Like everyone else I know, I spout off opinions often without a lot of specific facts and details to back up what I say. It isn't realistically possible to know everything, so we have to have generalities. These are a few of mine. Pardon my lack of detail.
I'm a child of the cold war era. Communists (socialist, pinko, red, leftist - same thing) were our boogie man. People seem to need a boogie man, an other, an enemy to define us, contain our shadow and give us purpose. Americans were adrift and confused until we we got another boogie man. Who is our boogie man now, boys and girls? That's right. The terrorist is our boogie man.
The Communists of my childhood were going to take away all our freedoms, our God, and our businesses. Communism was the ultimate imaginable evil. This force from the dark side was so powerful that it couldn't be tolerated anywhere in the world except for the Soviet Union because they had The Bomb, too. The United States fought Communism, overtly and covertly, wherever it popped up in the world, even when Communism was preferred by the people in these countries over the repression from their status quo governments. The idea was that if Communists gained control in one country, other counties would fall to Communism, too, like dominoes.
I'm going to give Little Jackie props for not completely falling for the Domino Theory. It seemed that Communism would have to be pretty fantastic if it was able to influence people so easily. I had serious doubts that Communism was all that because we were always hearing about how the Soviets never had enough toilet paper. Besides their ballerinas were defecting all the time. Also, I wondered why, if the United States was so fabulous, the Domino Theory didn't work in the other direction. Why were countries not all becoming freedom loving democracies like us? And why were those Vietnamese giving us so much trouble when we were just trying to save them! Why did nothing make sense about this?
I was grown when the Soviet Union fell and everyone gave credit to Ronald Reagan (and still do). This never made sense either. What did The Gipper, Bonzo's pal, have to do with anything? He was clueless. We all were. We fought wars and shed a lot of blood to rid the world of Red Menace. Then suddenly and surprisingly, no one saw it coming, the Communist boogie man was gone. Not a shot was fired, which, coincidentally or paradoxically, was exactly the way my mother and father told me the Communists were going to take us over. Without firing a shot.
Looks like we got it backwards. The world is still under the spell of the myth of Ronald Reagan. One day all those who remember his "charm" and "wisdom" will be dead. He will be re-evaluated by history as a leader who allowed the U.S. Constitution, American values, and our laws to be ignored in favor of the policies of an elitist oligarchy. And the truth will come out about why the Soviet Union really fell. No toilet paper.
Last week, I saw a surreal interview of a Congresswoman from Minnesota named Michele Bachmann. Congresswoman Michele was one creepy bitch. The most vacuous face I think I've ever seen. She wears this fixed grin like a flag lapel pin. She, with her Stepford emptiness on display for all to see on satellite cable TV, used all the buzz words good Republicans use in place of intelligent thought and serious policy discussion. I think her goal was to serve the McCain campaign's single remaining campaign tactic, that of associating Obama with our boogie man, The Terrorist. "Liberal", "leftist", and to top it off, "un-American ". Words of note. And she said that she believed that the press should "investigate" the congress, conduct a witch hunt, for anyone who didn't believe the way she believed and was therefore a suspect "un-American" and a potential terrorist. Ladies and Gentleman, we have our new Joseph McCarthy!
HUAC! McCarthyism has long been characterized as a dark spot in our American history. McCarthyism was un-American. It was McCarthy and his allies and Michele Bachmann and her ilk who are shamefully un-American. It is Bachmann's wing of the political spectrum that has spawned the likes of the worst our most recent domestic terrorists, the McVeys and the Rudolphs. Anyway, what moral authority do the Michele Bachmanns of the world have to decry the use of violence and the waste of innocent lives instead of peaceful problem solving? None. None at all.
Now we will step back in time to the old boogie man, Communism and its milder counterpart, socialism. Stay with me, now.
- Which political party is right-wing? Republicans. Right.
- And Democrats are left-wing.
- O.K.
- Communism and socialism are left wing, correct?
- McCarthy and Bachmann are anti-communist, "pro- American", right-wing Republicans.
- Communists and socialists are "un-American" haters of mom and apple pie and all that is good and righteous about American? This is how they are branded by Republicans. Right?
- Socialists want to get the government involved in healthcare and social programs that target disadvantaged citizens and redistribute the wealth of hardworking rich people. The Republicans think this is really, really bad - and un-American.
