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How the Democrats Created the Financial Crisis
bloomberg.com — A serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote.
stone2020- 454 diggs
- digg it
- rjey, on 09/22/2008, -30/+76Will this article even crack 100 diggs?
Doubtful.- ChronicColonic, on 09/22/2008, -5/+35I was the 100th to Digg it.
- TheDarkTemplar, on 09/22/2008, -5/+30It just did. Im number 101
- SethEllis, on 09/22/2008, -6/+34I am sick and tired of "This will never hit the front page".
This kind of pessimism is half our battle. How do you expect something to hit the front page, when it's supporters are doubting? Stupid comments like this only decrease the chances of the story going anywhere. - solidwhetstone, on 09/22/2008, -11/+3I can Digg it oooooh yeahhhhhhhhhhhhhhhh.
- ChronicColonic, on 09/22/2008, -1/+25This has made it to popular status on Digg, but it is surprisingly absent from the page. I checked the category and sure enough, it was not there. Political bent on Digg? Democrat favoritism? Seems so.
Screen shot of the story:
http://www.flickr.com/photos/individuallywarped/28 ...
Screen shot of the front page of Business and Finance:
http://www.flickr.com/photos/individuallywarped/28 ... - grumluvr, on 09/23/2008, -3/+1Bill s.190 ran through the Senate (Republican majority) and had a close to 50/50 result
H.R. 1461 was the House version (Republican majority) and it was a landslide with almost every single Republican and a majority of Democrats voting for it.
The 2 bills were largely similar with the same points for funding the regulator, the winding up of OFHEO and the FHFB, both had oversight boards, same minimum capital requirements, etc.... The few differences (i.e. tougher restrictions on the makeup of the portfolio) are suddenly being claimed to be the crucial linchpin of the entire current crisis by Kevin Hassett, the author of the Bloomberg article and an adviser to John McCain.
With two similar bills, did you think they would take BOTH bills? The most popular bill got through with almost complete support by Republicans and, in case you didn't take the hint earlier, they significantly outnumbered the Democrats.
The bigger scandal of all this is that s.190 involved the votes of 20 senators, which begs the question why do taxpayers pay these jokers if they don't even show up to work? - Spuy767, on 09/26/2008, -0/+1Important ***** never makes the front page, only partisan drivel.
- mistapony, on 09/22/2008, -14/+74It made drudge so maybe more will see it.
- jusccoj, on 09/22/2008, -28/+6Matt Drudge, a one shot tag along simpleton.
- flogistan, on 09/22/2008, -19/+1That adds another level to my comment.
Ahhhh... so Greenspan and the American Enterprise Institute are the good guys. Hmmmm. So Matt Drudge linked to a Bloomberg story telling me that the heroes are the Federal Reserve and the American Enterprise Institute. Got it. Since these gents are all so virtuous, they should start a secret club where they all serve eachothers interests, if only they all had something in common.
- Chahrlie5, on 09/22/2008, -14/+84Lies, all Bush's fault obviously.
Didn't you guys hear Pelosi last week? She clearly stated it was only the right's fault.- aliengoods, on 09/22/2008, -38/+7This article blames Obama because the bill didn't get out of committee in 2005....WTF?
While I don't doubt that Democrats did oppose the bill , they were the MINORITY in both the house and the senate at this point in time, and Obama wasn't even a US Senator yet. So blaming him seems like a total partisan hack job. I love how the party which was in power during the creation of this mess
Also, why did the Democrats oppose it? Didn't the "reporter" even ask their offices for comment? I saw no note of it.- stickywheelz, on 09/22/2008, -2/+37Partisan Hack Job?
Obama was a senator as of January 4, 2005. The bill was first introduced Jan 26, 2005 and continued to be brought up until Jan 2007. - goforbroke, on 09/22/2008, -4/+31"why did the Democrats oppose it?"
Ok the dems would say because it wasn't needed it would prevent the unqualified from getting loans.
But what they really were saying: "If this passes our piggy bank for buying votes will be uncovered"
The Dems in congress say : To hell with responsibility these institutions are backed by the full faith and credit of the american taxpayer. - radiofrequency, on 09/22/2008, -2/+17The committee it didn't get out of is the one which Christopher Dodd chairs. He's the only Senator to have collected more in special interest money from Fannie Mae and Freddie Mac than the big Obummer.
- davdev, on 09/22/2008, -3/+4Here is info on the "reporter":
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.) - Sfenton, on 09/22/2008, -2/+11ALiengoods is a typical Obamabot who knows nothing of the issues but knows how many cars each candidate has and how much each outfit is worth.
- stickywheelz, on 09/22/2008, -2/+37Partisan Hack Job?
- Jackietheblade, on 09/22/2008, -3/+9Of course...because everyone knows Nancy Pelosi speaks the word of God.
Are you effing kidding me?!- rebrad, on 09/23/2008, -0/+3Nancy Pelosi only speaks for God if you call Satan your Lord.
- sfgamergirl, on 09/22/2008, -26/+6I call BS because of the writer:
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
To contact the writer of this column: Kevin Hassett at khassett@aei.org
Buried.- dickenshit, on 09/22/2008, -1/+19Funny, I bet you never do so when the shoe's on the other foot. Everyone's got an opinion, and this is a well-written, non-emotional look at the situation by a leading economist. Regardless of whether or not you agree with his political leaning, you should take a look at what he's saying. Or do you enjoy living with blinders on, only reading what you already agree with and talking to people who love your opinions? Very open-minded of you, indeed!
- aliengoods, on 09/22/2008, -38/+7This article blames Obama because the bill didn't get out of committee in 2005....WTF?
- jonnyboy1544, on 09/22/2008, -13/+111This is all really upsetting... I wish more people would pay attention to substantive material like this and pay less attention to who owns more cars and who vacations where...
- Ihatehillary, on 09/22/2008, -4/+19The Dems can't seem to get over the fact that some evil republicans own more than one home. Statistically the democrats are richer than the republicans and own more homes.
But that won't stop the democraps from throwing stones when they live in 16 glasses houses themselves. - sfgamergirl, on 09/22/2008, -22/+6This is not "substantive" it's an opinion piece written by McCain's adviser. He's left a lot of things out.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
To contact the writer of this column: Kevin Hassett at khassett@aei.org- jonnyboy1544, on 09/22/2008, -3/+16Instead of pointing out who this guy advises, why don't you refute what he says?
- SpeedSteamBoat, on 09/22/2008, -14/+2I wish more people would do their own research instead of blindly believing an opinion peice written by a McCain adviser and thus making me do it for them.
Here is the bill in full if you care to read it yourself:
http://www.govtrack.us/congress/billtext.xpd?bill= ...
I've spent several hours researching and seeking to understand exactly what this bill was attempting to do, but it's a term paper's worth of research and study to do so.
The most important thing I've taken away from it is that it was not the financial silver bullet that it is being touted as in this article. It's essentially the consolidation of the Federal Housing Finance Board into a single Director of a new federal agency (the Federal Housing Enterprise Regulatory Agency). The Finance Board would essentially become the adviser board for the director of this new agency. This Director would have sweeping authority over Fannie Mae and Freddie Mac. I do not use the term "sweeping" lightly here. The President appointed Director of this agency would have the power to intervene in any proposed or active transaction these banks deal in, and those same banks would be required to report all activities to said Director. Now, this bill largely begs the question of "why?" Why go to the trouble of creating an entirely new agency when we already had a board designed to do essentially the exact same thing? Why wasn't the board allowed or able to carry it's duties out effectively? If the board is broken why not fix it rather than creating a new agency likely to face many of the same problems?
I do not have the answers to these questions nor the time to research it further. The important thing here is that we do not give in to the knee-jerk reaction this article wishes to invoke in us. That proposal was not the end all be all of financial reform. Most of what it proposed was, ironically, already supposed to be happening. The only thing sillier than believing that bill alone would have instantly enabled us to avoiding a crisis of this magnitude, that has been so long in the making, is invoking the name of two Sentators (Hillary Clinton and Barack Obama), who had about as much to do with this committee decision as a house has to do with a tree in the woods, in listing those purportedly "most to blame."
The bottom line here is that all of this finger pointing gets us no where. We need to stop demonizing one another and actually work together toward a real solution. It's too late to change what happened in 2005 when this billed was shot down, or 1999 when McCain voted for deregulation of banks, or any time since 1992 when this committee was either denied authority or simply failed at it's duty to ensure the stability of our federal banks. Those things are in the past, and every moment we spend focused on them is one we could have spent working towards a solution.
Our government failed us. It was not the Democrats. It was not the Republicans. It was not the President. It was not the Independents. It was all of them. They failed us all. It might feel good to point and shout at the person across the aisle and pretend your guy had no part in it whatsoever, but it's a lie. The sooner we can accept that and move on the better off we'll be.- keymanjim3, on 09/22/2008, -0/+7Why is it that whenever a republican does something wrong it's representative of the entire party but when a democrat does something wrong the left comes out with the "well, everybody's to blame" line?
