Bill Clinton and the GLB Act

Dungheap said:
I don't think the repeal caused the crisis but it exacerbated it, made it more widespread. I think it would have been a more compartmentalized crisis than we currently have with G-S in place. I also think we'd have a much better sense of what securities are exactly out there if G-S were still law, more transparency.
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This is just a reassertion that repeal of Glass-Steagall caused problems. No explanation of how or why this assertion should be believed.
 
Desh, your articles are good examples of the moral hazard created by the repeal of Glass-Steagall. I am in agreement that that is troubling. It does not even start to explain how it caused the crisis or the malinvestment.
 
Damocles said:
I fully agree with your second point. Once it is "too big to fail" it should literally translate as "too big to exist" and it should be separated and sold, much of it privatized. We should never have institutions that are "too big to fail" so that we have to spend billions saving them. It generally secures bad behavior for the future. Why would you show restraint when you know the government will step in and keep you going?
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You socialist:

End the danger posed by companies that are “too big to fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up.
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-- Bernie Sanders, letter to Secretary Paulson

http://sanders.senate.gov/petitions/?petition=Financial_Crisis_1
 
RStringfield said:
Desh, your articles are good examples of the moral hazard created by the repeal of Glass-Steagall. I am in agreement that that is troubling. It does not even start to explain how it caused the crisis or the malinvestment.
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The repealing of Glass Steagall hurt in this manner (not to say that it is the sole cause)....

It removed a barrier of due dillegence that used to exist. Previously a bank that wanted to sell a mortgage (or collection of mortgages... via MBS) to an investment bank, the investment bank would do due dilligence on the portfolio to determine value and what was in the portfolio. When the investment banks and banks were allowed to merge, many of these firewalls came down and it opened the door to a free for all.

When interest rates were driven down to (and held at) historic lows from 2001-2005, the CDO/MBS/SIV universe exploded.

Add in the fact that Fannie an Freddie became such prominant players and all of the sudden lenders had a constant marketplace for sub-prime debt.

The ratings agencies became complicit and started rating large packages of loans as AAA. Their rationale??? 'well there are so many loans in there the odds of them all going bad are minimal' Which is statistically true, but still idiotic to give them anything higher than a BBB rating.

Bottom line, Glass Steagall's dismantling over the 1990's played a part in this. As did the community reinvestment act. As did the Fed keeping rates low. As did the ratings agencies actions. As did politicians meddling.
 
ANd Clinton didn't look like he was trying to take ANY blame. He instead said that it was not a mistake to sign the bill and he would basically do it again.
 
Socrtease said:
ANd Clinton didn't look like he was trying to take ANY blame. He instead said that it was not a mistake to sign the bill and he would basically do it again.
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Soc, do you have any idea where she is trying to go with her comments?
 
cawacko said:
Soc, do you have any idea where she is trying to go with her comments?
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I am not sure, it appeared to me she was trying to make like Bill was sorry about GLB and in her own words "Bill got took then and will share the burden for this mess for his actions." He does NOT feel like it was taken anywhere and would indeed sign GLB if he had it to all over again
 
Socrtease said:
I am not sure, it appeared to me she was trying to make like Bill was sorry about GLB and in her own words "Bill got took then and will share the burden for this mess for his actions." He does NOT feel like it was taken anywhere and would indeed sign GLB if he had it to all over again
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Dude I thought I was partisan (which I know I am) but this woman Desh is scary partisan. Wow.
 
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