- Republicans believe that the private sector can always do everything better and cheaper than the monstrously inefficient government. Privatization is a great idea, especially when you have the ability to give no-bid contracts to to your family, friends and cronies while you hold public office.
- Republicans have no problem running up huge deficits with obscene military spending, while effectively scapegoating social programs which are a small fraction of what is spent on "defense" and the war machine. The poor maligned "earmark" is an insignificant fraction of a percentage of government spending.
- Republicans believe in small government and free market, trickle-down economic policies with little or no government regulation of business. Republicans hate taxes.
- Democrats are all about controlling peoples hard-earned money with taxes and redistribution of wealth.
I could go on. But you get the idea.
You can think of Marxist communists as divided into two groups. The intolerant, homicidal Stalinists and the nicer Trotskyists. Stalin had a policy of killing those who didn't totally support him. Or saying that anyone who disagreed with him was insane and locking them away. Or relocating them to an inhospitable environment. A lot of Stalin's enemies were of the Trotsky wing of Soviet communism. Some of these got out of Dodgesky and came to the United States where they eventually became known as NEOCONSERVATIVES.
Yes, my friends. Everything you think you know is wrong. Everything is topsy-turvy. The communists and socialists, the ones that want to take away our freedoms and our businesses aren't the Democrats at all. It's the Republicans who are actually rooted in socialism. It's the neocons who have orchestrated the Bush administration's campaign to get as much of the public treasury as possible into private hands where the ordinary citizen will have no say about it. Neoconservatism is about oligarchy, not democratic principles. It is about an elite cadre limiting and controlling information from those of us who are "too dumb" to understand what is in our own interest. They think they know what is best, not just for the Americans in their own country, BUT FOR EVERYONE ELSE IN THE WORLD ESPECIALLY THE MIDDLE EAST.
Well, they had their chance. W gave it to them. They were wrong at every turn. They had the typical problem of oligarchies, ignoring the "wisdom of the crowd" and opting for dumb assed "group think". "They think they are sooo smart." NOT!
So, my friends, these smart-assed elitists have targeted and tricked a couple of large blocks of American voters, the religious right and the "low-information" xenophobe. They don't seem to have anything else to turn to given what we are seeing with the current Republican presidential campaign. They can't tell the truth, that they are really a bunch of lying pinkos. Yeah, that would get them two votes in Vermont. This has been done to advance an agenda that is vastly different from what the American people are being told. The past eight years have established an on-going war, solidified the military industrial complex, and shunted public money to private entities for them to control. Or they aren't going to control the $700,000,000,000 bailout money? The American people are investing in these failed free market enterprises? The American people will own these questionable assets and will eventually profit when the value rises? Is that what you say? That sounds like socialism to me. You've been PUNKED!
Finally, this is why you should love Fox News. Listen to whatever they are saying about their opponents. They will be telling you what they themselves are doing. Easy as pie. "un-American"? "socialist?" "lying", "redistributing wealth"? "terrorist?" Uh-huh.
I was watching Neal Cavuto one afternoon during this recent financial crisis. He was interviewing an ordinary looking fat white man who was saying that the U.S. banking system should be nationalized. It was, for Fox, for any TV interview except for maybe Jim Lerher, a remarkably sedate interview. This fat man was suggesting something radical and un-American, especially for Republicans who don't want government involved in their economic affairs - so they say. The interview was not an attention getter, barely a blip. Cavuto asked something like "isn't this socialism?", but there were no attacks, no challenges, no follow-up interviews arguing about how un-American this was.
The interview just sat there. All fair and balanced.
So it is.
Next: You can choose your nuts at the market, but you are stuck with the ones on your family tree.
13 comments:
Was the current financial mess the result of the free market at work ????
Has anybody even heard of the Community Reinvestment Act and what it meant ? Does anybody care who created it ? Does anyone know who stood to gain from its creation ? How did Fannie Mae and Freddie Mac CEOs and their buddies make HUNDREDS OF MILLIONS ? Who is Franklin Delano Raines ? Why were the ones responsible for the "accounting errors" not put in jail? Why were Fannie and Freddie able to stay in business at all ? Who were their beneficiaries? Who tried to reform them in 2003 and 2006 ? Who blocked the reforms ? Who is Penny Pritzker ? How did she and her billionare family get a bank to fail and walk away with HUNDREDS OF MILLIONS even as their underinsured depositors lost everything ?? Why did her bank fail ? Who does she now work for ? Will she get a position of power after the election ?