- jbcomeau, on 09/23/2008, -2/+4Nicely put.
- grumluvr, on 09/23/2008, -1/+2Bill s.190 ran through the Senate (Republican majority) and had a close to 50/50 result
H.R. 1461 was the House version (Republican majority) and it was a landslide with almost every single Republican and a majority of Democrats voting for it.
The 2 bills were largely similar with the same points for funding the regulator, the winding up of OFHEO and the FHFB, both had oversight boards, same minimum capital requirements, etc.... The few differences (i.e. tougher restrictions on the makeup of the portfolio) are suddenly being claimed to be the crucial linchpin of the entire current crisis by Kevin Hassett, the author of the Bloomberg article and an adviser to John McCain.
With two similar bills, did you think they would take BOTH bills? The most popular bill got through with almost complete support by Republicans and, in case you didn't take the hint earlier, they significantly outnumbered the Democrats.
The bigger scandal of all this is that s.190 involved the votes of 20 senators, which begs the question why do taxpayers pay these jokers if they don't even show up to work?
- Ihatehillary, on 09/22/2008, -4/+19The Dems can't seem to get over the fact that some evil republicans own more than one home. Statistically the democrats are richer than the republicans and own more homes.
- ShadoeWolfe, on 09/22/2008, -16/+89Since the article is not favorable for the party of 'change' it more than likely won't go far on digg, which is a shame.
It seems to be a very clean article, not showing bias one way or the other, just the facts. It is too easy though to just 'blame Bush' for the economic situation (not a crisis - but a correction - the same thing happened when there were bad stock values in the late 90's on all the internet start ups) as opposed to looking at what could have been done to stop it from getting to this point.
As I have said before in a couple other posts, just be informed when you vote this year, no matter who you vote for. Don't believe the hype on either side - read and research issues on your own instead of becoming a lemming.- simeonart, on 09/22/2008, -1/+13Agreed. So let us please understand that this is both the Republicans' and Democrats' fault, with dirt on everyone's hands.
The Gramm-Leach-Bliley Act of 1999 (that is the Phil Gramm currently McCain's lead economic advisor) repealed many of the protections the Glass-Steagall Act of 1933, which stopped commercial banks from merging with investment banks (such as AIG, Citigroup, etc.), established the FDIC to insure bank deposits, gave the Federal Reserve control over setting interest rates, and made other banking reforms. The entire point was to protect deposits and stop banks from speculating with that money, which is what caused the issues we are seeing now. This was during the Clinton administration, again with dirt on each of the party's hands; a Republican Senate written and sponsored Act written into law by Bill Clinton.
So basically this article is blaming the Democrats for not correcting the issue created by the Gramm-Leach-Bliley Act of 1999. Understandable, but a shortsighted observation that I am sure the writer intended...- ooby, on 09/22/2008, -2/+6Even though Bill Clinton signed it, the Gramm-Leach-Bliley Act passed veto-proof. Clinton's signature was moot.
- Hopstar, on 09/22/2008, -2/+3"This was during the Clinton administration, again with dirt on each of the party's hands; a Republican Senate written and sponsored Act written into law by Bill Clinton."
Not to absolve Clinton of anything, but that bill passed the house and senate with a veto proof majority(Senate 90-8-1 and House 362-57-15), so he really had no choice but to sign it. - alliekins619, on 09/22/2008, -2/+3Signed into law by Clinton, but look at the vote: 90-8-1 Senate and 362-57-15 House. Veto-proof. Vetoing would have done nothing. Since the Repubs had the majority the Dems knew it was going to pass, they compromised (which is how Congress is supposed to work, not this bipartisan deadlock crap).
- simeonart, on 09/22/2008, -1/+4Thank you for the vote info. Though Clinton did vow to veto the bill unless this line was added: "requirements that banks make loans to minorities, farmers, and others who have had little access to credit." After this line was added, the bill passed veto proof.
- edstate, on 09/22/2008, -0/+7Guys... yes it was veto-proof, but EVERYONE went along with it. Look at those numbers, especially in the Senate. Including Clinton, who lobbied for it and got it through several hoops in both houses, and then gave out tons of his "signing pens" to the heads of investment banks.
I love it that it's all the Presidents fault, or none of it's the President's fault, depending on what happened and who was the President at the time.
- grillcover, on 09/22/2008, -2/+5Not showing bias? He is currently acting as a McCain adviser. There are no less than a dozen declarative statements about the fundamental 'blame' of this in EXACTLY the vein that he is contesting re: de-regulation. Please, everything's got a bias-- especially when coming from a direct adviser!!
It is a good article, though, and really adds some much-needed perspective on the 'everyone shares the blame' narrative that's emerging that taxpaying civilians are so resentful about. - tocsy, on 09/22/2008, -2/+5I'd have to disagree about the feel of the article, Shadoewolfe. Specifically, that it doesn't show bias one way or the other. Take a look at his wording:
"But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter."
Well, why did they vote against it? What exactly did they oppose in the legislation? The author doesn't allude to any reasons nor does he even try to. He simply states that it was a "partisan issue."
In addition, this guy is an adviser to John McCain in the election, it even says so at the end of the article.
Now, please note, I am not trying to make excuses for the Democratic members of this committee. I'm simply saying that this writer does not seem unbiased to me, and he didn't even go into why the Dems would vote against the bill. I have been liberal for my entire voting life (which, granted, isn't very long) and I've been a Obama supporter from the beginning, but if these Dems voted against this bill just because it was introduced by Republicans... well, they'd be a large part of what's wrong with this country. I want to know WHY they voted against it.- dickenshit, on 09/22/2008, -2/+2Bias is not avoidable. Bias comes from having an opinion--a good thing. He's not a journalist, so he doesn't have to pretend to be a robot.
- tocsy, on 09/22/2008, -0/+0That's a good point, *****. I was just pointing out the fact that ShadoeWolfe was wrong when he said it was unbiased, and I'd like to hear the other side of the story. In general I prefer to give people the benefit of the doubt before I form a lasting opinion.
- ShadoeWolfe, on 09/23/2008, -0/+0Ok - just went back and re-read the article. I will agree that if you look for a bias, you can see it. I wasn't looking for it - I admit that. I was reading an article that appeared very factual - and I feel still IS very factual.
Honestly, it was just nice to see an article that showed something other than a 'blame Bush and the Republicans for everything wrong in the world'. Both sides are equally to blame for most if not all of these problems. I agree, it would be nice to know why the democrats opposed it, but one can reasonably extrapolate that it was opposed strictly for party reasons. Bush has been hated by the democrats since he took office. The same thing happens on the other side too - republicans oppose bills based on nothing other than party loyalty - which is just as idiotic.
For the record, to be transparent, I am voting for McCain, but not because I think he is the best candidate available. I just agree with more of his views and proposals than I do Obama's. I was actually shocked when he won the republican nomination. He has always been too centrist for my tastes, which is funny, considering he actually does play both sides of the aisle which is what you would think people would want - they say they do - yet people are saying he is more of the same. Bush and McCain are different - don't just look at the voting records for the last eight years.
Anywho - I could go on all day. :) Everyone has their opinions and that is one of the things that makes this country great - we are allowed to share them. I won't try to change your mind as long as you don't try to change mine. I'm always up though for good discussion based in fact - not rhetoric. Like I said, both sides are terrible about this, but unfortunately in the media-obsessed world we live in, that's what we get stuck with. Ah well... thanks for the discussion!
- ykleetx, on 09/23/2008, -0/+0This is a very "fact" based article? Wake up people. Kevin Hassett, the writer of the bloomberg piece, is economic advisor for McCain's campaign. Look at his record. He's an economic hack. And he's misrepresenting history.
In 2005, the Senate was controlled by the Republicans. The bill was never put up for a vote in the full senate. Who's to blame for that? Oh, sure, the Democrats. Not. The party in the majority controls the legislation that comes to the floor.
In 2005, the housing bubble was already on the decline. The build up of the mortgage bubble happened before this!! We are just seeing the fallout now because it took this long for the de-leveraging to happen.
The bill WOULD NOT HAVE avoided this mess. It came far too late.
And don't you people understand how Congress works? In 2005, the Senate was controlled by Republicans.
And are you just a bunch of ditto heads, and can't even recognize propaganda when it's staring at you in the face? For god's sake, the guy is part of the McCain campaign.
- simeonart, on 09/22/2008, -1/+13Agreed. So let us please understand that this is both the Republicans' and Democrats' fault, with dirt on everyone's hands.
