisis had properly located the problems in the reduction of mortgage underwriting standards brought on by the government’s housing policies and implemented largely through the affordable housing goals.’”
“Continuing belief in this false narrative, evidenced by the Dodd-Frank Act, the Financial Crisis Inquiry Commission’s myopic 2010 report, and proposed legislation in the most recent Congress, makes it likely that there will be another financial crisis in the future.”
From Reuters. “Reg AB II was one of many rules Congress ordered up in the 2010 Dodd-Frank Wall Street Reform Act to fill regulatory holes in the market for asset-backed securities. An unprecedented expansion of this multitrillion-dollar market, in which banks repackage mortgages and other assets into complex securities and sell them to investors, lay at the heart of the financial crisis.”
“But as the evolution of Reg AB II suggests, banks and their advocates have managed to preserve many of the industry’s pre-crisis practices by focusing lobbying efforts on obscure corners of the regulatory world, far from the glare of congressional debate or public scrutiny. Many of these agencies are staffed by appointees from the industry they regulate and return to it when their stints are over.”
“‘The banks have done an end run around all the disclosure efforts,’ said Thomas Adams, a securitization lawyer at Paykin Krieg & Adams LLP.”
“Thanks to the private-market loophole in the SEC’s Reg AB II, banks are selling a greater share of securitized debt than ever on private markets – largely off the radar of regulators and watchdogs. Residential mortgage-backed securities tendered on the private market jumped to 78 percent of all new offerings last year from 46 percent in 2013 and just 10 percent in 2007, according to data obtained by Thomson Reuters. The privately sold share for commercial mortgage-backed securities jumped to 83 percent from 37 percent in 2013.”
“With their access to off-balance-sheet entities largely preserved, the banks continue to hold vast sums of securitized loans offshore and off their books. Together, JPMorgan Chase & Co, Bank of America Corp, Citigroup, Wells Fargo & Co, Goldman Sachs Group Inc and Morgan Stanley hold nearly $3.3 trillion of securitized loans in off-balance-sheet entities.”
“It isn’t just the banks. As hedge funds and private equity funds have ramped up high-risk lending in recent years, their use of off-balance-sheet vehicles has ballooned. For example, KKR & Co LP’s reported exposure to loss from off-balance-sheet entities has risen tenfold since 2010.”
“Off-balance-sheet vehicles free banks to make more loans and build assets without having to add to capital reserves. In theory, if one of these vehicles fails because the underlying assets sour – as, for example, when large numbers of homeowners default on their mortgages – the bank does not have to bail it out. In practice, they often do – to preserve their reputations in a lucrative market, and because specific asset-backed securities often carry implicit or explicit guarantees that leave banks legally liable to make investors whole.”
“On August 27 last year, 52 months after the original draft proposal of Reg AB II was floated, the SEC adopted the final version. The 683-page rule detailed a raft of new disclosure requirements for asset-backed securities – but only for those registered with the SEC for general offer to the public. For the same securities sold on the private market, disclosure requirements remained scant. In the end, 2014 saw a bigger share than ever of asset-backed securities being sold on private markets, with little disclosure or regulatory oversight.”
The Reason and Reuters articles cover a lot of ground and I recommend reading both. Here’s a bit from Reuters:
‘Then, on July 22, 2011, the U.S. Circuit Court of Appeals in Washington, D.C., struck down an unrelated SEC rule mandated by Dodd-Frank that would have made it easier for shareholders to replace company directors. The court said SEC staff hadn’t done a sufficient cost-benefit analysis of the new rule.’
‘The ruling, which was sharply critical of the SEC’s rule-making process, “intimidated the agency,” said Barbara Roper, director of investor protection for the Consumer Federation of America and a member of the SEC’s Investor Advisory Committee.’
‘SEC rule-making ground to a halt. Since the court decision, the SEC has published less than one new draft rule a month.’
‘In May 2013, one month after Mary Jo White was sworn in as SEC chairwoman, she tapped Higgins to be director of the agency’s Division of Corporation Finance, in charge of writing the rule he had lobbied against. Some inside the SEC were shocked.’
‘Higgins was close to White’s husband, John White, a partner at Cravath, Swaine & Moore LLP who had himself chaired the SEC division when Higgins was head of the ABA committee, according to people who know both men.’
‘John White and Mary Jo White declined to comment.’
“John White and Mary Jo White declined to comment.”