Any voter needs to have some idea of the answers to these questions before they vote.
We don't have a free market economy for a lot of reasons. "Free market" is just and excuse poor regulation and lack of financial policing.
As for the Community Reinvestment Act, it's probably an easy, racist scapegoat cover for thieves. It is very expensive to be poor in America. A lot of rich people want the little bit of money that they can squeeze from the unfortunate.
The elite class has always been far softer on the white collar thieves than on the regular guy thieves,the burglars, purse snatchers, muggers and the like, even though the white collar criminals are able to steal WAAAY more money.
The Democrats aren't innocent by any means. Just not, in the big picture, as guilty as the Republicans.
As for all your other suspicions and questions, Alan, I think you should check out Ben Stein. He looks guilty as hell to me.
jackie
"As for the Community Reinvestment Act, it's probably an easy, racist scapegoat cover for thieves. It is very expensive to be poor in America. A lot of rich people want the little bit of money that they can squeeze from the unfortunate."
Jackie, surely you jest. Racist ?? Was it a good idea to completely throw out ability to pay back a loan as a requirement for the loan ? See the following link and check out the date, 2000)
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
Was it a good idea to punish
(low CMA rating=fines, or inability to acquire or merge institutions)
federally insured banks that did not make enough sub prime loans ? Was it a good idea to make loans to poor and probably minimally educated people with no payment on principle and payments for several years on interest only with a variable rate (A.R.M.'s or adjustable rate mortgages) kicking in after a few years kicking the rates up to impossible levels ? Was it a good idea to fund ACORN and other groups with literally billions of dollars with a political agenda to sue banks that they felt were not making enough of these loans ? If any of this is racist, don't point the finger at anyone that thinks this was a bad idea. Point it at the folks that created it and exploited it. Penny Pritzker of the famous Chicago Pritzker billionare family as one of those instrumental in showing the way with pioneering work in the financial instruments necessary to securitize mortgages along with Merrill Lynch (my money is leaving those fools soon as possible). Pritzker is now Obamas finance chair and no doubt in line for a cabinet post. Jim Johnson former CEO of fannie mae (used by Obama to vet his vice presidential pick). He resigned from the "vetting team" after alledged sweetheart deals received from Countrywide financial. Similar to the deal Chritopher Dodd received from Countrywide. Of course Dodd had in his own words no idea that he received a better deal than anyone else, yea right. Franklin Delano Raines, (an African-Ameican) former CEO of Fannie Mae. He was questioned before a House Subcommittee.
"The subcommittee collared Raines after Fannie Mae's regulator, the Office of Federal Housing Enterprise Oversight (or OFHEO), published a 211-page diatribe citing a litany of sins: "pervasive and willful" earnings manipulation, lax controls, perverse incentives, unjust bonuses. The press pounced, likening Fannie Mae to Enron, calling for Raines' head. The Securities and Exchange Commission launched an inquiry, the Justice Department a criminal investigation."
Barney Frank (the House Financial Committee Services chairman) who commented in 2003 ""These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." If you look at the folks on the inside they are by far and away Democrats. Look at the lists of campaign contributions, that tells the story. I am not so foolish to think Repubs wouldn't have sponsored these failed GSE's with the same zeal given the opportunity. But, credit must be given where credit is due.
And lets not forget the Wal Street guys, my old financial advisors at Merrill Lynch who worked with Pritzker to engineer the entire Ponzi scheme that made so much money so fast that even non-federally insured institutions (CRA not applicable) were quick to jump on board the money train !
I don't know who Ben Stein is. I have to plead ignorance on that one. I will check it out though.
Thanks,
Alan
PS: I love differing opinions and debate. No matter how much I may disagree with your opinion on this one issue, rest assured I respect your right to it. If ever you want me to shut up and not blog on your site, just let me know. Say hello to Ollie, you have a winner there.
Oh yea.........I knew who he was as soon as I pulled up a picture. I don't know what he did but I have always thought the guy was a weasel !
I will read on with great interest. If you have a good link, flip it to me.
Thanks,
Alan
Good grief, Alan! The only thing I know for sure is that no one I've heard seem to have much understanding about this. The people who are venturing their opinions have been so wrong in the past, I'm sure you understand why I've been reluctant to believe very much of what I have heard.