- oracle202, on 09/22/2008, -32/+79Fantastic Article!!!! Read it and weep Obama Circle Jerkers.
- demicritter, on 09/22/2008, -21/+51The democrat weasels!
- busybrain, on 09/22/2008, -25/+28Reason number 3000 to vote for an independent.
This blame game ***** gets us nowhere.- markgl, on 09/22/2008, -2/+12its not a blame game. there are reasons why the ecomony is hurting and when pelosi that the rest of her gang say not my fault not my fault not the dems it was the repubs blah blah blah, then we need to know whose s*%& stinks and whose doesn't.
- dcmjzero, on 09/22/2008, -2/+1Both of their ***** stinks. Democrats and Republicans both have their hands dirty on this one.
- markgl, on 09/23/2008, -0/+1yeah i agree on that! no one was there to help us. no one warned us. but oh well, what can you do when they let the ***** hit the fan.
- markgl, on 09/22/2008, -2/+12its not a blame game. there are reasons why the ecomony is hurting and when pelosi that the rest of her gang say not my fault not my fault not the dems it was the repubs blah blah blah, then we need to know whose s*%& stinks and whose doesn't.
- stickywheelz, on 09/22/2008, -18/+73Dugg. We were sold out by the democratic led Senate because they were so blinded by their hatred of the Bush admin that they balked at any republican proposals good or bad. They ignored Greenspans warning, dropped s.109, failed to hold freddie and fannie accountable at the time, and ultimately failed to rescue the American tax payers from the greed of wall street investment banks.
This was 3 years ago! Yet, who was there trying to get s109 passed? John McCain. 1 or 3 cosponsors.
Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.- hsumaker, on 09/22/2008, -7/+4The Senate was controlled by Republicans in 2005. Easy fact to check, if you believe in facts.
- stickywheelz, on 09/22/2008, -0/+6Yeah I failed to mention that the bill is now referred to as S1100 and was reintroduced well under Dem control in 2007 by republicans with zero support. I also believe in the 125,000 facts lining Obamas pockets from Freddie and Fannie.
- stickywheelz, on 09/22/2008, -0/+6Yeah I failed to mention that the bill is now referred to as S1100 and was reintroduced well under Dem control in 2007 by republicans with zero support. I also believe in the 125,000 facts lining Obamas pockets from Freddie and Fannie.
- yojiffyskippy, on 09/22/2008, -1/+6Actually the problem was started during the Clinton Admin.
- inboxnews, on 09/22/2008, -1/+12Actually it was Jimmy Carter. Clinton just made things worse:
http://newsbusters.org/blogs/noel-sheppard/2008/09 ...
"...the collapse of the financial services industry lacks any honest assessment of decades-old legislation that laid the groundwork for today's problems.
In particular, 1977's Community Reinvestment Act which required banks and savings institutions to make loans to the lower-income areas in the communities they served.
Despite how integrally tied the current crisis is to this bill enacted by a Democrat-controlled Congress and signed into law by Jimmy Carter, no major media outlet other than Investor's Business Daily and National Review Online mentioned it during last week's market meltdown."
"These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans.
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was.
In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.
Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.
That's how the contagion began"
- inboxnews, on 09/22/2008, -1/+12Actually it was Jimmy Carter. Clinton just made things worse:
- Borstch1, on 09/22/2008, -2/+7It's impossible to assign the blame for the financial crisis to any party. What's happening now was caused by a massive overallocation of credit to people incapable of handling it, a system wide mispricing of risk, and the rapid adoption of new financial derivatives that's tightly coupled the entire financial system together in new and surprising ways. None of this was caused by a single political party or sitting president. No one person or organization planned all this.
At best you could say this crisis argues against the benefits of free markets vs regulated markets - stricter regulations might have prevented some of the above events from happening. But even that's a tricky call - is a few years of financial chaos a fair price to pay for 25 years of substantial growth? I can't make that call.
And for those mewling about "the facts:" this article was a hatchet job written by a member of a right wing think tank and campaign advisor to McCain. It's about as unbiased as an article by Ronald McDonald about the deliciousness of Chicken McNuggets. Seriously, there are smart, well-spoken Republicans out there who have a clear understanding of this crisis and intelligent things to say about it. Kevin Hassett isn't one of them.- edstate, on 09/22/2008, -0/+4You're right, both parties and businesses got us to where we are today (in the *****).
However, it absolutely STARTED with Carter, and then aggravated with Clinton (ala the Community Reinvestment Act) pushing ***** GOVERNMEnT QUOTAS of "minority" and "low income" home ownership on Banks.
The Banks HATED this at first. No, not because they were racist, but because it's not GOOD BUSINESS to loan a lot of money to people who can't pay it back.
So Clinton gave them Subprime, etc, and re-orchestrated Freddie & Fannie to back it up.
Then they ALL repealed Glass-Steagall, and the ***** started hitting the fan.
- edstate, on 09/22/2008, -0/+4You're right, both parties and businesses got us to where we are today (in the *****).
- hsumaker, on 09/22/2008, -7/+4The Senate was controlled by Republicans in 2005. Easy fact to check, if you believe in facts.
- cheeseysynapse, on 09/22/2008, -19/+36YES, the article WAS written by a McCain advisor.......................so WHERE is Franklin Raines? He is also an Obama advisor, and, if I may, REMARKABLY quite on this issue.
- SpenderH, on 09/22/2008, -4/+18Really? Obama is quiet on addressing a real issue?
- radiofrequency, on 09/22/2008, -2/+16He's planning to vote "present".
- Cadicus, on 09/22/2008, -9/+6Why do repubs knock Obama for voting present.. he had twice as many votes as McCain last year.. and he voted Present for a reason. Wait.. that's it.. Repubs don't actually think about things.. they just hear he voted present and start bashing.
- SpeedSteamBoat, on 09/22/2008, -6/+9Raines isn't an Obama adviser. He never was. The Post had a misprint they later corrected. Stop blinding buying into the FUD.
- SpenderH, on 09/22/2008, -4/+18Really? Obama is quiet on addressing a real issue?
- AWBoy666, on 09/22/2008, -20/+53Good, straightforward and factual article. It's pathetic how willing the populace is to blame Bush and the GOP for any problem, regardless of its source.
Let's see some more media calling out the dems on their lies for a change!- bugsoup, on 09/22/2008, -6/+3Factual? You mean except for:
1. Ignoring that the Republicans controlled the House, Senate, and the committee that was in charge of debating this bill.
2. This bill did not make it to a vote.
http://www.govtrack.us/congress/bill.xpd?bill=s109 ...
3. The current version of this bill (S.1100) does not list McCain as a co-sponser
http://www.govtrack.us/congress/bill.xpd?bill=s110 ...
4. The was an exception in the bill that loosened regulations: "Excludes the Federal Home Loan Banks from certain securities reporting requirements."
5. The opposition was from Republicans as well as Democrats. In fact, several blogs are claiming that this is an example of McCain bucking his party loyalties.
Basically this opinion piece by a McCain aid is empty of facts.- Rich711, on 09/22/2008, -2/+3The webpage you found doesnt mention more than one co-sponsor that doesnt mean they didnt. Just like none of the pages you found mention youre a retard but you obviously are.
I - bugsoup, on 09/22/2008, -5/+1How about this (which confirms that McCain is not, nor was, a co-sponsor)?
http://thomas.loc.gov/cgi-bin/bdquery/z?d110:SN011 ... - Rich711, on 09/22/2008, -0/+3Wow, you really are retarded bugsoup, that's not even the same bill. It has a different title and date (its not even the right year!) and you still cant tell the difference. Go back to the dailykoz and just do whatever they tell you because you obviously get confused when you try to think for yourself.
- Rich711, on 09/22/2008, -2/+3The webpage you found doesnt mention more than one co-sponsor that doesnt mean they didnt. Just like none of the pages you found mention youre a retard but you obviously are.
- bugsoup, on 09/22/2008, -6/+3Factual? You mean except for:
- ThinkOutTheBox, on 09/22/2008, -17/+29And these are the people half of America wants to put in the Whitehouse. They really have our best interest in their heart.
- SuperVepr308, on 09/26/2008, -0/+1It's not half. I think it is just a very loud 20-30%.
- ants023, on 09/22/2008, -16/+27Okay, looks like you guys beat me to submitting this.
Time for payback! - cardgame, on 09/22/2008, -16/+54Another point to the Story. An Article in the NEW YORK TIMES from 2003 has George Bush - you know the great idiot according to democrats - proposing the creation of a government oversight board to review Freddie and Fannie. It was laughed at and shot down by democrats. It was THAT idea that became the basis for S.190 bill co-sponsored by McCain. So Obama complains that McCain votes with Bush 90% of the time. Well I guess there was GOOD REASON TO.