“It has been asserted summarily in Rolling Stone magazine that, among other duties at Debevoise, White has used her influence and connections to protect certain Wall Street CEOs from prosecution including a notable case involving the firing of Gary J. Aguirre for investigations into the CEO of Morgan Stanley executive John J. Mack.” –wiki
Our entire system is corrupted to the very core.
And stupid people - 95% of the electorate - sanction such corruption election after election by voting for the status quo.
‘With their access to off-balance-sheet entities largely preserved, the banks continue to hold vast sums of securitized loans offshore and off their books’
In the spring of 2005, IIRC, it was reported that Fannie Mae had over 900 of these entities - off-shore. Freddie a few hundred too, we later learned. At one point in their, I guess it’s not a bankruptcy, but whatever it is, Fannie said they had hired over a thousand accountants to sort it all out. Then, it just went away.
What was the number we’re given to ‘bail-out’ the GSE’s? Is it $200 billion? Two broke companies doing about $5 trillion in business, and they can be bailed out with $200 billion? And we’ve been told they’ve paid it all back!
So why not let the GSE’s go on their merry way? Could it be there are still trillion$ of loses sitting in the Caymans? Were there any counter-parties involved, like AIG?
When I was studying accounting, the Japanese off-shore stupidity (in response to a bubble collapse) was covered. The book asked ‘could this happen in the US’? The professor answered it couldn’t; the US accounting rules don’t allow loses to be held off-shore. Read the Reuters article to see what a joke FASB has become.
How Wall Street captured Washington’s effort to rein in banks
By Charles Levinson, Reuters
Posted at 04/11/2015 5:18 PM
Street signs for Wall Street and Broad Street hang at the corner outside the New York Stock Exchange. Photo by Brendan McDermid, Reuters
NEW YORK - In the aftermath of the 2008 financial crisis, Keith Higgins was certain: Banks weren’t to blame.
Higgins, a top attorney at prominent law firm Ropes & Gray LLP, was chairman of an American Bar Association committee on securities regulation. As such, he lobbied strenuously against a rule U.S. regulators were drafting that would require banks to disclose a lot more about asset-backed securities like those that had just torpedoed the economy.
In letters to the Securities and Exchange Commission, Higgins argued that divulging more details about the mortgages and other financial products that go into such securities would only confuse investors. And it was investors, with “insufficient understanding and commitment” to their investments, who had been the real cause of the crisis, he argued in a July 2008 letter.
Then, in May 2013, as the SEC was still hashing out the rule, Higgins was tapped to lead the very 500-person SEC division that was writing it.
When the final version of Reg AB II came out last year, disclosure rules advocated by many within the agency had been stripped out. Of particular concern: Banks could continue to sell asset-backed securities to institutional investors on the private market with no new disclosure requirements.
Reg AB II was one of many rules Congress ordered up in the 2010 Dodd-Frank Wall Street Reform Act to fill regulatory holes in the market for asset-backed securities. An unprecedented expansion of this multitrillion-dollar market, in which banks repackage mortgages and other assets into complex securities and sell them to investors, lay at the heart of the financial crisis.
But as the evolution of Reg AB II suggests, banks and their advocates have managed to preserve many of the industry’s pre-crisis practices by focusing lobbying efforts on obscure corners of the regulatory world, far from the glare of congressional debate or public scrutiny. Many of these agencies are staffed by appointees from the industry they regulate and return to it when their stints are over.
“The banks have done an end run around all the disclosure efforts,” said Thomas Adams, a securitization lawyer at Paykin Krieg & Adams LLP.
Four of the six lawyers now in the leadership of the American Bar Association committee that Higgins chaired have worked for the SEC’s Division of Corporation Finance. And between 1993 and 2006, the proportion of financial services veterans on the Financial Accounting Standards Board (FASB) went from zero to 25 percent, according to a 2012 Harvard Business School study.
Higgins declined to comment.
SEC Chief of Staff Lona Nallengara said the selection of Higgins to run the division was a reflection of his status as “a respected securities practitioner with 30 years’ experience.”
Nallengara, who was acting director of the Division of Corporation Finance for seven months before Higgins took over, said the decision to remove disclosure requirements for private offerings from Reg AB II was made before Higgins arrived. “Keith had no influence on that decision,” he said.