If Penny Pritzker and others have broken the law, they should be prosecuted and made to pay their debts to society. I just heard that the FBI is unable to handle the increase in white collar crimes. Are you saying that she and her bank broke laws? Ethics? Benefitted from her relationships from prominent Democrats?
Or were their no regs to address these specific vulnerabilities?
I know that vulnerabilities are discovered and exploited by those who don't have any idea as to how their practices fit in to the big picture. Is this the nature of the problem? Numerous entities with limited understanding and oversight exploiting vulnerabilities for short term gain?
I know close to zero about the particulars of the finances of my friends, families and acquaintances. Within the context of my relationships with these individuals, I have no way of knowing about their practices. I associate with many, many people who do not share my values, morals or ethics. I'd say that if one was to judge me by my associations, they would have a seriously flawed assessment. If one assumed I benefited financially from my associations, they'd be wrong again. I'm saying all that because you seem to be suggesting that there is something untoward about Obama's associations with the usual suspects without saying what this means in the big picture of the current situation.
I know of nothing in the CRA that requires banks to make bad loans. I thought it was about redlining and providing full financial services to the communities they serve. I thought the CRA problem was related to predatory lending in these disadvantaged communities. I don't know if it was explicitly illegal or a legal exploit that should have been discovered and stopped. I don't think Barney and the other legislators intended that the CRE be used to support preditory lending. These payday loans have been aggressively marketed in the same communities as the CRA was intended to serve.
I'm no Ben Stein fan, but I read something he wrote last month after things started to tank. I thought it was interesting.About the credit swaps. What do you think?.
http://finance.yahoo.com/expert/article/yourlife/109609
Jackie, we all have shady friends from time to time. I have certainly had my share, so I would be one of the most guilty by association if I used this as standard to judge character. I am just saying, Pritzker looks like a prime suspect and major player in the sub prime scheme. She has hired some very high priced attorneys from the Clinton administration to represent her, so I think she is taking her legal exposure seriously. The following is a very good article among many you can find from independent sources on the internet which will detail her involvement much better than I ever could. Check it out, surf around for differing opinions on it. If you find some that seriously rebut this and many others, let me know because I haven't been able to find any yet.
http://loanworkout.org/2008/06/obamas-finance-chair-is-penny-pritzker-the-founder-of-subprime/
If the assertions are true, then it is troubling to see her elevated to a high position already in the Obama campaign. I look for her to rise higher unless she is convicted, and with her money and defense team, the evidence will have to be overwhelming.
As for the CRA, yes....federally insured banks had to (read: fines, penalties) obtain a high "CRA Rating." Read the following article by Howard Husock written all the way back in the winter of 2000. It is a very good, non-partisan explanation of the effects this Act had on banks and laid the absolutely necessary foundation for the financial disaster we have now. It is an example of how the banks were regulated (not deregulated) into doing this.
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
Before tackling the above article, read these two for a nice overview, they are concise and straight forward.
http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20080924&artnum=1
http://ibdeditorial.com/IBDArticles.aspx?id=298595185267130
They are really fascinating reading. I am still looking, reading and trying to understand as much as I can.
I will check out the link on Ben Stein.
Thanks,
Alan
PS: you are fun to blog with !
When the extent of the economic problem was exposed, I did what I could to understand it. It didn't take long to realize that it was complex and would take a long time to sort it out. But I had to have some way to think of it, so I settled on this: the problem came about as the result of greed, poor business practices, unintended consequences of deregulation and lack of oversight.
I heard the CRA being blamed, too. Conservatives, whom I see as having limited perspective, were the ones blaming the CRA. At least one of the charges I heard was blatantly rascist. I had a difficult time understanding or believing that the CRA could be to blame for the entire problem. This intuitively made no sense to me. Scapegoating a federal law aimed at helping minorities and the poor made total sense.
Ben Stein, a narrow minded, limited perspective sort if there ever was one, wrote the blog that I saw on the Yahoo finance page. Being narrow-minded and of limited perspective is not bad if the focus is on something that needs to be attended to. He focused on the credit swaps. Although I don't have a good mental picture of how these credit swaps were bought and sold, it made sense to pay attention to anyone who would have benefited from the economy going into the crapper.