OBAMA - Be afraid, be very afraid......- SDMX, on 09/22/2008, -4/+1Please read S.190. It dissolves the current regulatory systems of the Office of Federal Housing Enterprise Oversight and places them in corporate hands ensuring less regulation than present. It's in-line with McCain's history of Deregulation dating back to his involvement in the Keating Five scandal of the late 80's.
- Rich711, on 09/22/2008, -1/+490% of all votes are unanimous. So Obama actually agrees with Bush 90% of the time. McCain actually agrees 97% so when you take out the 90% that is unanimous you actually get 70%. Obama just made up the "McCain agrees with Bush 90% of the time" because it looks good on a bumpersticker. Like everything else Obama says.
- govsucks, on 09/22/2008, -32/+6OK, so the democrats are mostly to blame for this mess, but the Republicans had pretty much full control of the federal government for 6 years and did they do anything to force the issue on this thing? For six years the let the minority Democrats hand them their asses on everything from Social Security to this crap and now they are voting to bail out the very institutions that caused this problem. They no longer deserve my support. Bunch of freakin pussies.
- ftx437, on 09/22/2008, -4/+22And yet dems have had control now and they haven't done anything either...
- Cadicus, on 09/22/2008, -7/+1*cough* veto power *cough*
- dcmjzero, on 09/22/2008, -5/+1The Democrats do not have the Presidency (and therefore the veto power) and do not have a super majority (i.e. enough votes to overcome the other party on procedural votes and quorums). I do not call that power.
- eryximachus, on 09/22/2008, -6/+3Republicans are pussies, but the Digg machine always ignores the fact Democrats controlled the federal government for most of the 20th century. They also always ignore that Republicans only controlled the executive and legislature for those 6 years AFTER the start of the dot com crash. It's not like they inherited a stellar economy, unlike the Democrats after WWII.
- Ihatehillary, on 09/22/2008, -3/+1A bunch of pussies? Isn't it your party that will fight to the last "person" to allow a queer to ***** another in public without punitive measures. I cite San Fran as a good example.
- PolishLogic, on 09/25/2008, -0/+2You admit that the Dems are to blame, yet you think that the fact that they're to blame is the fault of the Reps?
What the *****? - Birdie1111, on 09/26/2008, -0/+0The Republicans, like John McCain did try, but they were voted down by the Democrats along with a few stupid Republicans. The blame here is squarely on the Democrats. Barney Frank is a crook and a bold faced liar
- ftx437, on 09/22/2008, -4/+22And yet dems have had control now and they haven't done anything either...
- hiscity, on 09/22/2008, -29/+4Same as it ever was. Compare Jimmy Carter's Savings & Loan Crisis or Whitewater.
I'd send you off to Wikipedia for references, but they're down. So here's Googles cache:
Savings and loan crisis
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The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government—that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts[1]—which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse selection incentives compounded the system’s losses. [2]
The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II. [3]
Contents
[hide]
* 1 Background
* 2 Causes
o 2.1 Deregulation
o 2.2 Imprudent real estate lending
o 2.3 Keeping insolvent S&Ls open
o 2.4 Brokered deposits
o 2.5 End of inflation
o 2.6 The major causes of Savings and Loan crisis according to United States League of Savings Institutions
* 3 Failures
o 3.1 Home State Savings Bank of Cincinnati
o 3.2 Lincoln Savings and Loan
o 3.3 Silverado Savings and Loan
* 4 Financial Institutions Reform, Recovery, and Enforcement Act of 1989
* 5 Consequences
* 6 See also
* 7 Notes
* 8 References
* 9 External links
[edit] Background
Savings and loan institutions (also known as S&Ls or thrifts) have existed since the 1800s. They originally served as community-based institutions for savings and mortgages. In the United States, S&Ls were tightly regulated until the late 1970s.[citation needed] For example, there was a ceiling on the interest rates they could offer to depositors.[citation needed]
In the 1970s, many banks, but particularly S&Ls, were experiencing a significant outflow from low-interest rate deposits, as interest rates were driven up by the high inflation rate of the late 1970s and as depositors moved their money to the new high-interest money-market funds.[citation needed] At the same time, the institutions had much of their money tied up in long-term mortgage loans at fixed interest rates, and with market rates rising, these were worth far less than face value. That is, to sell a 5% mortgage to pay requests from depositors for their funds in a market asking 10%, a savings and loan would have to discount its asking price on the mortgage. This meant that the value of these loans, which were the institution's assets, was less than the deposits used to make them, and the savings and loan's net worth was being eroded.
Under financial institution regulation, which had its roots in the Depression era, federally chartered S&Ls were only allowed to make a narrowly limited range of loan types. Late in the administration of President Jimmy Carter, caps were lifted on rates and the amounts insured per account to $100,000. In addition to raising the amounts covered by insurance, the amount of the accounts that would be repaid was increased from 70% to 100%. Increasing FSLIC coverage also permitted managers to take more risk to try to work their way out of insolvency so the government would not have to take over an institution.
Carter left office in January 1981, a year in which 3,300 out of 3,800 S&Ls lost money. In 1982, the combined tangible net capital of this industry was $4 billion. The chartering of federally regulated S&Ls accelerated rapidly with the Garn - St Germain Depository Institutions Act of 1982, which was designed to make S&Ls more competitive and more solvent. S&Ls could now pay higher market rates for deposits, borrow money from the Federal Reserve, make commercial loans, and issue credit cards. They were also allowed to take an ownership position in the real estate and other projects to which they made loans and they began to rely on brokered funds to a considerable extent. This was a departure from their original mission of providing savings and mortgages.
[edit] Causes
[edit] Deregulation
Although the deregulation of S&Ls gave them many of the capabilities of banks, it did not bring them under the same regulations as banks. First, thrifts could choose to be under either a state or a federal charter. Immediately after deregulation of the federally chartered thrifts, the state-chartered thrifts rushed to become federally chartered, because of the advantages associated with a federal charter. In response, states (notably, California and Texas) changed their regulations so they would be similar to the federal regulations. States changed their regulations because state regulators were paid by the thrifts they regulated, and they didn't want to lose that money.[citation needed]
[edit] Imprudent real estate lending
In an effort to take advantage of the real estate boom (outstanding US mortgage loans: 1976 $700 billion; 1980 $1.2 trillion)[citation needed]and high interest rates of the late 1970s and early 1980s, many S&Ls lent far more money than was prudent, and to risky ventures which many S&Ls were not qualified to assess. L. William Seidman, former chairman of both the FDIC and the Resolution Trust Corporation, stated, "The banking problems of the '80s and '90s came primarily, but not exclusively, from unsound real estate lending." [4]
[edit] Keeping insolvent S&Ls open
Whereas insolvent banks in the United States were typically detected and shut down quickly by bank regulators, Congress sought to change regulatory rules so S&Ls would not have to acknowledge insolvency and the FHLBB would not have to close them down.
[edit] Brokered deposits
One of the most important contributors to the problem was deposit brokerage.[citation needed] Deposit brokers, somewhat like stockbrokers, are paid a commission by the customer to find the best certificate of deposit (CD) rates and place their customers' money in those CDs. These CDs, however, are usually short-term $100,000 CDs.[citation needed] Previously, banks and thrifts could only have five percent of their deposits be brokered deposits; the race to the bottom caused this limit to be lifted. A small one-branch thrift could then attract a large number of deposits simply by offering the highest rate. To make money off this expensive money, it had to lend at even higher rates, meaning that it had to make more, riskier investments. This system was made even more damaging when certain deposit brokers instituted a scam known as "linked financing." In "linked financing," a deposit broker would approach a thrift and say he would steer a large amount of deposits to that thrift if the thrift would lend certain people money (the people, however, were paid a fee to apply for the loans and told to give the loan proceeds to the deposit broker). This caused the thrifts to be tricked into taking on bad loans.[neutrality disputed] Michael Milken of Drexel, Burnham and Lambert packaged brokered funds for several S&Ls on the condition that the institutions would invest in the junk bonds of his clients.
[edit] End of inflation
Another factor was the efforts of the federal government to wring inflation out of the economy, marked by Paul Volcker's speech of October 6, 1979, with a series of rises in short-term interest. This led to increases in the short-term cost of funding to be higher than the return on portfolios of mortgage loans, a large proportion of which may have been fixed rate mortgages (a problem that is known as an asset-liability mismatch). This effort failed and interest rates continued to skyrocket, placing even more pressure on S&Ls as the 1980s dawned and led to increased focus on high interest-rate transactions. Zvi Bodie, professor of finance and economics at Boston University School of Management, writing in the St. Louis Federal Reserve Review wrote, "asset-liability mismatch was a principal cause of the Savings and Loan Crisis"[1]
[edit] The major causes of Savings and Loan crisis according to United States League of Savings Institutions
The following is a detailed summary of the major causes for losses that hurt the savings and loan business in the 1980s[5]:
1. Lack of net worth for many institutions as they entered the 1980s, and a wholly inadequate net worth regulation.
2. Decline in the effectiveness of Regulation Q in preserving the spread between the cost of money and the rate of return on assets, basically stemming from inflation and the accompanying increase in market interest rates.
