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JEleazarian
Trad climber
Fresno CA
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Dec 16, 2014 - 10:48am PT
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Ward, you must know that populism and fact don't mix well. The foundation of mercantilism - that the economy is a zero-sum system - remains the driver of populism. This makes the intersection of populism and true progress the null set.
That said, I agree with the idea that the federal government should not be in the business of propping up any business. For that reason, I, too, wish the continuing resolution omitted the prop for Citigroup. I would just add that it should contain no prop for any other business.
John
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rockermike
Trad climber
Berkeley
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Topic Author's Reply - Dec 16, 2014 - 10:53am PT
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Here is what the CFA Institute (association of Chartered Financial Analysts) and the Systematic Risk Council (both generally conservative organizations) have to say about the issue:
Systemic Risk Council Statement About Repeal of Section 716 of Dodd Frank
On Friday, December 12, the Systemic Risk Council released the following statement about the repeal of Section 716 in the omnibus spending bill.
“We wish to express our strong opposition to including in the omnibus spending bill a repeal of the so-called ‘swaps push-out’ provision of the Dodd-Frank financial reform law. While this provision only pertains to a small portion of derivatives trading, its repeal would set a dangerous precedent.
First, if we want a more stable financial system, repeal of this provision, also known as Section 716, goes in the wrong direction. To increase market discipline and protect taxpayers, we should be shrinking the safety net, not expanding it. Repeal of Section 716 would allow certain high risk swap transactions to be conducted inside banks which are supported with taxpayer-backed, insured deposits, as opposed to securities and derivatives affiliates which do not use taxpayer backed funding sources. As FDIC Vice-Chair Tom Hoenig has stated, such a move is ‘illogical.’
Second, any changes to Dodd-Frank should be considered and passed under regular order, after thorough Committee consideration. If the changes to Dodd-Frank cannot pass on their own merits as part of the normal legislative process, they should not be jammed through as riders to must-pass spending bills. The American people deserve better from their elected representatives.”
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thebravecowboy
climber
just banana-jam it
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Dec 16, 2014 - 10:56am PT
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City Bank is the foundation of this country as we know it. It has been in existence since 1812
Not, you know, the PEOPLE that formed the country, those PEOPLE that were in existence well before the country.
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John M
climber
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Dec 16, 2014 - 10:59am PT
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I don't know who said what. I haven't paid that close attention. My bad.
that said..
the take away for me from her speech wasn't who is at fault. Its what we need to do. Which is dismantle these.. "too big to fail" sized companies. When a company is so large that its failure could take down our entire economy, then it is a dangerous size and needs to be reduced in size. I don't know how to do that fairly, but I do see the need. Someone smarter then me will need to figure out how to do it. I know that we have the people who could do it. I don't know if they would do it fairly.
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Reilly
Mountain climber
The Other Monrovia- CA
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Dec 16, 2014 - 11:01am PT
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Did y'all enjoy the last recession? Like it or not it would have been much worse without the
bailout. That's just the way things are. Sure it stinks, but so does Nature's best sushi if it is
left out in the sun. The problem is that the retards in Congress spend most of their time
working to get re-elected in addition to the fact that they're too stoopid and morally corrupt to
enact meaningful banking legislation.
OK, I'm off to the Jag dealer.
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JEleazarian
Trad climber
Fresno CA
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Dec 16, 2014 - 11:04am PT
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In the abstract, I agree with the CFA excerpt you posted, rockermike. Taxpayer-insured institutions should not have high-risk endeavors subsidized, because doing so puts them in a "heads-we-win, tails-the-taxpayers-lose" situation. Unfortunately, deposit insurance necessarily subsidizes risk with taxpayer dollars.
Since most of us think deposit insurance is desirable, the optimal governmental policy with deposit insurance almost certianly requires some limits on risk. The change the CRomnibus bill made is rather small - no more than 5 or 6 percent of derivative trading of banks is involved - but the direction should trouble those who watch. To that extent, Warren expresses not only the reservations of the left, but of conservatives as well.
I still think the real problem, though, remains a misdiagnosis of the disease. The housing bubble came about because of too much - not too little - governmental market intervention. If the government did not do what it did (and continues to do) to increase housing prices artificially, the bubble would have created a rather small change in overall economic activity. The idea that legislation authored by two of the chief architects of the damaging policy could somehow fix the problems that policy created remains, to me, the ultimate in fantasy.
John
Edit: Bruce, of course we're on the same side. We just disagree about how to get to the promised land.
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apogee
climber
Technically expert, safe belayer, can lead if easy
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Dec 16, 2014 - 11:08am PT
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Clinton-Warren is a dream ticket, but it'll never happen.
The country is probably ready to vote in a woman POTUS, but not across the ticket. Not yet, anyway.
Warren is the better ideologic, principled choice, but Clinton can actually win. I've got great concerns about Warren creating infighting within the Dems, away from the unity needed to demolish the GOP.
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John M
climber
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Dec 16, 2014 - 11:17am PT
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The housing bubble came about because of too much - not too little - governmental market intervention. If the government did not do what it did (and continues to do) to increase housing prices artificially, the bubble would have created a rather small change in overall economic activity. The idea that legislation authored by two of the chief architects of the damaging policy could somehow fix the problems that policy created remains, to me, the ultimate in fantasy.
If you have the chance, could you expand on this? and put it in laymen's terms please. I have heard you say this numerous times, and still do not understand. Thanks in advance for whatever you can explain.
what do ya'll think about "too big to fail" ?
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ontheedgeandscaredtodeath
Social climber
SLO, Ca
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Dec 16, 2014 - 11:33am PT
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To believe the government caused the bubble one must ignore the massive over securitization of risky loan products. I am pretty sure congress never required that.