Also, Ben Stein voiced a suspicion as to the whether the whole thing was orchestrated. This comment dove-tailed with a thought I had during the first W term. It looked to me that the administration was finding as many ways as they could to put as much public money into the private sector as possible with "faith-based" social programs, widespread privitization - including attempts to privatize social security, the profiteering opportunities of the war business as well as the mounting deficit. It also seemed that they were trying to put as much legislation in place as possible to insure this money would keep being funneled into private pockets after they left office. They were so aggressive I thought that they were willing to do any number of politically unpopular acts and sacrifice a second Bush term to get it done in four years.
But the Bushies stole a second election so had four more years to raid the treasury. So what do you think I thought when, at the eleventh hour of the Bush administration, we hear that unless the American people cough up $700,000,000,000 our economy was going to collapse? No time to think; no time to ask questions; no time to figure out if what Paulsen was saying was really true. Had to do it now or we'd all go down the tubes.
Ben Stein and I don't have much in common except for our tendencies toward conspiracy theories. It is interesting that people who are considered on the far left of the political spectrum and those on the far right were were similarly dubious of our new no-risk, no pain, capitalism.
I read your links. The opinion piece jumped to a conclusion that I don't think is correct. To me, it looks like legislation, which was meant to help poor people has several unintended negative consequences.I still don't see that the CRA required banks to have bad lending practices at all. What happened was that when banks wanted the benefits of the CRA credits(greed), they lowered their standards making it hard for responsible lenders to compete. The problem isn't the CRA, but bad lending practices. In retrospect, the CRA should not have contained incentives for CRA credits without regulation and oversight to insure good lending practices. There were holes in the deregulated and poorly monitored banking industry that those familiar with the CRA exploited. This went on for a long time and should have been addressed way before now.
I remember watching TV the day the congress was told about the crisis. I'm not a fan of any politician, but these guys and gals seemed genuinely surprised at how bad they were being told the situation was. Across party lines, it was the same. "Why didn't we hear this before now?" There had been rumblings about the mortgage industry for a long time. We all knew it was bad, but we didn't know of the far-reaching impact the mortgage industry failures would have on the larger economy.
As for the CRA, since it was legislation meant to help poor people, it makes sense that those associated with it would be Democrats. Greed is non-partisan. I do know this much, greed and selfishness win every time unless the larger society preempts and penalizes it. There is only a tiny minority who have the intrinsic values to resist an opportunity to get something for themselves. These people and institutions will win advantages unless they are stopped. (Some banks were trying to have good practices, but were unable to compete with the cheaters. If good practices were used the CRA would have had a different impact.) Regulation of finance and business is often characterized as thwarting the free market rather than a way of protecting the free market from thieves and pirates in business suits and Prada loafers. The crimes of the rich and powerful are much more consequential to the population than crimes of the poor, yet not as severely punished.
I see a failure to monitor and hold accountable the banking and finance system. I also think that the IRS and maybe the congress should make an effort to examine the non-profit, tax exempt organizations, too. I think it is fine to be an assertive advocate for the poor and disadvantaged, but some of these guys seem to be nothing more than thugs strong-arming the system for personal advantage.
The other issue is "sweetheart" deals and whether or not any of these deals are bribes. Investigate them. I don't know what else to say. Life's not fair and some of us have advantages that other of us don't have.
When we lived in Alabama I had a severe gall bladder attack on the evening of the Iron Bowl. This is the one and only time I was ever admitted to an emergency room in my life. Someone started an IV, and I was told to wait for the ultrasound tech who was taking call from his house. He took his sweet time getting to the hospital and was none too be pleased to have been pulled from the game. When the ultrasound was over, I was left alone. I was in severe pain. My IV had stopped almost immediately after it was started. No one checked on me from the time I was admitted until the ultrasound tech got there. When the ultrasound tech left no one checked on me for over two hours. They were watching the game. I was in serious pain (I'm not a baby about pain, either. It was bad.) I couldn't walk. My IV was stopped. I needed to pee (not the IV fluid, but the iced tea I had at lunch when my attack started.) It was very quiet in the hospital that evening. Occasionally I'd see someone in the hall, and I'd try to get their attention. I felt like The Fly, "help me, help me". Nobody did. Eventually the person who started my IV came in with a couple of prescriptions and told me my ultrasound was negative, and I was going to be discharged. She noticed the IV had stopped. She said, "I think he wants you to have this fluid," and proceeded to turn up the drip. I still hadn't peed, and no one seemed a bit interested that my pain was so severe that I couldn't walk. As this type of pain does, it subsided a bit eventually, the IV ran out, I peed and was discharged. All without seeing the ER doc or being given a diagnosis.I just wanted to get out of there and suffer at home in my own bed. As I was leaving the ER, a red haired, red faced, anxious man ran up to me. The ER doc. He said to me, "Why didn't you tell us WHO you are?"