3. Absence of an ability to vary the return on assets with increases in the rate of interest required to be paid for deposits.
4. Increased competition on the deposit gathering and mortgage origination sides of the business, with a sudden burst of new technology making possible a whole new way of conducting financial institutions generally and the mortgage business specifically.
5. A rapid increase in investment powers of associations with passage of the Depository Institutions Deregulation and Monetary Control Act (the Garn-St Germain Act), and, more important, through state legislative enactments in a number of important and rapidly growing states. These introduced new risks and speculative opportunities which were difficult to administer. In many instances management lacked the ability or experience to evaluate them, or to administer large volumes of nonresidential construction loans.
6. Elimination of regulations initially designed to prevent lending excesses and minimize failures. Regulatory relaxation permitted lending, directly and through participations, in distant loan markets on the promise of high returns. Lenders, however, were not familiar with these distant markets. It also permitted associations to participate extensively in speculative construction activities with builders and developers who had little or no financial stake in the projects.
7. Fraud and insider transaction abuses were the principal cause for some 20% of savings and loan failures the past three years and a greater percentage of the dollar losses borne by the Federal Savings and Loan Insurance Corporation (FSLIC).
8. A new type and generation of opportunistic savings and loan executives and owners—some of whom operated in a fraudulent manner — whose takeover of many institutions was facilitated by a change in FSLIC rules reducing the minimum number of stockholders of an insured association from 400 to one.
9. Dereliction of duty on the part of the board of directors of some savings associations. This permitted management to make uncontrolled use of some new operating authority, while directors failed to control expenses and prohibit obvious conflict of interest situations.
10. A virtual end of inflation in the American economy, together with overbuilding in multifamily, condominium type residences and in commercial real estate in many cities. In addition, real estate values collapsed in the energy states — Texas, Louisiana, Oklahoma particularly due to falling oil prices — and weakness occurred in the mining and agricultural sectors of the economy.
11. Pressures felt by the management of many associations to restore net worth ratios. Anxious to improve earnings, they departed from their traditional lending practices into credits and markets involving higher risks, but with which they had little experience.
12. The lack of appropriate, accurate, and effective evaluations of the savings and loan business by public accounting firms, security analysts, and the financial community.
13. Organizational structure and supervisory laws, adequate for policing and controlling the business in the protected environment of the 1960s and 1970s, resulted in fatal delays and indecision in the examination/supervision process in the 1980s.
14. Federal and state examination and supervisory staffs insufficient in number, experience, or ability to deal with the new world of savings and loan operations.
15. The inability or unwillingness of the Bank Board and its legal and supervisory staff to deal with problem institutions in a timely manner. Many institutions, which ultimately closed with big losses, were known problem cases for a year or more. Often, it appeared, political considerations delayed necessary supervisory action.
[edit] Failures
The United States Congress granted all thrifts in 1980, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts. Designed to help the thrift industry retain its deposit base and to improve its profitability, the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 allowed thrifts to make consumer loans up to 20 percent of their assets, issue credit cards, accept negotiable order of withdrawal (NOW) accounts from individuals and nonprofit organizations, and invest up to 20 percent of their assets in commercial real estate loans.
The- Jakeman21co, on 09/23/2008, -0/+1Oh how i hate the copy and pasters on digg
- hiscity, on 09/22/2008, -26/+4part 2 re: wikipedia ref on S&L Crisis.
Failures
The United States Congress granted all thrifts in 1980, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts. Designed to help the thrift industry retain its deposit base and to improve its profitability, the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 allowed thrifts to make consumer loans up to 20 percent of their assets, issue credit cards, accept negotiable order of withdrawal (NOW) accounts from individuals and nonprofit organizations, and invest up to 20 percent of their assets in commercial real estate loans.
The damage to S&L operations led Congress to act, passing a bill in September 1981[6] allowing S&Ls to sell their mortgage loans and use the cash generated to seek better returns; the losses created by the sales were to be amortized over the life of the loan, and any losses could also be offset against taxes paid over the preceding 10 years. This all made S&Ls eager to sell their loans. The buyers - major Wall Street firms - were quick to take advantage of the S&Ls' lack of expertise, buying at 60%-90% of value and then transforming the loans by bundling them as, effectively, government-backed bonds (by virtue of Ginnie Mae, Freddie Mac, or Fannie Mae guarantees). S&Ls were one group buying these bonds, holding $150 billion by 1986, and being charged substantial fees for the transactions.
In 1982, the Garn-St Germain Depository Institutions Act was passed and increased the proportion of assets that thrifts could hold in consumer and commercial real estate loans and allowed thrifts to invest 5 percent of their assets in commercial loans until January 1, 1984, when this percentage increased to 10 percent [7].
A large number of S&L customers' defaults and bankruptcies ensued, and the S&Ls that had overextended themselves were forced into insolvency proceedings themselves.
The U.S. government agency Federal Savings and Loan Insurance Corporation (FSLIC), which at the time insured S&L accounts in the same way the Federal Deposit Insurance Corporation insures commercial bank accounts, then had to repay all the depositors whose money was lost. From 1986 to 1989, FSLIC closed or otherwise resolved 296 institutions with total assets of $125 billion. An even more traumatic period followed, with the creation of the Resolution Trust Corporation in 1989 and that agency’s resolution by mid-1995 of an additional 747 thrifts. [8]
There also were state-chartered S&Ls that failed. Some state insurance funds failed, requiring state taxpayer bailouts.
[edit] Home State Savings Bank of Cincinnati
In March 1985, it came to public knowledge that the large Cincinnati, Ohio-based Home State Savings Bank was about to collapse. Ohio Gov. Dick Celeste declared a bank holiday in the state as Home State depositors lined up in a "run" on the bank's branches to withdraw their deposits. Celeste ordered the closure of all the state's S&Ls. Only those that were able to qualify for membership in the Federal Deposit Insurance Corporation were allowed to reopen. [9] Claims by Ohio S&L depositors drained the state's deposit insurance funds. A similar event also took place in Maryland.
[edit] Lincoln Savings and Loan
The Lincoln Savings led to the Keating Five political scandal, in which five U.S. senators were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln Savings and made $300,000 as political contributions to them in the 1980s. Three of those senators - Alan Cranston(D-CA), Don Riegle(D-MI), and Dennis DeConcini(D-AZ) - found their political careers cut short as a result. Two others - John Glenn(D-OH) and John McCain(R-AZ) - were rebuked by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.[10]
[edit] Silverado Savings and Loan
Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.6 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was Director of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing. [2]
The US Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement, as reported in the Washington Post [11].
As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.[citation needed]
Silverado's collapse cost taxpayers $1.3 billion.
Neil Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million.
[edit] Financial Institutions Reform, Recovery, and Enforcement Act of 1989
As a result, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) dramatically changed the savings and loan industry and its federal regulation. Here are the highlights of this legislation, signed into law August 9, 1989 [12]:
1. The Federal Home Loan Bank Board (FHLBB) and the Federal Savings and Loan Insurance Corporation (FSLIC) were abolished.
2. The Office of Thrift Supervision (OTS), a bureau of the Treasury Department, was created to charter, regulate, examine, and supervise savings institutions.
3. The Federal Housing Finance Board (FHFB) was created as an independent agency to oversee the 12 federal home loan banks (also called district banks).
4. The Savings Association Insurance Fund (SAIF) replaced the FSLIC as an ongoing insurance fund for thrift institutions (like the FDIC, the FSLIC was a permanent corporation that insured savings and loan accounts up to $100,000). SAIF is administered by the Federal Deposit Insurance Corp.
5. The Resolution Trust Corporation (RTC) was established to dispose of failed thrift institutions taken over by regulators after January 1, 1989. The RTC will make insured deposits at those institutions available to their customers.
6. FIRREA gives both Freddie Mac and Fannie Mae additional responsibility to support mortgages for low- and moderate-income families.
[edit] Consequences
While not part of the Savings and Loan Crisis, many other banks failed. Between 1980 and 1994 more than 1,600 banks insured by the Federal Deposit Insurance Corporation (FDIC) were closed or received FDIC financial assistance. [13]
During the Savings and Loan Crisis, from 1986 to 1995, the number of US federally insured savings and loans in the United States declined from 3,234 to 1,645. [8] This was primarily, but not exclusively, due to unsound real estate lending.[14]
The market share of S&Ls for single family mortgage loans went from 53% in 1975 to 30% in 1990.[3] U.S. General Accounting Office estimated cost of the crisis to around USD $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government from 1986 to 1996. [1] That figure does not include thrift insurance funds used before 1986 or after 1996. It also does not include state run thrift insurance funds or state bailouts.
