Capitol Hill Blue Forums Political Issues The Obama Administration 6,825.42 Nice job Mr. President

Good stuff, Ma, thanks for posting! Now we have something to talk about! From your first article:
My question is (and I hope I am not risking too much adherence to the topic of the thread!): what effect would these new jobs in alternative energy have on the stock market?

From your second article:
Looks to me like the first and third problems cancel each other out. By the time the new carbon taxes take effect, there will be new licenses in place for various alternative energy projects, since obviously businesses are already planning right now for the "recession" to be over by the time period in question.

My question to you Ma: If Americans are making more money by virtue of being freed from low-paying service industry jobs to enter the new market of higher-paying alternative energy jobs, would you blame the Obama Administration for the accompanying "tax increase" they will "suffer"?

I appreciated your dissection of the arguments in the second article, and I had already cued up the paragraph you quoted, Steve, so you saved me that effort too. This has gotten pretty far from the central tenet of the thread, and I have my suspicions as to why that is, but I will simply point out that the first article is far more balanced than portrayed here, and that the second article is a pretty scatter-shot complaint with nary a word of substance in it. Clearly the author doesn't like carbon taxes, but I would hardly call it "an analysis." It is, however, an opinion, and one that I do not share.

To get backon topic. Mar 09 at 4:21 PM


6,547.05 -79.89 -1.21%

Here's a really good response to this drivel comparison by Dick Meyer at NPR: Wall Street Blame Game: Tag, You're It

It would also seem impossible for any one person to have the power to solve the problem.

As the man said, "I am shocked - shocked - that there is gambling going on here!"

I think that the first sentence in the article you linked to sort of sums it all up, doesn't it. You know, the reference to "common sense."

Wall Street Blame Game: Tag, You're It [/quote]


NWP and Julia...I'm with you both on your postings above. Too much to blame on any one person, and too much to solve by any one person.

This thread has a number of postings that piecemeal together a pretty obvious chronology, set of events, people involved, and etc., etc. that offer us a fairly clear picture of who to blame. The list is a long list.

Just a very quick recap of these legislative actions that led to a violent crash of our economy and financial institutions:...so take a deep breathe and dive in!

1) Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing.

We Need To Jump Forward In Time Regarding FM and FM...

In October 2000, in order to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of "My Community Mortgage" loans. In November 2000 Fannie Mae announced that the Department of Housing and Urban Development (“HUD”) would soon require it to dedicate 50% of its business to low- and moderate-income families." It stated that since 1997 Fannie Mae had done nearly $7 billion in CRA business with depository institutions, but its goal was $20 billion. In 2001 Fannie Mae announced that it had acquired $10 billion in specially-targeted Community Reinvestment Act (CRA) loans more than one and a half years ahead of schedule, and announced its goal to finance over $500 billion in CRA business by 2010, about one third of loans anticipated to be financed by Fannie Mae during that period.

Okay...Back In Time - to the Kick-Start of the Subprime debacle...

2) In July 1993, President Clinton asked regulators to reform the CRA in order to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden.

3) The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which repealed restrictions on interstate banking, listed the CRA ratings received by the out-of-state bank as a consideration when determining whether to allow interstate branches. According to Bernanke, a surge in bank merger and acquisition activities followed the passing of the act, and advocacy groups increasingly used the public comment process to protest bank applications on CRA grounds.

One might ask..."So what?"

According to the Joint Center for Housing Studies at Harvard, the changes to the CRA in the early to mid-1990s made the ratings more transparent and increased the incentives for larger banks to achieve at least a Satisfactory rating. Finally, most observers agree that the 1995 interagency revisions to the CRA regulations had the biggest impact on CRA lending and led to increased lending and reduced regulatory burden.

Specifically, the evidence shows that the changes made to the law and regulations in the 1990s coincided with a rise from $1.6 billion in 1990 annual commitments to $103 billion in 1999, and peaking at $812 billion in 1998. CRA lending volume increased greatly between 1993 and 2000. The number of CRA-eligible home purchase loans originated by CRA lenders and their affiliates rose from 462,000 to 1.3 million.

Clinton put a lot of pressure on the Feds to do what they needed to do to make his dreams come true.

So in other words...Clinton dumped a ton of money to allow low income to middle low income family to get housing.

But...there were still a few obstacles that stood in the way for Washington, lending institutions, and Wall St.

My-O-My...the Fun Begins...

4) The Gramm-Leach-Bliley Act of 1999, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, 113 Stat. 1338, is an Act of the United States Congress which repealed part of the Glass-Steagall Act of 1933, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.

READ THE FOLLOWING VERY CAREFULLY...

The Gramm-Leach-Bliley Act (GLBA) allowed commercial and investment banks to consolidate. For example, Citibank merged with Travelers Group, an insurance company, and in 1998 formed the conglomerate Citigroup, a corporation combining banking and insurance underwriting services under brands including Smith-Barney, Shearson, Primerica and Travelers Insurance Corporation. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act by combining insurance and securities companies, if not for a temporary waiver process. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the financial services industry.