I gave them my insurance card and driver's license when I came in. They knew who I was. And I knew what he meant. I told him to forget it, and went home. But I'm still pissed about that incident.
I learned something that day. I learned that had they "known who I was", I would have seen the doctor, got something for my pain and maybe even been diagnosed, admitted, and got that gallbladder out, because that's what it was even though the ultrasound was negative, instead of me suffering for another month. In otherwords, had they "known who I was", I would have been given the ordinary minimal level of care I was entitled to. I would have never even known that I was getting special treatment.
And I learned to not have an emergency in Alabama during the Iron Bowl.
We don't often think of the advantages that come our way for no reason other than our sex, race, social position or perceived status. We don't even know we are getting favored treatment. I'm saying this in defense of Chris Dodd and others like him. People like to do favors for those they see as important because it makes them feel important. No bribe intended.
As for how this all relates to the Democratic nominee for president, I'm not sure. We have only two choices. I have already disqualified the other candidate. He has plenty of questionable relationships himself as well as a major financial/ethical scandal in his own background. A major aspect of the Obama campaign strategy has been to outspend the Republicans. It's fine to ask where this money has come from. If the mortgage industry is expecting favored treatment during a Democratic administration, how is this unusual or alarming? Some business entities give huge donations to both sides to insure that the administration, whoever it turns out to be, will "know who they are"and will be on friendly terms with them. As of now Pretty Penny is a rich white woman who has been charged with no crime. (no charges yet? just investigation, right?)She has her story. She says she broke no laws. Anyway, why does it make a difference? How will this impact the country? What are you suspecting is going on? Do you have any reason to think that Obama himself has done anything illegal or unethical.
Amy asked me for some reasons to vote for Obama instead of voting against McCain.I had a couple of reasons that I thought of long ago when we all thought Hillary would get the nomination. I had a couple of affirmative reasons to support Obama, but I actually don't think like that, in positive terms, about political candidates. I have a strong compulsion to not idealize individuals. I am rarely disappointed in people when their flaws surface. I couldn't be a politician because I can't compromise on some issues. I'm tactless and too direct. I can't imagine a candidate that isn't compromised in some way that I wouldn't like. I just have to weigh the pros and cons according to my personal values.
So, what I'm asking is even if all your suspicions were correct, what can be done about it now? Does it make any difference?
Jackie
P.S. I'm still bothered by that "big picture" comment. I think I said those two words more than once. You've accepted my apology, but now I have to forgive myself and get back on track. I have no integrity at all. I have committed heresy by denying the ultimate po-mo value. There is no Big Picture.
I have no doubt about your integrity. It is a shame that good people such as yourself, Ollie, my brother Keith or Jim can not rise to high office.
I truly believe that our country can not have reform until something is done to change the way candidates are elected. Usually the one with the most money wins. Money is used for advertising in a kind of sound bite mind control over the population in messages that have been tested statistically on focus groups for effect. Maybe candidates should be restricted to public debates and all other political advertising done away with, I don't know.
The article by Ben Stein addresses credit default swaps. It is insurance between two parties with no insurable interests. Imagine the two of us in a hospital hallway standing outside of a patients room. I bet you that the patient will die, you bet he lives. Neither of us knows the patient (uninsurable interest). I pay you a premium that you get to keep. If the patient dies within a designated period of time you pay up on the policy in the agreed upon amount. If he lives, you keep the premium and there is no downside. Now imagine that you can sell this deal to another person in the hallway who also doesnt know the patient. Now imagine that there is no law requiring that anybody have the cash on hand to pay up if the person does indeed die. Imagine that you think this is such a good idea, you will borrow 30 times (leveraging) as much money as you have on hand to make such deals. (that's a lot of imagining) That is basically what sunk AIG and many others. I don't think regulations were in place for this sort of thing from the get go. Some people at Morgan Stanley came up with the the idea and started trading in the CDS's without regulation because they were contracts or "financial instruments" that were kind of cutting edge without regulation. It was like a business version of high stake gambling, with the subprime mortgages being like a roulette wheel in a casino. The only thing is, the roulette wheel was fixed. It was fixed by the Community Reinvestment Act. They began betting on the outcome of the mortgage business with the sub prime business being the centerpiece of the betting. With the CRA, the banks were sure to fail given a little time.