SYMPATHETIC EARS
Like the SEC when it was weighing rules on asset-backed securities, FASB, the private group that sets accounting standards for public companies, came under political pressure to tighten rules blamed for exacerbating the financial crisis. Critics said FASB had made it too easy for banks to stash mountains of securitized loans in off-balance-sheet vehicles based in the Cayman Islands, hiding their exposure to risks that eventually swamped them and the global economy.
Here, too, banks pushed back hard. And here, too, their protests reached sympathetic ears. Ultimately, FASB’s rules barely dented the size of banks’ off-book holdings.
The practical effect of these lobbying efforts has been obvious.
Thanks to the private-market loophole in the SEC’s Reg AB II, banks are selling a greater share of securitized debt than ever on private markets - largely off the radar of regulators and watchdogs.
Residential mortgage-backed securities tendered on the private market jumped to 78 percent of all new offerings last year from 46 percent in 2013 and just 10 percent in 2007, according to data obtained by Thomson Reuters. The privately sold share for commercial mortgage-backed securities jumped to 83 percent from 37 percent in 2013.
The markets for asset-backed securities today are a fraction of what they were in the run-up to the crisis. But they are showing strong signs of revival. What bothers some current and former regulators and industry watchers is that much of the regulatory framework that enabled the crisis remains in place.
“What’s playing out is exactly what we were worried about,” said Sheila Bair, former chairwoman of the Federal Deposit Insurance Corp. “Most everything is going into these private markets where regulations require little visibility of what’s happening.”
With their access to off-balance-sheet entities largely preserved, the banks continue to hold vast sums of securitized loans offshore and off their books. Together, JPMorgan Chase & Co, Bank of America Corp, Citigroup, Wells Fargo & Co, Goldman Sachs Group Inc and Morgan Stanley hold nearly $3.3 trillion of securitized loans in off-balance-sheet entities.
“I still think there is significantly more risk there than is being reflected on banks’ balance sheets,” Bair said.
It isn’t just the banks. As hedge funds and private equity funds have ramped up high-risk lending in recent years, their use of off-balance-sheet vehicles has ballooned. For example, KKR & Co LP’s reported exposure to loss from off-balance-sheet entities has risen tenfold since 2010. A KKR spokesperson said less than half of the firm’s off-balance-sheet entities are composed of corporate loans originated by KKR and securitized into collateralized loan obligations, but declined to provide numbers or other information.
Robert W. Stewart, a spokesman for the Financial Accounting Foundation (FAF), the private-sector body that oversees FASB, said the new rules “resulted in a dramatic increase” of the holdings financial firms and companies in other industries keep on their books. “These standards eliminated long-standing exceptions for securitizations, and that reduced the opportunity for work-arounds,” he said.
HOLDING THE BAG
Even before the crisis, FASB struggled for years with how banks should account for off-balance-sheet entities and the assets held in them.
Every additional dollar in assets on a bank’s balance sheet requires holding more idle cash in capital reserves to cover those assets if they drop in value. The increase in reserves means less revenue and earning power and smaller employee bonuses.
Off-balance-sheet vehicles free banks to make more loans and build assets without having to add to capital reserves. These assets include all sorts of things: Treasury securities, home and commercial real estate mortgages, auto loans, even “junk” loans used to finance leveraged buyouts. Banks bundle the assets into securities, sell the securities to investors, and then park the assets in separately incorporated off-balance-sheet vehicles.
In theory, if one of these vehicles fails because the underlying assets sour - as, for example, when large numbers of homeowners default on their mortgages - the bank does not have to bail it out.
In practice, they often do - to preserve their reputations in a lucrative market, and because specific asset-backed securities often carry implicit or explicit guarantees that leave banks legally liable to make investors whole.
“Repeatedly, constantly, when the new off-balance-sheet entity got into financial difficulty, the bank bailed out the entity that they supposedly didn’t have any more connection with,” said Halsey Bullen, who was with FASB from 1983 to 2006, much of that time managing financial instruments projects.
FASB sought to address the issue several times before the crisis - to no avail. It tightened rules on Special Purpose Entities, the off-balance-sheet vehicles that played a big role in the collapse of Enron Corp in 2001. But banks simply started using alternatives called Qualifying Special Purpose Entities (QSPEs).
Again, in 2005, as banks were stuffing huge amounts of securitized subprime mortgages into QSPEs, FASB Chairman Robert Herz began to push for change. Earlier in his career, Herz turned down a shot to be U.S. chief executive officer of accounting giant PriceWaterhouse Coopers, where he was a partner, rather than give up his campaign to remake accounting standards. Now, he wanted to toughen the rules and require banks to put more loans back on their balance sheets.
