Of course that is not remotely what was said. There were definite changes in the law that meant a whole bunch of people who should not have gotten loans did. I don't see how it is all that progressive to make it possible (almost mandatory) to give a person a house that they PTB know from the outset he isn't going to be able to afford to keep. Seems rather cruel to me.
What's your evidence that "paying the ultimate price, bankruptcy" works? Remember Enron and WorldCom? Not only did they go bankrupt, but the executives received lengthy prison terms and Ken Lay died of a hear attack. Yet they were followed by more recent financial trickery at Lehman, AEG, Bernie Madoff, etc?
In the case of the recent corporate bankruptcies, eg Lehman, the only ones to get really punished were the shareholders who lost everything. The executives were out a job, but only after collecting years of exec bonuses amounting to hundreds of millions based on profits generated by taking huge risks that ultimately directly lead to the bankruptcies. And I wouldn't be surprised to see many of them showing up at other businesses before long.
I'm not saying that corporations shouldn't be penalized for doing wrong. Only that there isn't much evidence that it works. In fact, I would argue that it's getting much worse due to the fact that moral standards in general are in decline in the USA A few decades ago, if you filed for bankruptcy, especially personal bankruptcy, it was a disgrace and to be avoided. Now, it's being treated like just a normal course of every day life. And the bankruptcy part I can understand. When the govt hands out taxpayer money right and left to bail out any company it chooses, why shouldn't Joe six pack think that walking away from a mortgage because it's upside down at the moment is OK too?
That part of the world is no stranger to O-ring accidents as in Challenger.
-- Bobby G.
irrespective
It's a very good one, too. But things might change. The judge in the Bank of America/SEC case refused to punish shareholders because they had nothing to do with the bad decisions that cost BOA so much money.
Corporations (now equal to private citizens - thanks to Judge Roberts) are excellent shields against personal responsibility. As the judge asked: Who took these actions that resulted in so much loss? Ghosts? No, it was corporate officers knowing that if they screwed up, the *shareholders* would pay the fine, not them.
As you point out, that has to change. The people that pushed the buttons, the people that pushed past the safety features, the people that made the bad decisions that led to the disaster: They are the ones that need to be punished as an example to others. They need to be punished so the next time some suit says to the safety chief "bypass that overload device" the safety chief says "I am not going to jail for you."
That's the only way meaningful change will occur. By stopping that buck where its passing caused all the trouble.
-- Bobby G.
When execs know their company is on the rocks, they begin their slow sell-off off their stocks. Think those AIG bonuses ever got paid back? Last I remember, it was not a single one even though many promised. They know that the news and the population have a short attention span and if they wait until the spotlight moves elsewhere, they can probably escape unnoticed.
I think most of us here that have gotten mortgages were shocked at how some people were able to obtain mortgages with nothing down, little or no verification of income, etc. In some cases they obtained in excess of 100% financing. When I've gone for mortgages they were up my rear with a microscope and that was with excellent credit, a long term job at a Fortune 100 company, and 20% down. And this went on for years, yet as usual, when the sh** hit the fan, Congress acts like they are surprised, outraged and didn't play a role in either actually enabling this or at the very least, looking the other way.
It was Wall St.'s voracious appetite for mortgages of any kind that fed the process. The poor were just pawns the lenders could lure into a machine that never meant to let them own a house in the long run. This is one of those cases where crooks saw an opportunity to do something criminal and yet lay the blame at the feet of the government.
If it were true, hundreds of bankers would be telling lurid tales of how Barney Frank or Nancy Pelosi came into their offices with a gun and made them make loans to poor people. It just didn't happen like that. It was Enron/WorldCom take two, and naked greed ran the show. And that meant happily making loans to people who could never complete the payments knowing that they could foreclose on those houses and resell them to other suckers.
What happened was that they scammed so many people that the market got flooded with foreclosed homes that no one wants to buy at the crazy, inflated prices that came with the bubble.
Lenders just wanted loans of any quality they could package and securitize (putting bad apples in with good and making them legally very hard to split apart). When the loans went bad, they were someone else's problem. The thinking, I am sure, was to repo the house and sell it to another buyer that really couldn't afford it, generating more fees for the lender.
The CRA was
In article , "Robert Green" wrote:
That was sorta pissy of me. I apologize. Everybody has an off-day occassionally, I guess. I shall give myself 10 lashes.
I find it disingenuous at absolute best for suggestions of not following precedent to be brought about in a case settled in 1990 that itself overturned not one, but at least two cases from the late 70s (First Natl Bank of Boston vs. Bellotti 78) and (Buckley in 1976). Bellotti specifically addressed this in the majority opinion. Justice Lewis Powell ruled that a Massachusetts criminal statute prohibiting the expenditure of corporate funds "for the purpose of ... influencing or affecting" voters' opinions infringed on corporations' "protected speech in a manner unjustified by a compelling state interest." The Supremes have also noted, that as it involves corporations and business interests, that only specific kinds of speech can be regulated. In a 1978 case, the Court noted" We have not discarded the "common-sense" distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government regulation, and other varieties of speech. To require a parity of constitutional protection for commercial and noncommercial speech alike could invite dilution, simply by a leveling process, of the force of the Amendment's guarantee with respect to the latter kind of speech. Rather than subject the First Amendment to such a devitalization, we instead have afforded commercial speech a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, while allowing modes of regulation that might be impermissible in the realm of noncommercial expression." (Ohralik v. Ohio State Bar Ass'n). Although (somewhat surprisingly to my mind) this wasn't cited in the case at hand, it does show that only certain, very specific, kinds of speech can be regulated. I was wrong in hanging this on the Warren ,it was the Burger Court. Looked at the chart wrong. Another 5 lashes.
