Privatized profits and socialised losses...
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That is a weak defense. The CRA forced banks to engage in activities which were not in their best economic interests. In order to continue to make profits, which is what they are supposed to be doing, banks looked for some more creative means of doing so. When the interests rates fell to artificially low levels under Greenspan, the profitability of subprime loans exploded, and banks jumped on it. This was all enabled by fannie mae and freddy mac, finally resulting, when home valus began to drop and interest rates increased, in a melt down of the entire system. There are any number of contributory factors, and certainly a lot of blame to go around. But the CRA, and other clumsy government interventionism, stands at the heart of the entire mess. Banks are supposed to make a profit, that is the only reason they even exist. They do not exist to help poor people get homes, they exist to make rich people richer. They were doing precisely what they were supposed to be doing. I'm fine with punishing any bankers, etc, who committed fraud in this process, but I also want the heads of all government bureaucrats who benefitted from it in any way - includeing Obama and McCain. And, BTW, the CRA is as gross an example of fascism as you are likely to find.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
The CRA forced banks to engage in activities which were not in their best economic interests.
In some very narrow sense that might be true, and completely irrelevant.
Stan Shannon wrote:
In order to continue to make profits
Where is your proof that the CRA caused such an incredible hit to profits(or any hit at all) that compelled banks to create bad loans, and then leverage those loans 30X. It just isn't credible.
Stan Shannon wrote:
But the CRA, and other clumsy government interventionism, stands at the heart of the entire mess.
No, it doesn't. Lack of intervention, maybe. These finacial institutions made the bad loans and were not compelled to do so. They also chose to leverage those 'assets' as much as 30X compounding their exposure.
Stan Shannon wrote:
They were doing precisely what they were supposed to be doing.
Obviously not. They are going bankrupt and require a trillion dollar bailout.
Stan Shannon wrote:
And, BTW, the CRA is as gross an example of fascism as you are likely to find.
And, BTW, your definintion of fascism is completely bullshit.
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Stan Shannon wrote:
The CRA forced banks to engage in activities which were not in their best economic interests.
In some very narrow sense that might be true, and completely irrelevant.
Stan Shannon wrote:
In order to continue to make profits
Where is your proof that the CRA caused such an incredible hit to profits(or any hit at all) that compelled banks to create bad loans, and then leverage those loans 30X. It just isn't credible.
Stan Shannon wrote:
But the CRA, and other clumsy government interventionism, stands at the heart of the entire mess.
No, it doesn't. Lack of intervention, maybe. These finacial institutions made the bad loans and were not compelled to do so. They also chose to leverage those 'assets' as much as 30X compounding their exposure.
Stan Shannon wrote:
They were doing precisely what they were supposed to be doing.
Obviously not. They are going bankrupt and require a trillion dollar bailout.
Stan Shannon wrote:
And, BTW, the CRA is as gross an example of fascism as you are likely to find.
And, BTW, your definintion of fascism is completely bullshit.
http://mises.org/story/2963[^] The CRA was the stick, FM and FM were the carrot. One required banks to engage in non-profitable activities, FM and FM was always there to buy up the resulting bad loans in order to increase their own bottom line.
oilFactotum wrote:
Obviously not. They are going bankrupt and require a trillion dollar bailout.
Directly because of government creating a situation with which they had to deal as a part of their operational costs. Are you suggesting that the banks should have just saluted and said "Yes, sir, we'll abandon our profits to help all the poor folks"?
oilFactotum wrote:
And, BTW, your definintion of fascism is completely bullsh*t.
No, it is precisely what the man who invented fascism had in mind - corporatism - the state coercing the institutions of a society to achieve its collectivist goals.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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http://mises.org/story/2963[^] The CRA was the stick, FM and FM were the carrot. One required banks to engage in non-profitable activities, FM and FM was always there to buy up the resulting bad loans in order to increase their own bottom line.
oilFactotum wrote:
Obviously not. They are going bankrupt and require a trillion dollar bailout.
Directly because of government creating a situation with which they had to deal as a part of their operational costs. Are you suggesting that the banks should have just saluted and said "Yes, sir, we'll abandon our profits to help all the poor folks"?
oilFactotum wrote:
And, BTW, your definintion of fascism is completely bullsh*t.
No, it is precisely what the man who invented fascism had in mind - corporatism - the state coercing the institutions of a society to achieve its collectivist goals.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
Dear me. You called Gorden's article a 'weak defense'. Your rebuttal article is plain pathetic. I have yet to see any evidence that banks were compelled to make bad loans. I have yet to see an explanation of how CRA was able to exist for over a quarter century and then, in the last few years suddenly destroy the finacial markets. The rebuttal does not address the fact that most sub-prime loans were made outside of the CRA's perview. Or why the bankrupt lenders aren't pointing their collective fingers at the CRA.
Stan Shannon wrote:
One required banks to engage in non-profitable activities
An assertion you have yet to support.
Stan Shannon wrote:
FM and FM
Private corporations - so what's your point?
Stan Shannon wrote:
Directly because of government
An assertion you have yet to support.
Stan Shannon wrote:
No, it is precisely what the man who invented fascism had in mind - corporatism - the state coercing the institutions of a society to achieve its collectivist goals.
Sorry, but that is not the definition of fascism.