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Dec 6th, 2017
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Joined: Feb 2004
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journeyman
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journeyman
Joined: Feb 2004
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Hmmmmm, then perhaps a really good question to pose to the current crop of Presidential candidates is this,
" Are you ready, willing and able to reinstate the Glass-Steagall laws"
Here in America we are descended in blood and in spirit from revolutionists and rebels -- men and women who dare to dissent from accepted doctrine. As their heirs, we may never confuse honest dissent with disloyal subversion.
Dwight D. Eisenhower
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Joined: Jan 2003
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old hand
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OP
old hand
Joined: Jan 2003
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The Glass Steagall repeal is a fascinating story, recapped here: Demise of the Glass Steagall ActHere's the upshot: As the push for new legislation heats up, lobbyists quip that raising the issue of financial modernization really signals the start of a fresh round of political fund-raising. Indeed, in the 1997-98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spends more than $200 million on lobbying and makes more than $150 million in political donations. Campaign contributions are targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.
Oct.-Nov. 1999
Congress passes Financial Services Modernization Act
After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.
On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.
On Oct. 22, Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?" Without question, this was the underlying reason for the subprime problem that may well bring down the international monetary system... The Greed, Power and the disappearance of basic morality that will become the heritage of today's children.
Last edited by itstarted; 12/14/07 12:35 PM.
Life is Good!
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Joined: Sep 2011
Posts: 18,003 Likes: 191
Moderator Carpal Tunnel
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Moderator Carpal Tunnel
Joined: Sep 2011
Posts: 18,003 Likes: 191 |
There are a number of labels that have been applied to the "financial markets" of late that are by their very nature misleading. An "investor" in another context would be a "bettor." While the purpose of the "bank" remains essentially the same, public banking and investment banking play (or should) by different rules. We forget, though, that Reagan was not the instigator of bank deregulation, but that Jimmy Carter was also under the sway of the Chic-anery-go School of Economics and Milton Frie-ride-man. Reagan did make it an art form and push it well beyond rationality, but it was an equal-partisan project, and as itstarted points out, Bill Clinton was in on it too. The S&L debacle of Bush Sr.'s tenure was a direct and predictable result, just as the crash of '87 was predictable based upon the "go go" investment cons of Michael Milken and Ivan Boesky, etc., and just as the current financial meltdown was predictable.
That is what I find so frustrating about the current situation (and many of the errors of arrogance of the current administration): everything was so predictable. Those with knowledge and a modicum of intelligence foresaw the problems. The problem, of course, is that they do not occupy seats of power.
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: Sep 2005
Posts: 12,581
Pooh-Bah
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Pooh-Bah
Joined: Sep 2005
Posts: 12,581 |
And that's where we stand today. Victims of an unregulated market, and banking bets gone bad. Rather than falling back on the "unregulated market" shibboleth, why not support getting off of this recurring Government-induced yoyo credit ride by forcing the banking system and financial industry to submit itself to the rigors of a free market, eliminate the government monopoly on money creation, and pass an amendment that would mandate a wall of separation between industry and the State? Of course, that would mean that politicians would have less 'goods' to exchange for votes and campaign contributions, but we can probably survive that.:-) Yours, Issodhos
"When all has been said that can be said, and all has been done that can be done, there will be poetry";-) -- Issodhos
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Joined: Jan 2003
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old hand
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OP
old hand
Joined: Jan 2003
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Well yeah... A free market is great, and I would be first to support this, if there was also transparency.
Some time ago, I posted a link to the risk calculation for a derivative. It was a 7 page single spaced calculus formula with perhaps 50 variables.
On the same theme, the securities that have been developed to obscure the churning of the subprime and associated disasters, are just as obscure. In effect a result of defacto deregulation.
Much as we would like to think that banks are in integral part of our free enterprise systemm, in truth, the failure of the SEC to follow up on the most simple fair trading (generic fair trade) rules, has left the entire banking industry in shambles. The current problem is, in the final analysis, little more than a Ponzi scheme, a pyramid scheme, or the worst example of multi level marketing.
And you may argue that free enterprise would eventually filter out the bad guys. Maybe... but the recent success of Solomon brothers in outguessing the entire industry. says to me that it isn't integrity that builds business, but being one step ahead of the next cutthroat pirate.