“Clearly there were lots of things that had been given off-balance-sheet treatment that should not have been designated as such,” said Herz. “All the big Wall Street firms were doing it.”
Herz was opposed, former FASB officials said, by former JP Morgan Vice President Leslie Seidman - a FASB member known to some of her critics as “Loophole Leslie” for her advocacy of bank-friendly accounting rules.
Herz’s effort fizzled out. “I started to realize that some people on the board didn’t want to get anywhere,” said Don Young, a FASB board member at the time.
Seidman said she objected to the initial proposals because they would have made the rules more complex and created more exceptions.
Then, in 2008, the U.S. housing bubble burst, and with it, the market for mortgage-backed securities.
Citigroup announced that it was on the hook for more than $100 billion in loans it had placed in off-balance-sheet vehicles. All told, the biggest U.S. banks wound up bringing back onto their books more than $300 billion of guarantees for off-balance-sheet loans and bonds, according to a report by RiskMetrics Group Inc. The banks paid out billions more in lawsuits to investors demanding that they take responsibility for off-balance-sheet loans.
Under pressure from Congress, FASB again took up the issue. Banks bombarded the board with comment letters and tasked full-time staff to sway it as it started drafting new rules.
Force banks to report too much lending on their balance sheets, Citigroup, Bank of America and other banks argued, and credit available to ordinary Americans would shrink. Make them disclose too much information about what was going off-balance-sheet, and it would just confuse investors.
In September 2008, Young, the FASB member, told a congressional hearing: “There was unending lobbying of the FASB” to preserve banks’ right to continue stashing loans off their balance sheets.
Even so, FASB’s draft rules did away with QSPEs. That left something known as a Variable Interest Entity, which carried a tougher standard banks had to meet to secure off-balance-sheet treatment. But then, as the lobbying continued, FASB relaxed the rules for VIEs, essentially closing one loophole while opening another.
“The changes were all in the direction of watering it down,” said Marcus Stanley, director of Americans for Financial Reform, a consumer group in Washington, D.C.
There are concrete measures of the banks’ lobbying success. When FASB published the first draft of the rules in 2008, Citigroup warned in its annual report that it expected to increase its risk-weighted assets by $100 billion as a result of having to bring loans onto its books.
A year later, after FASB issued its final draft of the new rules, Citigroup brought just $24 billion in risk-weighted assets back onto its books. At the time, it had $557.5 billion in off-balance-sheet loans.
The new rules took effect on Jan. 1, 2010. The top six U.S. banks brought about $400 billion of loans back onto their books, a 2010 Deloitte Study found, a fraction of the $4 trillion of loans - mostly mortgages - those banks then held off their balance sheets.
That August, Herz walked out of a FASB meeting and resigned. He said at the time that he wanted to spend more time with his family. Several people close to him said FAF, the overseer of FASB, forced out Herz amid growing backlash against his tough stances on some accounting rules important to banks.
Stewart, the FAF spokesman, declined to comment on the circumstances surrounding Herz’s departure.
The six-person committee overseeing the selection process for Herz’s successor included a former chief investment officer of Swiss bank UBS AG; the managing partner of Brown Brothers Harriman & Co, one of the largest private banks in the U.S.; a former American Express vice president; and a lawyer from Brown & Associates, a law firm that caters to financial industry clients.
They chose Seidman, the first former bank executive - rather than auditor - to hold the top spot.
Bank stocks rose on the news.
Seidman’s term at FASB ended in 2013. She is now a director at ratings company Moody’s Corp and on the board of governors of the Financial Industry Regulatory Authority, Wall Street’s self-regulatory group.
…
Oh, this is some great stuff …
“In letters to the Securities and Exchange Commission, Higgins argued that divulging more details about the mortgages and other financial products that go into such securities would only confuse investors. And it was investors, with “insufficient understanding and commitment” to their investments, who had been the real cause of the crisis, he argued in a July 2008 letter.”
What a steaming pile of. ..
This is all theater for the thinnest of public cover. As long as Congress has de facto legalized bribery for itself, this sort of thing will continue. It’s great for small, organized, well-financed groups to gain outsized influence, but ultimately, it undermines the rule of law.
As far as the financial crisis goes, bad debt was the core of it. As long as they don’t force lenders to retain repayment risk, and as long as they don’t ringfence consumer deposits, the previous system will continue, with window dressing.