NOW CONGRESS GOES FOR THE THROAT...

5) The Commodity Futures Modernization Act of 2000 or CFMA (H.R. 5660 and S.3283) is United States federal legislation which repealed the Shad-Johnson jurisdictional accord, which had banned single-stock futures in 1982. The legislation also provided certainty that products offered by banking institutions would not be regulated as futures contracts.

In other words...Banks could compete with insurance companies and Wall St...and NOT BE REGULATED. But the same applied to the other competing institutions!

(Simplied symoposis)Thus...we have Morgages bundled into graded securities by banks without the underlying collateral attached, credit derivative swaps being sold to hedge bet the mortage defaults...and consequently we have a DERIVATIVES MARKETS and SECURITIES MARKETS UNREGULATED.

This act was incorporated by reference into H.R. 4577, an omnibus spending bill. It was passed by the 106th United States Congress and signed by President Bill Clinton on December 21, 2000; the legislation thus became law as a part of H.R. 4577 - Public Law 106–554, §1(a)(5).

The act has been cited as a public-policy decision significantly contributing to Enron's bankruptcy in 2001 and the much broader liquidity crisis of September 2008 that led to the bankruptcy filing of Lehman Brothers and emergency Federal Reserve Bank loans to American International Group[1] and to the creation of the U.S. Emergency

WHOOOOAAA! BUT WAIT...What about SUBPRIME LENDING while all of the above is going on?

6) The 1990s saw the development of "private-label securities" issued by commercial banks and other entities generally free of the regulations governing ordinary banks. These were similar to the mortgage-backed securities sold to investors by government-authorized entities like Fannie Mae, but they did not carry the same implicit government guarantee that investors would be protected against unexpectedly high default rates.

Initially, private-label securities involved only "prime" mortgages issued to low-risk borrowers, but then lenders used them to back jumbo loans that the government-authorized lenders were not permitted to make. Finally, lenders used them to back subprime loans to borrowers with poor credit histories and Alt-A loans to ones deemed safer than subprime but not as good as prime.

The private-label market mushroomed from $586 billion in 2003 to $1.2 trillion in 2005, as subprime and Alt-A loans grew from 41% of the private-label market to 76%. Investors were eager to buy these securities because the higher mortgage rates charged to riskier borrowers meant higher yields on the mortgage-backed securities.

So who is at fault?

Check out the TOP 25 LIST...and then some!

Both Democrats and Republicans are at fault...they've been in it together since the beginning of it all.

HOWEVER...all of the above just scratches the surface!

****************************************************************

Of course my version of this gig is a wee bit on the dramatic side, but non-the-less, I believe that the collective history over the past 20 years might win the hearts of a jury decision based on perponderance of evidence.

And Finally, JUST FOR YOU MA!...The Obama Market Closing Day March 9, 2009

6547.05 -79.89 (-1.21%) Mar 9 4:03pm ET
Open: 6625.74
High: 6755.17
Low: 6469.95

Volume: 365,747,592
Avg Vol: 379,718,000
Mkt Cap: N/A

Over the weekend, Bob Brinker of Money Talk fame (ABC Radio Network SA/SU 4 PM to 7 PM EDT) laid blame on Phil Gramm for the repeal of the Glass-Steagull Act in 1999 and all of his Repbulican cronies for pushing for the repeal which lead investment bankers into full banking and full banks into investment banking.

There's a reason why the depression era oversight sucessfully lasted over 50 years and it only took less than 10 years for the walls of Wall Street to come crashing down all around the money grubbers once it was repealed.

Now Wall Street is whining. Too bad you money grubbers!

How low will the DOW go?

While I understand and don't radically dispute your comment above, when I have seen it raised in the past, it too often is accompanied by assertions that people in substandard housing areas were the cause of this. It took a while to track down a source to balance that view but have one now. And it in fact links up well with your thesis at the top of the thread because it brings into focus the role that the lenders and others who are part of the "Wall Street" mess played in taking us down this road:
http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?_r=1
Two passages in particular:


and


Do the folks in this neighborhood who fell for these schemes deserve a portion of the blame for participating? Sure. Are they the root of the problem? Not hardly.

And so we have the companies that fostered the predatory lending going under as the fruits of their practices over-ripen, upstream (or down, depending on your point of view) concerns who bought the derivates based on these predatory practices taking major hits as the ephemeral nature of their investments fly away, major lenders taking hits that exceed their ability to absorb, the market crashing, and the economy going into an increasingly rapid tailspin.

All resulting from practices that began before Barack Obama was even a Senator, much less President. So to give him "credit" for this mess is overly "generous".

Stocks Shoot Higher on Citigroup Profit News

Oooh, oooh, oooh,... Citigroup reported a profit during the first two months of the year...and, and, and, guess who was President for most of those two months!!! That means that President Obama is responsible for Citigroup's return to profitability!!! Hallelujah!!!

[Please note sarcasm alert -> ]