Call me a conspiracy nut, but I think that the really smart/unscrupulous people figured out a way to revamp the Carter administration Community Reinvestment Act to compel banks to make enough bad loans that they were destined to fail. Then they invested in CDS's (credit default spaps) to win big time if they did. They just had to sit back and wait for them to come crashing down and cash in.
Alan
I checked fact check, wikipedia, and a few other things I don't remember.
The Pretty Penny thing doesn't sound as bad as your report. As failed bank owners go, the Pritzkers come off pretty well. This bank failed in 2001. I can't find where she is being investigated at all. The bank failed for the usual reasons. At the time the bank failed she no longer had any management duties with the bank, but she was on the board. She did market a lot of sub-primes in her day. The CRA does not seem to figure in this failure.
Wikipedia's entry on, I forgot what the article was called, maybe subprime mortgage crisis 2008? Said very little about CDA regulations contributing to the problem. In fact, the 3 or 4 lines about the CDA inserted into the entry said "reference needed". There were no references that supported that claims that the CDA contributed to the problem.
I tried to look up the bill and regs. I'm not sure I found all the information, but I can't find anything about fines and penalties for low CDA scores. All I can find is that a low CDA score prevented mergers and acquisitions.
I can find nothing that required the CDA banks to make bad loans to anyone. Banks did make bad loans, not because the government forced them, but because they could pump up their CDA scores with bad loans then not assume the risk because they sold them. The bad banks made it hard for the honest banks to compete. I didn't read anything about this, but it seems reasonable to assume that all the banks in the area would eventually reduce their standards, not because the FEDS were making them, but to compete with the irresponsible banks easy loans. This is one of the failures in the free market system. And a reason for regulation and oversight.
This is a sub-prime crisis, not a CDA loan crisis. Very few CDA loans were sub-prime.
The problem seems simpler to me now, a little bit anyway. It was profitable for banks to write mortgages. Since the banks intended to sell the mortgages, they were not taking the risk for the bad loans they granted. These mortgages were bundled and sold to investment institutions. These bundles were evidently given grossly higher
ratings than they deserved. From today's news: these inflated investment ratings may figure in more than we thought.
The banks would lend to bad risks, sell the mortgage as an asset, misrepresent the risk, and take no risk themselves but would not take the risk themselves. They banks made bad loans because it was lucrative to do so.
Mortgages have been aggressively marketed for years. Our daughter bought a house recently. The word got out somehow that she was shopping for a mortgage. The phone didn't stop ringing for weeks from calls from mortgage companies. It was shocking.
That one article was written by a conservative think tank guy.I may have enough information to give his article a good fisking. But it looks like pure propaganda. There is nothing I trust less than conservative think tank guys. No joke. Ever wonder why there are no liberal think tanks? Universities.
Now I'm wondering what is up with trying to pin this failure on the CDA and associate it with Obama. Could be ordinary election politics.
Oh, the Pritzker bank had 1400 customers with accounts that exceeded FDIC $100,000. They have a payment schedule to repay these customers, so they didn't lose everything. They have been paid back 69% so far and should eventually have all monies returned.
I still vote for my conspiracy theory about how the war in Iraq, the financial crisis and the entire eight years of Geo W Bush/Darth Cheney administration has been a Fascist Socialist Zionist Imperialistic Neoconservative New World Domination Order Sub Rosa Junta.
Jackie, did you read the article by Howard Husock ?
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
This article by Husock written in 2000 is as clear as anyone can make it about requirements to make subprimes.
Or the articles in Investors Business Daily ? There are literally hundreds of articles like them that detail exactly how federally insured banks were required to make subprime loans in order to have a high CRA rating. A high CRA rating allowed them to 1)avoid monetary penalties 2)allow them to acquire other banks or merge with another bank 3)avoid being sued by ACORN or other social activist groups that didn't think they were making enough subprime loans.