I think this is where all the paper for the millions of vacant houses is sitting.
“Read the Reuters article to see what a joke FASB has become.”
Legalized fraudulent activity is no joke.
Ben Jones: Two broke companies doing about $5 trillion in business, and they can be bailed out with $200 billion? And we’ve been told they’ve paid it all back!
Actually, the current narrative is that the government made a PROFIT on the bailouts.
The numbers are not easy to come by, by design.
Yeah, “made a profit.” I’d like to see the numbers to back that balderdash up.
“The 683-page rule detailed a raft of new disclosure requirements for asset-backed securities – but only for those registered with the SEC for general offer to the public.”
So all that is needed for public buyers of the stuff to do in order for them to more-or-less fully understand what is going on is to read the full-disclosure stuff that the SEC requires.
And good luck with that ever happening.
What the SEC requires is FULL DISCLOSURE. It’s okay for a company to totally rip off its shareholders as long as the people who run the company fully disclose that that is what they are doing.
But the people who run these companies don’t really care what is or is not fully disclosed because they know that few investors ever trouble themselves with reading and understanding the stuff.
Sorta like NOT reading and NOT understanding a loan document that contains such interesting words and terms as “adjustable rate” that is placed before someone who is eager to place his signature on a dotted line that will commit himself to, oh maybe SEVERAL HUNDRED THOUSAND dollars of monthly payments spread out for maybe THIRTY YEARS … or so.
“Jamie Dimon got Bear Stearns for a bargain price — and he says he’s still paying for it.”
Nobody put a gun to his head and made him sign on the dotted line…did they?
I got a free cat who became my loving companion. She got older and got sick and became my $4,000 cat. Petsmart and Petco support adoption.
Instead of a trip to the vet, she could have provided a few meals for a Chinese restaurant. Decisions, decisions, decisions…
A couple of things to note about future crises:
Financial firms that anticipate them and position themselves before the shit hits the fan can mske boatloads of money off the misfortunes of others.
And politicians have a great opportunity to show off their crisis management skills.
“And politicians have a great opportunity to show off their crisis management skills.”
And can then shove through some legislation that will insure that such an unforeseen crisis “will never happen again”.
A crisis is a terrible thing to waste.
And every crisis victim who is helped represents another Democratic vote!
Not to inject politics here, but the causes of the next crash will have been entirely on Obama’s watch. Instead of learning from Bush’s mistakes and taking action to stop it from happening again, he brought in the exact same crowd of bozos who let it happen the first time. Playing golf with Wall Streeters may seem like a silly criticism, but as a symbol of how he prepared the country for the next crisis, it is completely deserved.
Not to inject problem solving logic here, but if Obama’s administration carried the same baton that Bush’s did, how can one conclude that the problem was caused by Obama?
Bushs and Obamas come and go and the problem remains. If you identify the wrong cause, corrective action is likely to be fruitless.
Not to inject reality here, but Obama and Bush relied on essentially the same Goldman Sachs-annointed coterie to run the Fed and to formulate economic and monetary policy (translation: how to best swindle the 99% for the benefit of a corrupt and venal .1%. The looting will continue or escalate under HillaryJeb, the epitomes of crony capitalism, as the same “economic team” will be kept in place. Changing out the water carriers every four years changes absolutely nothing, as 95% of the dolts known as the US electorate have yet to grasp.
Hopefully the con is getting thin and more people are taking advantage of the internet to be better informed about the games being played with their lives and their livelihoods. It is just what to do about it that is the problem.
I have appreciated this forum.
Yes sir. This blog is unique in that regard. The very second the widespread fraud and crimes is mentioned on comment area of any other outlet on the net, the posts are either censored or the paid hacks swarm it with BS.
From Arizona:
‘Local home prices are no longer rising because of a rebound effect. The markets with the fastest employment growth now have the largest price increases.’
‘For much of the recovery, the rebound effect was more closely tied to local price gains than job growth was. Today, things have reversed: Job growth is now much more important than the rebound effect.’
Rebound effect; prices were skyrocketing because they fell. The REIC would have us believe prices fell too far. But what about that rebound? Did it occur naturally, as the forces of supply and demand wrestled to establish equilibrium? Or did Bernanke put a ‘floor’ in? And how did Bernanke know the magic moment when prices had reached equilibrium? Or was his concern more about the mountain of debt backed by houses? And what’s all that foam doing on the runway?