The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed dropped from 1.8 to 1 million, the lowest rate since World War II. [3]
A taxpayer funded government bailout related to mortgages during the Savings and Loan crisis may have created a moral hazard and acted as encouragement to lenders to make similar higher risk loans during the 2007 subprime mortgage financial crisis. [15]
[edit] See also
* Financial crisis
* Fractional-reserve banking
* Resolution Trust Corporation
* Tax Reform Act of 1986
* Cottage Savings Association v. Commissioner, a United States Supreme Court case dealing with the tax consequences of the S&L crisis
* United States v. Winstar Corp., a US Supreme Court case that gives a concise but useful history of the crisis and the accounting practices that aggravated that crisis.
[edit] Notes
1. ^ a b "Financial Audit: Resolution Trust Corporation's 1995 and 1994 Financial Statements" (PDF), U.S. General Accounting Office (July 1996).
2. ^ "LESSONS FOR FEDERAL PENSION INSURANCE FROM THE SAVINGS AND LOAN CRISIS" (PDF), FEDERAL RESERVE BANK OF ST. LOUIS REVIEW (JULY/AUGUST 2006).
3. ^ a b c "Housing Finance in Developed Countries An International Comparison of Efficiency, United States" (PDF), Fannie Mae.
4. ^ "Lessons of the Eighties: What Does the Evidence Show?" (PDF), FDIC (September 18, 1996).
5. ^ Norman Strunk, Fred Case (1988). Where deregulation went wrong:a look at the causes behind savings and loan failures in the 1980s. Chicago: United States League of Savings Institutions, 15-16. ISBN 0929097327 9780929097329. OCLC 18220698.
6. ^ fact=January 2008
7. ^ Mishler, Lon; Cole, Robert E. (1995). Consumer and business credit management. Homewood, Ill: Irwin, 123-124. ISBN 0-256-13948-2.
8. ^ a b http://www.fdic.gov/bank/analytical/banking/2000de ...
9. ^ Home State Savings Bank's Failure - Ohio History Central - A product of the Ohio Historical Society
10. ^ Dan Nowicki, Bill Muller (2007-03-01). "John McCain Report: The Keating Five", The Arizona Republic. Retrieved on 2007-11-23.
11. ^ Peter Carlson, "The Relatively Charmed Life Of Neil Bush: Despite Silverado and Voodoo, Fortune Still Smiles on the President's Brother", Washington Post", December 28, 2003
12. ^ (September-October 1989) FIRREA — It's Not a New Sports Car. The Credit World, 20.
13. ^ http://www.fdic.gov/bank/historical/history/3_85.p ...
14. ^ http://www.fdic.gov/bank/historical/history/vol2/p ...
15. ^ Weiner, Eric (November 29, 2007). "Subprime Bailout: Good Idea or 'Moral Hazard", NPR.org.
[edit] References
* Black, William K. (2005). The Best Way to Rob a Bank is to Own One. Austin: University of Texas Press. ISBN 0292706383.
* Lowy, Michael (1991). High Rollers: Inside the Savings and Loan Debacle. New York: Praeger. ISBN 027593988X.
* Mayer, Martin (1992). The Greatest Ever Bank Robbery : The Collapse of the Savings and Loan Industry. New York: C. Scribner's Sons. ISBN 0684191520.
* Pizzo, Steven; Fricker, Mary; Muolo, Paul (1989). Inside Job: The Looting of America's Savings and Loans. New York: McGraw-Hill. ISBN 0070502307.
* Robinson, Michael A. (1990). Overdrawn: The Bailout of American Savings. New York: Dutton. ISBN 0525249036.
* Tolchin, Martin (1990-09-27). "Legal Scholars Clash Over Neil Bush Actions", New York Times.
* White, Lawrence J. (1991). The S&L Debacle: Public Policy Lessons for Bank and Thrift Regulation. New York: Oxford University Press. ISBN 0195067339.
[edit] External links
* FDIC: The S&L Crisis: A Chrono-Bibliography
* The Cost of Savings & Loan Crisis: Truth & Consequences
* Classic Financial and Corporate Scandals
Retrieved from "http://en.wikipedia.org/wiki/Savings_and_loan_cris ..."
Categories: Savings and Loan Crisis | Economic disasters in the United States | Financial crises | Financial services | Financial institutions | Mutual organizations- ftx437, on 09/22/2008, -4/+1YEAH WIKI!!!!!!
The site that makes anything true!!
http://news.cnet.com/2010-1038_3-6104446.html
http://chronicle.com/wiredcampus/article/1328/wiki ... - schnikies79, on 09/22/2008, -2/+3Please don't quote or reference wikipedia. It's not a source.
There are links on the bottom of each page, use those. Thanks. - goforbroke, on 09/22/2008, -0/+2ever hear of TinyUrl
- ftx437, on 09/22/2008, -4/+1YEAH WIKI!!!!!!
- NexTRaker, on 09/22/2008, -10/+19Now that is serious.
- solidwhetstone, on 09/22/2008, -3/+1Serious Business. ;)
- davidhallstrom, on 09/22/2008, -12/+27Very interesting and informative article.
- Gandalff, on 09/22/2008, -15/+34This is the Best part of the Article that everyone keep ignoring and Obama blames the Right.
"There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess. "
Read the whole foot note that John McCain wrote back in 2005 about the whole mess and see if he was correct about the mess that came true and was voted down by mostly Democrats & also some Republicans. - boheme, on 09/22/2008, -8/+22Let's face it: Both sides are corrupt.
- radiofrequency, on 09/22/2008, -9/+11Yes, the democratic senate and democratic house of representatives is corrupt. Let's get rid of democrats until they change.
- Aguyinachair, on 09/22/2008, -3/+2I see what you did there.
- prrp, on 09/22/2008, -3/+20Yes, yes it is very easy to point the finger at specific parties. We can all do that. But, is this truly a big picture view of the economic crisis? What about financial downfalls of America that have lasted for nearly 100 years?
The Federal Reserve? A central bank? Didn't the founding fathers warn us of this?
Bailouts? Seriously? Where in the constitution (which is a Government-Limiting Document [!!!!]) is it permitted to bail out supposedly free market enterprises?
Borrowing to spend? That is everyone's fault. Both democrats and republicans want to give you "free" programs (whether social like the dems or emperialistic like the repubs), but neither want it to hurt the majority of the electorate.
Come on... get off your partisan highhorse and start looking in to senators who are fiscally sound. If you're a big-government person, be prepared to pay more for taxes IF you have a sound politician. If you're a small-government person, be prepared to sacrifice some of your warmongering nature.- SuperVepr308, on 09/26/2008, -0/+2While I agree that our debt has come from both parties, this mortgage crisis is firmly in the laps of the Dems. There is no denying that.
- radiofrequency, on 09/22/2008, -9/+10Demand Christopher Dodd's resignation!
- Wartyboskfapped, on 09/22/2008, -27/+13HA HA HA HA
Desperate Republicans blame the Democrats when things don't go their way. You're pathetic children.- loganro, on 09/22/2008, -4/+13In what way is this article 'desperate'?
- sfgamergirl, on 09/22/2008, -10/+3Written my McCain's adviser.
(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
To contact the writer of this column: Kevin Hassett at khassett@aei.org - yojiffyskippy, on 09/22/2008, -2/+7He wouldn't know. He didn't read the article.
- PolishLogic, on 09/25/2008, -0/+4@sfgamergirl
It shouldn't matter who wrote it if the information is factual.
- sfgamergirl, on 09/22/2008, -10/+3Written my McCain's adviser.
- solidwhetstone, on 09/22/2008, -3/+10Now now, name calling just because your party is on the business end of the stick for once will get you nowhere ;p
- keymanjim3, on 09/22/2008, -2/+8Like how pelosi took all (or even some) of the blame for this mess?
Oh, that's right. She placed the blame solely on the republicans. - PolishLogic, on 09/25/2008, -0/+4"Desperate Republicans blame the Democrats when things don't go their way. You're pathetic children. "
Sounds like how the Democrats did things during the last two presidential elections.
- loganro, on 09/22/2008, -4/+13In what way is this article 'desperate'?
- CaptRage, on 09/22/2008, -8/+33Digg needs more articles like this, more fact, less opinion and finger pointing.
- kimathi, on 09/22/2008, -9/+4comment dugg for jokes
FTA: "He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own."- PolishLogic, on 09/25/2008, -0/+4Did you bother to check the accuracy of his claims?
Doubt it. You most likely read that and discounted the whole thing.
- PolishLogic, on 09/25/2008, -0/+4Did you bother to check the accuracy of his claims?