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apogee
climber
Technically expert, safe belayer, can lead if easy
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Dec 16, 2014 - 11:35am PT
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Can someone remind us all who repealed Glass-Steagal?
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Norton
Social climber
quitcherbellyachin
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Dec 16, 2014 - 11:43am PT
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short term memory loss?
the financial crisis was predominantly twofold in causation
both caused by lack of government oversight from the Bush Administration
one, the mortgage market was "allowed" to underwrite mortgages very "loosely"
I am sure we all remember Stated Income and Liar's Loans, etc
secondly, the financial derivatives market was allowed to expand in a very "unregulated" manner, allowing what we now call Toxic CDOs to proliferate
period
enter stage right the Recession, loss of ten million jobs, and the destruction of trillions
of dollars in wealth with the collapse of the stock market
avoidable? not with a Republican President, House, and Senate, that has as a core
of their "conservative" philosophy the belief that market should, in effect, be left alone, that they will, in time, revert to the mean, and bubbles that decimate the economy?
well, sh#t happens, but don't "interfere", because, um, can't remember why not..f*#k
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JEleazarian
Trad climber
Fresno CA
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Dec 16, 2014 - 11:46am PT
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Warren can accomplish more as a senator than as VP. I think she knows this.
Based on similar logic, I always ran for student body vice president, rather than president, because I figured I'd get all the perks but have no responsibility. Unfortunately, it didn't work that way when it came time for our class reunions, because our president moved away and wasn't available to organize the events. Despite my protests that I was now a convicted cirminal, and therefore unsuitable to chair the reunion committee, I ended up as chair. Karma happens.
And John M. I will expand, but later.
John
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StahlBro
Trad climber
San Diego, CA
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Dec 16, 2014 - 11:50am PT
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http://www.toobighasfailed.org/2013/04/24/dangerous-derivatives/
I believe he is saying that tax incentives for mortage interest drove people to believe they could afford houses they couldn't. But the bottom line is financial institutions were allowed to make ludicrous loans to to people based on speculation regarding future housing values. A crazy catch-22 that the government should have intervened to diffuse.
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apogee
climber
Technically expert, safe belayer, can lead if easy
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Dec 16, 2014 - 11:57am PT
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Best summary:
"avoidable? not with a Republican President, House, and Senate, that has as a core
of their "conservative" philosophy the belief that market should, in effect, be left alone, that they will, in time, revert to the mean, and bubbles that decimate the economy?"
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crankster
Trad climber
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Dec 16, 2014 - 12:01pm PT
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Norton has done his reading and nails it, re: the crash.
Warren accomplishing more as a senator?....perhaps, but the lure of being the first woman president or VP is quite a lure.
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apogee
climber
Technically expert, safe belayer, can lead if easy
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Dec 16, 2014 - 12:06pm PT
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OK, then, TC....who would you like to see throw their hat in the ring?
What do you think about Warren?
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StahlBro
Trad climber
San Diego, CA
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Dec 16, 2014 - 12:07pm PT
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She will probably be "swift boated" now. Just put a big target on her back.
Glad she had the ovaries to stand up shine a light on the cockroaches
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apogee
climber
Technically expert, safe belayer, can lead if easy
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Dec 16, 2014 - 12:12pm PT
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I'm thinking this is mostly political positioning. Not to say Warren doesn't believe this...she absolutely does, to her great credit...but her populist message is probably aimed towards either foundation building to her impending campaign, or some other political position.
She has the potential of being the (more popular, yet still unwinnable) Ralph Nader of 2016. Scary, that.
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wbw
Trad climber
'cross the great divide
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Dec 16, 2014 - 12:30pm PT
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The housing bubble came about because of too much - not too little - governmental market intervention. If the government did not do what it did (and continues to do) to increase housing prices artificially, the bubble would have created a rather small change in overall economic activity. The idea that legislation authored by two of the chief architects of the damaging policy could somehow fix the problems that policy created remains, to me, the ultimate in fantasy.
If you have the chance, could you expand on this? and put it in laymen's terms please. I have heard you say this numerous times, and still do not understand. Thanks in advance for whatever you can explain.
Both the presidential branch and the legislative branch "on both sides of the aisle" had a hand in this. Clinton pushed the idea that more people should participate in the American dream of owning a home. Fannie Mae and Freddie Mac helped make this happen by buying mortgages from brokers, knowing full well that lending practices had become so lax that many of those mortgages were bad, and at the same time were backed financially by the fed. Had Fannie and Freddie not had this unique relationship with the U.S. government, then they never would have purchased all of the toxic mortgages that they did (and sold them off to investors in bundles), which in turn would have had the effect that the brokers would not have engaged in the dubious practices they did such as lying on mortgage applications. Had the federal government not taken the view that everyone should own a house, and implemented policy to that end they never would have needed to bail out the huge investment banks.
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Jon Beck
Trad climber
Oceanside
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Dec 16, 2014 - 12:43pm PT
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The right wing obstructionists propelled Elizabeth Warren by blocking her nomination to the Consumer Finance Protection Bureau. The Repugs handlers were deathly afraid of Elizabeth, and rightfully so. She was an obvious pick to run it as she conceived the idea of consumer protection on a Federal level in 2007 as the lender shenanigans began to come apparent. Rather than run the CFPB she became a senator. Thank you very much Republicans
Not sure Warren wants to be VP unless Hillary decides to be a one term prez. Look at some of the past VP, Spiro Agnew, Dan Quayle, Dick Cheney. Who wants to be on that list!
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