I’ll give them this: They (FED) sure know how to blow one hell of a bubble, and repeatedly.
I hear alot of conservatives defending Bush and blaming liberals and sub-prime mortgages. But it still goes back to Bush for not taking the appropriate actions to limit the outsourcing of jobs. It is the greed behind the globalists and that reduction in the American workers income that motivated other greedy people to loan sub-prime mortgages that kept housing from dropping in price when wages no longer supported the market.
The first foul belongs to the globalists. Conservatives and liberals alike participated in the greed. The system is unsustainable and it continues.
Rumor is that HRC will be announcing her candidacy tomorrow. Do you think she packs the gear to handle the bag of turds the next POTUS will get? (Why would anyone want that job, now?)
Someone needs to photoshop Ole Hill right next to Ole Bill on that photo of the NAFTA presidents
The ageism is ugly and Hill is not responsible for NAFTA. It was still Bush who failed to take the appropriate actions as the situation created the job crisis. Maybe he thought it was best to just kill off a whole bunch of Americans in war.
Both parties share the blame for the loss of jobs, but the Iraq War is an entirely different class of failure. Its the standard by which all other presidential stupidity will be judged.
And both sides want the next war the same as both sides wanted the last war, and the one before that, and so on. All MIC banksters controlled shills.
Hill’s shills are out to shill. I am an unabashed ageist, especially now that those too old to give up the reigns of power include Boomer trash like her. She is responsible for NAFTA as much as Slick Willy and all the others that stood next to him.
Onger, I have been reading alot of the posts on this blog with great interest as the discussions are thought provoking and informative. YOURS is not. I suggest you get your ridiculous bigoted ass back to your momma for some schooling before you say anything else stupid.
Bigoted because I’m pointing out she is too old to be president? She’ll be the same age as Reagan was when he took office. Too old then, too old now. I guess she’ll be fully releasing her medical records to show there are no problems then. I’ll expect them around the same time I expect her server. Nice try shill.
Bigoted because she is a great age to be president and her experience is a major asset. Regan was born in 1911 and in office in the 80’s. These days we know more about aging and a lot of people stay vital well into their 70’s.
Furthermore, your derogatory reference to Boomers indicates you are part of the young and dumb generation that voted for Obama who never released his medical records. Or any of his other records, for that matter. I guess what you don’t know makes you better than me. Go home to your momma, fool.
It is obvious to me that Shrimpsaladsandwich and Richard Warm Onger are both the same person posting as two different people. The lack of content and accuracy as well as the insults and name calling to deflect the issue suggest something rotten about his posts.
Outsourcing was already in overdrive when gw came along. He accelerated it.
Duly noted. It was still a problem that became Bush’s responsibility and how he handled it (accelerating instead of decelerating) caused wage problems that … and so on. They wanted to have their cake and eat it to, but the math says the system is unsustainable. It always did.
Duly noted. It was still a problem that became Bush’s responsibility and how he handled it (accelerating instead of decelerating)
This is exactly the same with Obama and housing.
Maybe Bill Clinton made a mistake with NAFTA, or maybe he could just not stop the globalists. But it was still up to Bush to deal with the turd he got. Neither Bush nor Obama have dealt with anything effectively, while the elites controlling both parties have just looted. We are in a bad mess. 16 years of poor leadership and a failed economy. That is what the next POTUS gets.
I tell you what, it is looking like Bush or Clinton and I’ll take Clinton. The last Bush was all for killing off the excess workforce and the next one wants to import more “fertile” immigrants who will appreciate the crummy jobs and wages. Cattle, I tell you we are livestock to those people. Dumb them down.
If HRC starts looking like Obama 3.0, I am just going to get my picket and take it to the streets.
You who understand what is going on must keep talking. Here and where ever you can. We are being economically enslaved.
Neither of those bought and paid for whores are worthy nor can a single word they say be trusted. We’ve been through this every 4 years for decades. Select from two worthless turds. No thanks. A vote for either one is a tacit endorsement of the system that enslaves.
I used to feel that way. Don’t vote, it only encourages them. The election of Bush in 2000 changed my mind. The election of Obama in 2008 made me an activist. Formerly a moderate Democrat, I left the party over the extreme leftist Stalin stench that Obama brought.
But I have had snipes and insults but no answer to my question on HRC’s ability to handle the economic situation unfolding.
She’ll handle I well for her masters at Goldman Sux. Quit shilling for her shill.