- kimathi, on 09/22/2008, -9/+4comment dugg for jokes
- loganro, on 09/22/2008, -16/+26The liberals on here are always asking for facts. They finally get facts, and yet they still believe they are right about everything.
- keymanjim3, on 09/22/2008, -4/+9Have you ever tried to eat a sandwich and there's a fly buzzing around you? You swat it away but it keeps coming back.
Liberals are like that with facts. They make an accusation, you swat it down with facts and they keep on making the same accusations unchanged. - Taiyoryu, on 09/22/2008, -6/+3Facts need to be true to be accepted. In 2005-2006, Congress was controlled by the Republicans not the Democrats. By 2007 it was too late to do anything to prevent the crisis. Now it's all about damage control, not prevention.
This is also an op-ed piece not a news report. FTA: "The opinions expressed are his own."- DWalla, on 09/25/2008, -0/+1Hey idiot... this started before 2005.
- keymanjim3, on 09/22/2008, -4/+9Have you ever tried to eat a sandwich and there's a fly buzzing around you? You swat it away but it keeps coming back.
- dcbebop, on 09/22/2008, -4/+6'Assisted' is a more appropriate term but the true direction of blame rests solely on these businesses who put greed before business savvy. I have no sympathy for these pricks.
And now we have to foot this trillion dollar bailout. Let these guys fail. The whole financial institution needs a hard reset. - TPorter72, on 09/22/2008, -4/+14greenspan warned congress of what he caused.
- brad3378, on 09/24/2008, -1/+1I wouldn't put the entire blame on Greenspan.
Yes, he (and the Fed. Res. Board) kept rates low (arguably too low for too long).
But let's not forget about the Democrat's role in encouraging Fannie in subsidizing ridiculous mortgages for people with unrealistic expectations.
Let's not forget about the homeowners who signed these contracts.
Let's not forget about the Republicans who supported big government deficit spending (especially the war) which necessitated keeping the printing presses going at the Fed. Reserve.
Let's not forget about the weak economy driven by the Walmart effect and manufacturing jobs moving overseas.
Let's not forget about the 100 other factors I'm forgetting :-)
- brad3378, on 09/24/2008, -1/+1I wouldn't put the entire blame on Greenspan.
- dalittle, on 09/22/2008, -3/+12Wow, when they banned a bunch of digg users I thought it was going to be more difficult to game the system and put crap stories on the front page. And really, the more pressing issue is, when are the assets of the CEO's and Management of these investment banks going to be seized like they do with drug dealers. Why should these people be allowed to drive around in their fancy cars and live in fancy houses when average people will have to pay $4300 each for the CEO's and Management's greed and inability to be able to do their jobs. It should be taken from them to pay for the bailout.
- Makemeasword, on 09/22/2008, -13/+5Ah, bloomberg.com. Mayor Bloomberg sounds like a perfect source of information germane to this topic.
- geekee, on 09/22/2008, -5/+5Go back to reading Huffington post and pretend you know what's going on.
- Rich711, on 09/22/2008, -1/+6Do you even know what Bloomberg is are you such a liberal political junky that cant tell the difference between real news and a political blog?
- LRonaldHubbs, on 09/22/2008, -7/+17I don't agree entirely with the author that the crisis would have been completely averted, but all the facts in the article are in order. Dugg.
- Taiyoryu, on 09/22/2008, -6/+3All the facts are not in order or present. Kevin Hassett's op-ed piece isn't true because the 109th Congress (2005-2006) was Republican controlled, nor does he include all the facts since Hassett leaves out the deregulations passed in 1999 and 2000 by the Republicans that allowed this economic crisis to occur in the first place.
- Marble68, on 09/22/2008, -1/+8There are some republicans who are dirty; but had there been any democrats who would be willing to put their country first and not vote lock step out of partisanship this would have passed.
You are ignorant, Taiyoryu. Some republicans actually put their Country First!! - Taiyoryu, on 09/22/2008, -3/+1Sorry, Marble... I'd bet I'm more informed than you are. Besides Ron Paul I have yet to find a single Republican who's a true "maverick." Republicans have consistently pushed deregulation, and that goes for McCain as well. McCain is one of those dirty Republicans you are referring to. McCain was part of the Keating 5 even if he only ended up getting a slap on the wrist. He obviously didn't learn much from the experience because he continued to be a self-admitted deregulator throughout his career. So when 1999 and 2000 rolled around, why didn't some Republicans put country first and opposed the bills that deregulated the bank industry that caused the problem in the first place?
- flip2trip, on 09/23/2008, -0/+3"McCain was part of the Keating 5 even if he only ended up getting a slap on the wrist."
I stopped reading right after I read this because it shows that you are not informed.
from Wikipedia--Democrat Robert S. Bennett, who was the special investigator during the scandal, suggested to the Senate Ethics Committee that it pursue charges against neither McCain nor Glenn, saying of McCain, "that there was no evidence against him."
- Marble68, on 09/22/2008, -1/+8There are some republicans who are dirty; but had there been any democrats who would be willing to put their country first and not vote lock step out of partisanship this would have passed.
- Taiyoryu, on 09/22/2008, -6/+3All the facts are not in order or present. Kevin Hassett's op-ed piece isn't true because the 109th Congress (2005-2006) was Republican controlled, nor does he include all the facts since Hassett leaves out the deregulations passed in 1999 and 2000 by the Republicans that allowed this economic crisis to occur in the first place.
- pathouston22, on 09/22/2008, -7/+27Holy *****. Is something anti-democrat really on the front page of Digg?
- bipolar, on 09/22/2008, -2/+15It didn't last long. Passed 200 diggs and it left the front page.
- pathouston22, on 09/22/2008, -4/+4Guess the digg censors were lagging there for a second.
- keymanjim3, on 09/22/2008, -3/+7What do you expect? Digg is based out on the left coast.
- Sfenton, on 09/22/2008, -5/+6Reality can only be suppressed for such a time.
- stone2020, on 09/22/2008, -2/+7It was taken down with in minutes. Not surprised.
- Taiyoryu, on 09/22/2008, -8/+4There's nothing wrong with having criticisms of the Democratic party, Republican party, or any party whatsoever. However, criticisms should be valid, relevant, and complete. Kevin Hassett's op-ed piece may be relevant given the current economic crisis, but it isn't valid because the 109th Congress (2005-2006) was Republican controlled, nor is it complete since Hassett leaves out the deregulations passed in 1999 and 2000 by the Republicans that allowed this economic crisis to occur in the first place.
- tiger32kw, on 09/22/2008, -1/+1Bills go to committee then to vote... the committee was split.
Dumbass
- tiger32kw, on 09/22/2008, -1/+1Bills go to committee then to vote... the committee was split.
- bipolar, on 09/22/2008, -2/+15It didn't last long. Passed 200 diggs and it left the front page.
- ferndave, on 09/22/2008, -14/+11(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
I'm sure he'd never cherry pick things to make Democrats and/or Obama look bad. No, never.- keymanjim3, on 09/22/2008, -2/+7What in this article is incorrect, missing or misleading?
- grumluvr, on 09/23/2008, -0/+2Bill s.190 ran through the Senate (Republican majority) and had a close to 50/50 result
H.R. 1461 was the House version (Republican majority) and it was a landslide with almost every single Republican and a majority of Democrats voting for it.
The 2 bills were largely similar with the same points for funding the regulator, the winding up of OFHEO and the FHFB, both had oversight boards, same minimum capital requirements, etc.... The few differences (i.e. tougher restrictions on the makeup of the portfolio) are suddenly being claimed to be the crucial linchpin of the entire current crisis by Kevin Hassett, the author of the Bloomberg article and an adviser to John McCain.
With two similar bills, did you think they would take BOTH bills? The most popular bill got through with almost complete support by Republicans and, in case you didn't take the hint earlier, they significantly outnumbered the Democrats.
The bigger scandal of all this is that s.190 involved the votes of 20 senators, which begs the question why do taxpayers pay these jokers if they don't even show up to work?
- grumluvr, on 09/23/2008, -0/+2Bill s.190 ran through the Senate (Republican majority) and had a close to 50/50 result
- keymanjim3, on 09/22/2008, -2/+7What in this article is incorrect, missing or misleading?
- Yatata, on 09/22/2008, -10/+5THIS IS NOT A PARTISAN ISSUE, stop bickering and wake up to what is really going on if you care about your country!
Demand that the Bailout Legislation Be Rejected
We are witnessing a bankers' coup d’etat. In the name of saving the economy from a crisis created by their own greed and immense profits, The heads of government and the biggest bankers have taken a country and a people hostage.
“Give us your money and tear up what’s left of your Constitution or we will sink your economy,” is the message from Wall Street and the current Administration. “Give us the power and money we demand or you will be left jobless from a new economic depression."