Here is a link to an article that summarizes Penny Pritzker's involvement.
http://amok.asianweek.com/2008/02/28/obamas-campaign-finance-chair-has-links-to-subprime-debacle/
Here is one that details Pritzkers involvement very well.
http://loanworkout.org/2008/03/is-obama-for-the-people-or-the-banks/
Alan
I did read that Howard Husack's 2000 article. He's a conservative think tank guy who uses Phil Gramm's opinion as an authority. I don't respect Phil Gramm's opinion, and I blame his overzealous deregulation for contributing greatly to the project. I am very skeptical of the biases with any conservative think tank guy. Their biases are not in line with my values. When I read this article I knew that I was getting only one side of a complex story. All the Husack article really says is that banks don't like the CRA. This is nothing more than I'd expect him to say given his bias.
Have you been watching Anderson Cooper? He's been doing this 10 Most Culpable for the Financial Crisis. Phil Gramm is number 4 or 5 on his list.
The only connection between the CRA and the sub-primes are that they are mentioned in the same article. What's up with that? Has there been a long standing campaign of disinformation that when the house of cards eventually fell, they'd blame the CDA? Convenient scapegoat? That's what happened. The sub-primes had nothing to do with the CRA. Very few CRA loans are subprimes. And didn't one of those guys Husack quoted say that the banks would have done these risky loans with or without the CRA?
Sub-primes were pushed widely to the entire mortgage market. A lot of these were low or no down payment and refinances. But very few of these troubled loans were CDA loans. I think I read that only 20% -30% of CDA loans were subprime. They may be a tiny fraction of total of subprime loans.
I'm seeing two separate problems. There may well be problems with the CDA. I looked, but I couldn't find a sufficiently neutral source that said what the problem exactly is or how or if it relates to the overall sub-prime problem. I know that any action, no matter how well intentioned is likely to have unintended consequences, some good, some not good. I imagine this is true of the CDA.
Then there is the sub-prime problem. It seems to me that because of the ponziesque nature of the entire mortgage system, the lenders would be forced to take bigger and bigger risks and would have loaned in these areas anyway. The only difference is that they received CDA credit when they loaned in certain areas. Which may have been an extra incentive.
It does seem that Pritzker was big into sub-primes. They had sloppy business practices. They may have well been predatory in their lending practices according to the way you or I see it. They might see themselves as making the American Dream available to people who wouldn't be able to afford their own homes otherwise. She might think that she's like Jimmy Stewart in "It's a Wonderful Life". Her Uncle Billy messed up.
Yes. There are big advantages given to some people. They were able to legally profit off of an awful lot of OPM. It appears that Pritzker is one of them. This bank failure was seven years ago. The only stuff I've seen that accuses her of anything untoward is in articles connection with Obama. These could be lies, distortions and overstatements meant to cast Obama in doubt. These are not neutral sources in other words. The most neutral sources I could find about this bank failure actually praises the family and said they were the most cooperative owners of a failed bank they had ever worked with.
What I'm saying, Alan, is that these are complicated issues that can be judged from several perspectives. I don't know. The articles you have sent me (and other ones I have found) are conservatively biased. The Pritzker rumors only appear (as far as I have seen) as anti-Obama propaganda. The most neutral stuff I could find says they screwed up, the bank failed, and the family is going beyond what they are required by law to do are are paying the uninsured depositors back. All those other machinations that are allowing the family to make away like bandits as a result of the bank's failure, I just don't know about. The sources on this issue are biased.
Obama has been well connected for a long time. He's long had political aspirations. He must have an a great deal of support from a wide array of powerful people. I'm rarely impressed with the characters of powerful people. It would be hard to find enough squeaky clean people to be of much help to him. Otherwise, without the powerful people, he wouldn't be able to pull off such an elegant and expensive campaign.
The short version is that your sources are biased. As such, they are at best only one side of the story.
Few articles are written without bias to be sure. But many of the facts of the articles ring true despite the bias that the author might have. I don't give a lot of credence to articles that state opinion without objective data or facts to back them up. Husock may be biased but he backs up opinion with real world events and facts. He also wrote the article long before this political contest.
Talk about bias, remember Nancy Pelosi's response when asked if the Democrats bore ANY of the responsibility for the financial crisis. "NO"!! .....she states.......hilarious !
I just wish Obama would come in and get spending under control, rescue the economy, stop the U.S. from being the policeman for the world, privatize the school system, deprivatize the military, fix the health care system (strip insurance companies of some of their power), stop the ridiculous war on drugs, mandate higher fuel standards for the auto industry, support a comprehensive alternative energy plan and and and........whew! Well, a guy can wish can't he ?
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