Speaking of shills, it is pretty obvious that you are Richard Warm Onger blogging under two names. Your lack of content and name calling gives you away. I now suspect you cannot go home to your momma, because you are already there, posting from her basement.
We don’t like Hillary because she’s the same old news as Bill and all the rest in that NAFTA pic. My generation, the one that comes after the Boomers, was left holding the bag for all their nonsense. My momma was not a Boomer, she was a member of the Silent Generation.
So somehow people born between 1944 and 1962 are responsible for your problems? It must be pretty dark in that basement.
Shilling for Hillary ain’t gonna change things. Wake up.
Onger,
Calling me a shill is not going to change my mind. Go home to your momma and don’t come back until you have some content.
That she will be 70 when elected is content desperately trying to be ignored or suppressed because Boomers suck.
Shrimpsaladsandwich Richard Warm Onger
That is not content.
Hillary Clinton Born: October 26, 1947 (age 67), Chicago, IL
Nobody is ignoring it.
Much too old. Also some problems with sickness. You will vote for her no matter what. You are not a skeptic from Florida or elsewhere.
I did not ask you who I was. I already know that. The question was about the persons abilities, not their age. You still have no content Shrimpsaladsandwich Richard Warm Onger.
Some bankers are capable of knowing their current delicate status.
Jamie Dimon is not one of them.
Even though they have discarded so much of their rotten mbs unto the government, not all of it is there yet. But their leverage is back to the same as 2007 !
Off balance sheet does not eliminate contingent liabilities. With apparently most of their OBS securities in foreign hands - how are those foreigners doing with higher repayments due to the USD escalation?
If payment for losses doesn’t sink them, legal fees will. No protection for either.
Current bank status ? Fixed low interest incomes into the distant future against rising cost of capital. Sinking global economies and a litigious world. Depreciating leverage due to profit rape. A new government soon that will not abide by their short term “fixes”. FASB that will finally have some guts - mark to market. Ridiculous repurchase of shares program which has done so much harm to so called recovering bank’s capital. Some Oracle !
Many on this board have said that in 2008 the government should have let the economy self right. Not Dimon and his buddies. But it should have been allowed to.
yep…and here is an interesting article comparing Jamie Dimon w/ Walter White of Breaking Bad infamy…
http://www.fool.com/investing/general/2013/09/30/is-jamie-dimon-the-walter-white-of-banking.aspx
Or, the federal government could have said “we stand ready to expedite your Chapter 11 process and provide creditor in possession financing, after your outstanding executive pay is wiped out, you sign employment contracts paying no more than the President of the U.S. (if we decide to keep you), your shareholders are wiped out, and your bondholders tax a very large haircut and have their remaining rights turned into equity.”
Sure we’d have gotten another Great Depression. But we wouldn’t be ruled by these oligarchs like we are now.
The oligarchy has become malignant, as most do. 100 years and multiple generations of those who do not have to live in the world as it is. They are disengaged and dysfunctional. Few worry about any rebellion from the masses while the populous has few who talk rebellion. My own position is comfortable enough, although my future is not bright. But I have a daughter. She will not have the opportunities I had if thing keep going the way they have been.
I have been in rebellion of the will of the oligarchy for the last 15 years and they have made no profits off me. And all I can tell you about the future is that I will not go quietly.
At the time, I can understand these policies as a result of panic.
Seven years on however, it seems keeping them is the result of a different motivation.
We gave up our government in response to economic terrorism.
ruled by these oligarchs? no different than the next oligarchs.
that’s what happens to people. over. and over on human history.
the greedy corrupt the powerful who then enslave the rest for their pleasure.
endless cycle. never changes.
There are those occasional nasty interruptions, such as the American Revolution of 1776, or the French Revolution of 1789, which keep matters interesting over the course of history.
Is using securitization to hide debt “off balance sheet” strictly a U.S. problem?
Markets
China Securitization Surge Raises Concerns
China’s Asset-Securitization Boom Prompts Worries About Possible Risks
By Fiona Law
Updated Sept. 2, 2014 5:38 p.m. ET
China’s securitization market is booming, as Beijing relaxes rules to help funding for companies and ease the strains on banks. That is triggering worries the surge could add risks to the financial system.
Sales of asset-backed bonds so far this year have jumped to $19.7 billion, up from $3 billion for all of 2013, according to data tracker Dealogic. The Chinese securitization market overtook South Korea’s this year to become the largest in Asia except Japan.