Under the pretext of the banking crisis, this Administration is changing the way this country operates. This is not simply taking trillions of dollars from the people and giving it to the richest bankers to do with as they see fit.
send your letters of objection to Congress.
Congress is poised to vote to give the Executive Branch of government, and specifically the White House’s political appointees in the Treasury Department, the absolute right to take your money and give it to domestic and foreign banks and corporations without any oversight of elected officials, from the courts, or from the people.
The new legislation states: “Decisions by the Secretary [of the Treasury] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The Legislation allows the Treasury Department to appoint the same bankers who created the crisis to administer and dictate the use of trillions of our tax dollars.
We will not stand by and let the Administration formalize its vision of a “government of, by and for the richest bankers."
The new system institutionalizes theft on a grand scale. Lehman Brothers bankers will receive $2.5 billion in bonuses after their company went bankrupt last week, but the new dictatorial authority under the White House and Treasury Department has ruled out any relief for the millions of working families who are being foreclosed.
We live in a $15 trillion annual economy. Instead of taking our tax dollars and giving it to the already rich and powerful, these funds should be used provide to decent paying jobs, affordable housing, health care and a good education for our children. There is another way!
Now is the time to hear the voice of the people. A spineless Congress authorized an illegal war in Iraq and rubber-stamped the Patriot Act. Now they are being herded like sheep again to give the White House and Wall Street dictatorial control over the people’s money.
refuse these bailouts if you want to keep your freedoms.
this is exactly the kind of DISASTER CAPITALISM Naomi Klein was talking about in the Shock Doctrine.
Don't be blinded by partisan bickering while the ship is sinking!- Yatata, on 09/22/2008, -0/+2you get the government you deserve: http://digg.com/2008_us_elections/Dirty_Secret_Of_ ...
- Yatata, on 09/22/2008, -0/+2all the money in the bailout is going to ONE PERSON secretary paulson. That is ONE TRILLION dollars.
even McCain says it doesn't feel right: http://thecaucus.blogs.nytimes.com/2008/09/22/mcca ...
especially when one of the provisions on the bill says and i quote:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
translation: there will be NO OVERSIGHT as to what Paulson does with the 1 Trillion dollars of taxpayers money. As McCain says, "in a case like this, "just trust me" isn't good enough."
- ddissent, on 09/22/2008, -12/+4SAY NO TO McBAMA
vote 3rd party - kimathi, on 09/22/2008, -9/+2Four legs good, two legs bad.
- carve, on 09/22/2008, -2/+9Here is my favorite quote from the article...
"Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks"
That's funny, because their whole reason for existing was to TAKE EXCESSIVE RISK, BACKED BY THE TAXPAYER! We already have banks that impose strict requirements on the kinds of risks they take. The point is, especially when it comes to banking, THE MARKET WORKS. We should leave it alone! We shouldn't even try to make fanny and freddie work like real banks, because they won't do as good a job as real banks. We should let fanny and freddie go broke like they deserve. I DON'T WANT TO PAY FOR ANYBODIES BAILOUT! It costs us a bunch of money to maintain an inferior system. It is a lose/lose situation!
Here is my 2nd favorite quote...
"It is a classic case of socializing the risk while privatizing the profit."
no comment- Mightbiteyou, on 09/22/2008, -3/+1Yes you are right but the problem is they already took the risks and lost, but now if they don't get bailed out it would become just about impossible for anyone to get a mortgage.
- carve, on 09/22/2008, -0/+3No- it wouldn't. If you have good credit, YOU CAN GET A MORTGAGE
- Mightbiteyou, on 09/23/2008, -0/+1yep, and most people don't have good credit, they had the bar too low, but without the bailout they are afraid it would get to high.
- Mightbiteyou, on 09/22/2008, -3/+1Yes you are right but the problem is they already took the risks and lost, but now if they don't get bailed out it would become just about impossible for anyone to get a mortgage.
- Sfenton, on 09/22/2008, -16/+23McCain/Palin 08
Making Democrats move to Canada.- CaptRage, on 09/22/2008, -4/+6"Making Democrats move to Canada."
Everyone says it, no one does it. - TPorter72, on 09/23/2008, -0/+3Canada's closed. Please make your way south.
- CaptRage, on 09/22/2008, -4/+6"Making Democrats move to Canada."
- tdishman, on 09/22/2008, -4/+6You would think that McCain would be tooting his own horn right now if he knew he was partially responsible for the bill that could have avoided this mess (which is of course an assumption).
- Rich711, on 09/22/2008, -0/+9Big surprise McCain is talking about solutions rather than toot his own horn. While Obama blames others, avoids mentioning Fannie Mack gave him over $100K and says things like "McCains ideas wont work, we need ...uhh... change."
- Ihatehillary, on 09/22/2008, -11/+6AS America sinks into the abyss, the democraps do nothing about it at all. Pelousy is busy getting facelifts and buying new blouses. Reid is too busy trying to get another commission going to hang a republican, obama is too busy playing the race card, and Barney Frank is looking for young little boys.... Thankfully Kennedy has been quiet with his own issues(I hope the best for him heathwise but his politics suck).
The above are what you diggerals are voting for in November.... Crom help us all......
- SuperVepr308, on 09/26/2008, -0/+1Crom, if you don't help me now, then to hell with you!
- sfgamergirl, on 09/22/2008, -20/+12OK, let's keep in mind who wrote this article:
FTA: (Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
To contact the writer of this column: Kevin Hassett at khassett@aei.org- Glynth, on 09/22/2008, -1/+5Are you soliciting hate mail for the writer or something? What's your problem?
- MisterWonderful, on 09/23/2008, -6/+2Wow, reactionary much? What's your problem?
- PolishLogic, on 09/25/2008, -0/+4Don't discount the writer, discount the information in the article. If you can, that is.
It's not like Bloomberg is some partisan hack job of a website, like Huffington Post or Kos.
- Glynth, on 09/22/2008, -1/+5Are you soliciting hate mail for the writer or something? What's your problem?
- fatbas202, on 09/22/2008, -10/+7I wish I could bury stupid people (including but not limited to those that post entire Wikipedia articles as a comment) more than once. The Block User feature isn't enough. There needs to be a Stab This Person In The Face With A Rusty Knife feature on Digg.
- Marble68, on 09/22/2008, -1/+2report as abuse for threatening physical violence.
hahaha
- Marble68, on 09/22/2008, -1/+2report as abuse for threatening physical violence.
- ericjohnson0, on 09/22/2008, -10/+10If anyone is interested, here's the head of Fannie Mae calling the Congressional Democrats 'family'
http://www.youtube.com/watch?v=usvG-s_Ssb0 - rupaw, on 09/22/2008, -16/+11(Kevin Hassett [the author] ... is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)
What a surprise that McSame's boy is blaming the Democrats :-D What were the Republicans doing over the last 8 years? Sleeping on the wheel???- Marble68, on 09/22/2008, -3/+3You, rupaw, are ignorant. If some democrats had been bipartisan and put the COUNTRY FIRST this would have gone through.
You are the embodiment of what is wrong with the democratic party. You are a slave to their thought police.
I'll pray for you. - TheInformer, on 09/26/2008, -0/+1"McSame"! I'll put that on the placard along with "Obeavis" for an upcoming debate.
- Marble68, on 09/22/2008, -3/+3You, rupaw, are ignorant. If some democrats had been bipartisan and put the COUNTRY FIRST this would have gone through.
- frolet, on 09/22/2008, -16/+13get ready for the OBAMATARDS
- Brownds, on 09/22/2008, -11/+19Can you hear the screams? I am amazed this made it to the front page.
- Ljay90, on 09/22/2008, -0/+11Does anyone have a copy of the bill? I'd like to read it in its entirety.
- bugsoup, on 09/22/2008, -0/+4http://www.govtrack.us/congress/bill.xpd?bill=s109 ...
- ThinkOutTheBox, on 09/22/2008, -2/+2Don't go and do anything crazy after you ready although you will want too.
- DarKnyht, on 09/22/2008, -10/+23Apparently the bury brigade has started working. I wonder how many of them actually bothered to read the article versus blindly burying?
- flogistan, on 09/22/2008, -8/+9Ahhhh... so Greenspan and the American Enterprise Institute are the good guys. Hmmmm. Bloomberg is telling me that the heroes are the Federal Reserve and the American Enterprise Institute. Got it. Since these gents are all so virtuous, they should start a secret club where they all serve eachothers interests, if only they all had something in common.
- downneck, on 09/22/2008, -17/+12i like how the article fails to mention that the Republicans held the majority in BOTH the house and senate in 2005
buried, inaccurate.- ThinkOutTheBox, on 09/22/2008, -2/+9Why don't you do a little research and find out why the bill was shot down?
-
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