Basically, for the most part I did not mess with your citations, because I thought they were handled by the Court in their opinion. That part basically boiled down to focussing on the guys we thought were right. Not much to debate there, other than the fact that you were breathtakingly wrong (grin). One last note, the majority decision did keep intact the prohibitions about direct funding, PAC funding and the only thing directly at point was whether money could be spent independently of a campaign or party on issue oriented campaigns in a 90-day window around a general election and a smaller one around a primary. Even if intact, the law would have had no impact whatsoever on any of the ads we were bombarded by over the Health Care Act, Cap and Trade or most of the ads thanking Congresscritters for voting the right way (or chastising them for voting wrong). The only thing that MIGHT have been stopped in recent history was the "thanking" ads and only then if was near a primary election in that state.
Nah. It was them taking advantage of the fact that the government made it possible on many levels. The largest players in this was the quasi- governmental units like Fannie and Freddie. And lets not forget about underwriting standards of the FHA that were largely required to be followed to get loans guaranteed and able to sell many of them off. I get a kick out of lawmakers (of all stripes) who get upset about corp bonuses yet don't acknowledge (or hell even realize) that their own messing with things they don't understand (economics and tax laws) brought much of it about. You effectively cap the salary that people are paid to actually run the company at $1 million by making anything more non-deductible. Then you tax favor bonuses and stock options to make the interests of the honchoes more in line with the shareholders. Of course you put no limits on this so that the money they get paid to actually run the company is breathtakingly small compared to what they get to run the books. (The most egregious example of this was a late-stage Merril Lynch honcho who got $300,000 in salary and $300 million in options and bonuses). So what you get is a rather startling disconnect between the honchoes and the shareholders, inflicted on us by Congress.
Nope. That is what the people charged with enforcing the acts such as Community Reinvestment did. Besides, as we are seeing now, all BF and NP had to do was go to the press and start talking about how banks would feel the wrath of the Congress and Banks got the hint. .
>
Ah, but several government agencies DID go to individual lenders and insist that they do a better job of "serving the under-served" or face regulatory ruin. Subprime loans were only PART of the problem. Drive through a disreputable part of your town and I'll be you'll find a branch of Bank of America, Wells Fargo, or Chase. They, the hookers, and the crack dealers will be the only retail establishments on the block.
Agreed, but the CRA was only part of the wedge. And the "Bush" to whom you refer was the one that signed the 1977 original legislation. It was his successor, Bill Clinton, who vamped the 1995 massive expansion of the CRA.
No, the CRA is an example of OVER-regulation. It was the CRA, and accompanying regulations that mandated certain percentages of loans to "disadvantaged" borrowers as a condition of a lending institution being able to remain in business.
In an interesting book entitled "Systems of Belief," the author contrasts the "Commercial" mindset against the "Guardian" (government) mindset and finds that the two do NOT agree. Things held in great esteem by governments (force, secrecy, pomp, cooperation (CYA), distrust) do NOT work in the commercial world.
Conversely, things that work in the commercial realm (trust, dissent, incentive, innovation) do NOT work in the government realm.
It's not unusual, then, for the government to look askance at how private companies pay their employees. Payment based on performance (i.e., school teachers) is simply wicked.
If the government paid its workers on performance, say a bonus for traffic tickets written, there would be an uproar. Likewise, it's hard to find a salesman that DOESN'T get a commission or bonus for sales. Government people don't understand commissions and commercial people can't stomach pay for just showing up.
The problem, then, is when an entity - government or business - tries to employ a tactic, solution, or goal usually found in the other realm. A corollary to that is a person with experience in one field trying to make it in another. That is, someone running for their first office on the basis of being a "successful businessman" is almost guaranteed to be a disaster.
There are exceptions: Mitt Romney was a successful businessman, but came from a political family and had experience with large, quasi-governmental affairs (the Olympics) before he became governor of Massachusetts. Gerald Ford spent his life in politics but made a nice living afterward by serving on boards of directors.
And, of course, ex-politicians enter the fairy-world of lobbying (which, like the Mafia, is an interesting bastardization of both civilizations).
On 6/12/2010 6:57 AM Robert Green spake thus:
Maybe, but this one was different. Apparently it wasn't a manufacturing defect but operator error that caused the seal to fail.
yeah and when brought to management attention they didnt care saying dont worry about it
On 6/12/2010 1:52 PM snipped-for-privacy@aol.com spake thus:
Yes; operator error compounded by mismanagement.
BP is toast after Obamas lawers get done with it. Not that I agree with that, I dont, but thats just the way things are gonna shake out. I dont think they can tell a British company what to do as far as dividends go.
There are major things that I don't understand. GM and Ford are highly successful in Europe but struggle at home. Why?
Ford is *not* struggling. GM is owned by the feds and the unions. They're toast.
. =EF=BF=BDThey're
ford was near bankrupt and ford family lost control of company in refinancing just before economic dump.....
if they hadnt been forced to refinance early they would of gotten fed funds too.....
was is
You mean taken over, Chavez style.
I've always called it Affirmative Action lending.
TDD
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