No... the market is hard enough to figure out, without having to wonder whether or not the bank or broker is hewing to a mutually agreed on moral standard... that has no oversight.
Our world moves too fast, and the money has become too important to allow me to believe that self regulation would be in the interest of the non-professional investor.
Sorry... though I don't like our litigious society,I'd feel helpless without (at least) some basic regulation with oversight.
Life is Good!
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Moderator Carpal Tunnel
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Moderator Carpal Tunnel
Joined: Sep 2011
Posts: 18,003 Likes: 191 |
Transparency is absolutely required to have a true free market, and invariably absent whenever there is one. Increasing profit margins require that information be kept from prospective vendees so that they cannot ascertain the true "value" they are receiving. The problem in virtually any market is that it is manipulated by the purveyors to the detriment of the buyers, most commonly, but not always, through monopolistic practices and without exception through deception. This habit of deception then pervades the whole market sphere, and the invariable result is corruption and collapse, which is exactly how this crisis came about. The purpose of the government should be ensuring transparency (but then, that would entail being honest about their own practices, and the public wouldn't put up with what they do). "Market" forces are almost always anti-humanitarian, looking only at the mechanics of the general scheme and discounting any impact it might have on individuals in the process. It is very difficult for even a savvy participant to work through the layers of deception that underly most economic activities. Want a wake-up on your own inadequacy? Try these economics tests from the National Economic Challenge (National Council on Economic Education/Goldman Sachs Foundation).
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: May 2005
Posts: 47,430 Likes: 373
Member CHB-OG
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Member CHB-OG
Joined: May 2005
Posts: 47,430 Likes: 373 |
Today I happened across this article: African Americans Bear Brunt of Subprime Crisis, when yesterday I read this article: Investors own about one-fifth of Bay Area homes in foreclosure. The subtitle of the former article is this: U.S. economy built on slavery and genocide I am sick-to-death of reading/hearing how everything that goes wrong for African-American is always a throw-back to slavery. Slavery happened over 140+ years ago. It was horrible. It shouldn't have happened. Get over it! No where in the second article are African-Americans singled out.
Contrarian, extraordinaire
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Joined: Jun 2004
Posts: 15,646
Carpal Tunnel
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Carpal Tunnel
Joined: Jun 2004
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Perhaps the reason the second article doesn't mention African-Americans is because it is about a small percentage of people who are "suffering" foreclosures, whereas the former article is about the majority of people who are suffering foreclosures. There are a number of valuable factoids in the first article that explain the difference. I too am sick to death of reading and hearing how everything that goes wrong for African Americans is a throwback to slavery. Just as I am sick to death of reading and hearing how everything that Israel does is justified by the Holocaust, and anyone who disputes it is an anti-Semite. Money quote from your "despised" article: We are taught ridiculous myths that somehow Europe worked hard, saved its money and thus became the dominant economic and military power in the world. But an honest look at history shows that the development of wealth and power in Europe parallels its assault on Africa and other peoples every step of the way. It's sickening all right.
Steve Give us the wisdom to teach our children to love,
to respect and be kind to one another,
so that we may grow with peace in mind.
(Native American prayer)
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Joined: May 2005
Posts: 47,430 Likes: 373
Member CHB-OG
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Member CHB-OG
Joined: May 2005
Posts: 47,430 Likes: 373 |
Granted stereoman and I don't doubt the parallel events in the quote that you cite.
...but how can the author of the article state that African-Americans have payed the brunt in this sub-prime scheme. I've not seen any evidence of this. A Google® search doesn't support that either.
Furthermore, what does the sub-prime fiasco have to do with slavery? Why does everything that happens bad to African-Americans have to do with slavery? That's what burns my hiney.
Every ethnicity is a victim of the sub-prime shenanigans - not just one group.
That's all...just my rant for today.
Contrarian, extraordinaire
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Posts: 12,581
Pooh-Bah
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Pooh-Bah
Joined: Sep 2005
Posts: 12,581 |
No... the market is hard enough to figure out, without having to wonder whether or not the bank or broker is hewing to a mutually agreed on moral standard... that has no oversight. This is just more of the same thing we hear after every excess -- demand that the government provide a 'solution' for a government-generated problem. It gets old. Yours, Issodhos
"When all has been said that can be said, and all has been done that can be done, there will be poetry";-) -- Issodhos
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