A variety of institutions have led the spree, including large government-owned banks and local lenders unloading loans from their books and packaging them into products such as collateralized loan obligations, which make up the bulk of such asset-backed securities in China. Financing units of car makers from Ford Motor Co. to Volkswagen AG have sold debt instruments composed of bundled auto loans.
Asset securitization provides businesses with an additional channel of credit as banks have become increasingly selective about lending and are looking to clean up their balance sheets.
“Securitization can in theory help banks vacate existing loans from their balance sheets, making room to lend to the underserviced sector in the economy,” said Goldman Sachs economist MK Tang.
…
China’s Debt Binge Spawns Asset-Backed Bond Boom
by Lianting Tu
5:10 PM PST
March 2, 2015
(Bloomberg) — Banks are bundling loans into securities to make room on their balance sheets for more lending amid a fading property boom and stuttering economic growth. This isn’t the U.S. circa 2007, it’s China in 2015.
Having banned asset-backed bonds in 2009 after they’d helped spark the global financial crisis, authorities in the world’s second-largest economy started allowing sales in 2012. Issuance has climbed since then to 282.3 billion yuan ($45 billion) last year, almost 15 times the offerings in 2013, according to data compiled by Bloomberg. Sales are already up 147 percent this year versus the same period in 2014.
The boom is alarming ratings companies as soured loans rise to the highest in four years and China’s total debt soars to over 250 percent of its gross domestic product, more than double the ratio for the U.S. and Germany. Chinese banks’ profit growth is slowing and the nation’s economy, which expanded at the weakest pace since 1990 last year, is struggling to regain momentum.
…
You paid how much for a house? And you borrowed the money?
LOL
Oregon City, OR List Prices Crater 6% YoY; Inventory Skyrockets 85%
http://www.movoto.com/oregon-city-or/market-trends/
It’s Time for the GOP to Revisit the Housing Crisis
Hard times in North Las Vegas, Nev. (Ethan Miller/Getty)
by Mona Charen April 10, 2015 12:00 AM
“Who controls the past controls the future.” — George Orwell, 1984
The candidates who are announcing for president will be cheered to know that the Democratic party has been hemorrhaging popularity the way the housing market lost value in 2008. In 2009, 62 percent of Americans had a favorable view of the party. In January, only 46 percent said the same. But the Democrats’ loss has not been the Republicans’ gain. A 2015 Pew survey found that 40 percent of Americans had a favorable opinion of Republicans in 2009, and just 41 percent do today.
Republicans might profitably ponder two things. First, this question from a Pew poll: Which party “cares about the problems of the middle class?” Sixty percent said the phrase applied to Democrats. Only 43 percent thought it accurately described Republicans. The second thing they might consider is revisiting that housing collapse. According to the Federal Reserve, the median net worth of American households fell by 39 percent between 2007 and 2010. Not only was a Republican administration in office when the bottom fell out — that alone is usually enough to convince voters to lay blame — but the Democrats seemed to win the intellectual argument.
The Republicans’ case went like this: Unwise federal-government policies that urged lenders (and purchasers of those mortgages) to make loans to people who could not repay them tampered with the normal risk management of the housing sector and led to a system-wide collapse. The Democrats’ explanation was that “out of control” bankers, recently liberated from regulation, made risky investments in complex financial instruments that they didn’t even understand themselves, and tanked the financial system. Worse, they received taxpayer bailouts.
The Democrats’ interpretation was naturally echoed by the press, and because they won the 2008 race, became enshrined in law. The Dodd-Frank legislation ignored government’s role in the crisis completely, merely layering new levels of regulation on banks and other businesses.
A new book by Peter J. Wallison, Hidden in Plain Sight, offers a comprehensive and thoroughly convincing case for why the received version of the financial crisis is wrong and why Dodd-Frank is such a serious mistake. Not only does Dodd-Frank virtually guarantee that another financial crisis will eventually envelop the economy, it is also responsible for the extremely slow recovery we’ve been mired in since 2009.
…
Over 8 years now and still little to no recovery. Fines were paid money cures all problems, who stood trial, who went to jail, the powers want you to believe Madoff was a rogue and isolated incident.
In fact in the crisis then and now they are many Madoffs who have all but ruined the housing industry and economy in general, but the real culprit, the psyche of the mind, that people are scared to buy even if they have money and this is a huge problem.
No. That’s how markets work. Ask a grossly inflated price, it’s going to sit until the price is slashed.