Comments on: You Call This Discipline, Mr. President?

By: larryo

larryo — Mon, 09 Feb 2009 00:10:04 +0000

Actually, the first step on the road to our economic predicament was the enactment, in the mid-1980’s, of REMIC (Real Estate Mortgage Investment Conduit) provisions in the Internal Revenue Code. 236 USC 860A. There were actually two Glass-Steagal Acts, codified in various sections of Title 12 of the United States Code. The first passed within FDRs first one-hundred days, and the second, passed in June, 1933, was known as the Banking Act of 1935. The first primarily prohibited the hoarding of gold coins and provided for the well-known bank holiday of 1933, permitted the Federal Reserve to issue paper currency and separated commercial banking from investment banking. The second imposed regulations on banking across the board, including the creation of another wall between banking and insurance. The separations of the two kinds of banking from each other and of both from the insurance business were put in place, originally, to avert another depression.

By: larryo

larryo — Sun, 08 Feb 2009 22:42:39 +0000

Another thing – Bush didn’t even think of bipartisanship in 2001, because the Republicans had both houses of Congress – of course, his approval rate was already dropping when September came along, but then the country rallied to his posturing and we were on our way to Iraq.

By: Chekote

Chekote — Sun, 08 Feb 2009 22:42:13 +0000

Dragonlady. Citigroup is in trouble because of its investment in MBS. Bank of America is also in trouble for purchasing Merrill. I think it is best to keep investment banking separate from commercial banking. It worked since the 1930s until the 1990s. If it works, don’t fix it. Bubbles are created because as certain psychology takes over the market. It is hard to explain. Basically, a belief of invincibilty sets in and greater risks are taken. I have seen it many time. The regulators have plenty of resources. What they need to do is hire staff with street experience and focus the examination process on finding fraud.

By: larryo

larryo — Sun, 08 Feb 2009 22:40:18 +0000

“President Obama voted against both Alito and Roberts. Both were within the mainstream of American jurisprudence.” Actually, no one in the legal community regards either of these men very highly as legal thinkers, and most regard them as political extremists who lied during their confirmation hearings to get on the bench.

By: dragonlady

dragonlady — Sun, 08 Feb 2009 19:26:56 +0000

Chekote, I’m not convinced on the repeal of Glass-Stegall because commercial banking services are still heavily regulated by the FDIC. GLB has nothing to do with lending standards. Why did banking failures occur then at purely investment banks (Bear Sterns, Lehman) or commercial banks (WaMu, CountryWide)? The big banks that have diversified commercial banking and investment arms seem to be weathering the storm and buying up the ones who folded (JP Morgan, Citigroup, Bank of America). I trace lot of the failures to the way Fannie and Freddie were run, creating a huge moral hazard for risky MBS that did not meet usual standards. But I think we can agree that a more effective regulatory scheme is needed. One thing the GOP can be strong is on enforcing regulations through appropriate agencies (FDIC, SEC, etc), giving regulators proper resources, and ferreting out those abuses you allude to, in the name of preserving the free market, not for gov’t to nationalize every failing industry. The GOP is known as the party that’s tough on crime…there’s no reason it can not be seen as being tough on financial abuses, either. That would break up the image fair or not, of the GOP being beholden to Wall St.

By: ireign

ireign — Sun, 08 Feb 2009 15:12:09 +0000

Two way street? The Democrats never gave Bush a chance. 2001-They claim he stole the election, 2002 Nita Lowey head of the DCCC claims the recession is Bush’s fault and somehow he is responsible for Enron. Even though Bush refused to bailout Enron despite pleas from Robert Rubin. The fact that Enron which primarily donated to Republicans but also donated to politicians on both sides of aisle (unlike say Madoff) like Sheila Jackson Lee was irrelevant and was the Democrats way of taking advantage of a crisis. 2003-Democrats claim it was the neocons that lied us into war after half of the Senate Democrats voted for the resolution (hence, bi-partisan). 2004-Democrats claim it is the worst economy since the Great Depression and tax cuts for the “wealthy” caused it. Both untrue. 2005-Democrats opposed both Alito and Roberts and tried to fillibuster both. President Obama voted against both Alito and Roberts. Both were within the mainstream of American jurisprudence. This is after Republicans supported overwhelmingly Breyer and Ginsburg.

Republicans have been less partisan to President Obama than President Obama was when he was in the Senate towards President Bush. Bi-partisanship is a two-way street and given the Democrats performance over the past eight years, the Democrats are lucky that Republicans are not making a big deal that people like Madoff and the Sandlers were Democrats.

Republicans are so far showing the willingness to work with President Obama. Hopefully, the Democrats will remember next time there is a Republican President.

I would also hope that people stop claiming that what Paulson did was a con. I personally thought Paulson did somethings right and other things wrong but the man sacrificed a lot of money to serve his country and while you can question his judgment, you shouldn’t question his sincerity.

By: larryo

larryo — Sun, 08 Feb 2009 13:49:01 +0000

Bill – I was not arguing tu quoque; I was suggesting that bipartisanship is a two-way street. I will try to be less subtle next time.

By: sinz54

sinz54 — Sun, 08 Feb 2009 13:12:31 +0000

Chekote & Bill: That was my problem with the TARP too. I saw at least one detailed analysis that the securities that Paulson hoped to purchase at a “fair” price, might actually turn out to be 100% worthless, once all the effects of the deleveraging were factored in. I think Paulson knew it was a big con anyway–his real intention was to buy up securities he knew were worthless (and have the Government eat the loss), just to keep these financial firms from all going bankrupt.

By: sinz54

sinz54 — Sun, 08 Feb 2009 12:54:09 +0000

larryo: I haven’t noticed that “wages and benefits” have declined. The statistics on *average* personal income over the last 30 years don’t bear that out. The folks working in the service economy, especially the high-tech economy, are paid pretty well. In fact, those who got in on the ground floor of all the successful new high-tech companies (Microsoft, Apple, etc.) are very wealthy. What you have had, is a widening of the distribution–you’ve got the well-paid white-collar folks, and at the other end of the scale, the working-class blue-collar folks with maybe a high school diploma, wages have stagnated. But that was inevitable, given computers and robots and automation. Back in the 1950s and 1960s, it was widely predicted by futurists. There’s just not as much of a market anymore for a guy who’s not very bright but who has strong muscles and is willing to work hard. Prior to the 1970s, such a guy could get a job in manufacturing, working on an assembly line or handling a fork lift or something. Now those assembly lines are 98% automated by robotics.

By: Chekote

Chekote — Sun, 08 Feb 2009 03:54:42 +0000

Bill. Soxs was supposed to prevent another Enron. Of course, the exempted Fannie and Freddy. All Soxs has done is make London richer. Until recently, of course.