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They warned us, but US eased loan rules

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December 02, 2008 – Comments (10)

 

I am big on accountability.  If you screw up, everyone should know about it and you should be held accountable for your actions.  This is the way that most normal jobs work.  I don't care if it doesn't help things or is unhealthy.  I can't help it.  The current administration, with a large helping hand from the "Maestro" HA Alan Greenspan played a huge part in getting the United States into the economic mess that we are currently in.  If anyone else outside of a Big 3 CEO had screwed up at their job so badly, they would have been canned ages ago.

This is not a political commentary, but a criticism of people who have been absolutely terrible at their jobs.  I am a registered Republican who is anxiously counting the days until the current administration gets the heck out of office.  Come on January 20th, don't let the door hit your arse on the way out Mr. Bush and take that fool Paulson with you.

Here's the latest on the current administration's ineptitude.  The Associated Press published this fantastic article yesterday: They warned us, but US eased loan rules.  Apparently, the Bush administration ignored numerous warnings and caved into pressure from major banks, many of which have since failed and decided not to implement proposed crackdowns on no-money-down, interest-only mortgages that it was considering implementing years ago.

Aggressive lobbying from banks, including statements like this gem from the home loan president of the now defunct WaMu "These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages," persuaded regulators to delay and significantly soften new, tougher mortgage rules.

I believe in having fairly free markets, but not the Wild West.  The system needs to have at least a little oversight and regulation.  The Bush administration's and Greenspan's Laissez-faire attitude, which allowed investment banks to lever up a million to one, allowed the use of all sorts of derivatives, and let this mortgage mess spin out of control are absolutely disgusting. 

Ironically, this hands-off attitude has brought us the largest government intervention in the markets since the Great Depression.  If we had been able to reach some sort of middle ground, we wouldn't be in this mess right now. 

What we need right now is a change.  This is not a political statement, it's a fact.  What we were doing was not working.  I just hope that the new administration doesn't take things too far in the other direction.  The only things that Obama could possibly to make things any worse would be to empower unions too much, raise taxes too much, or implement protectionist tariffs.  I suspect that we have learned enough lessons from the failed policies that exacerbated the Great Depression to avoid these things.  Time will tell.

Deej

10 Comments – Post Your Own

#1) On December 02, 2008 at 8:51 AM, johnw106 (57.88) wrote:

I dont think Obama will raise tariffs on imports. He is aware that hurting other countrys economys now would bring ours crashing down even harder than it is. Regardless of the fairly sound argument that we need to bring some jobs back to US soil, it does not make any sense to create goods when their are no buyers for said goods.
As for the unions. Domestic terrorists is what I call them. They morphed over the years from the workers freind into a poltical extorionist machine. Sadly I see no way to dethrone unions as the premeir lobbying power any time soon. If Obama follows through on his pledge to ignore the lobbyists we may see them weaken a bit. But thats a big if.
Taxes. This is a sticky issue. No one likes taxes. But facts are facts. In the modern world it takes the entire population of a nation to support government. It can not function with funds from a handful of wealthy familys like it did two hundred years ago.
A real reform in the tax code is needed where all pay a fair share. From the poorest to the richest. Perhaps some type of flat tax with no deductions and no refunds. Simplify and streamline, do away with the 600 page code book we have now for petes sake.

Most of all I pray we learn as a Nation that debt on a personal basis is bad and that pay as you go is good. Other than a mortgage for a home there is no good reason to have more than a few hundred dollars of debt hanging over your head at any given time.

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#2) On December 02, 2008 at 9:28 AM, olegal (< 20) wrote:

From what I have read, it wasn't Bush that caused all this trouble.  Check back to the Clinton Admen.  that is where it really started.  Bush tried to get it stopped, but the Democrats  kept voting against him and saying there was not a problem.. It was brought up several times over the years and the good ole Democrats kept saying it's o.k. we want to leave it alone and help the POOR people own a home...  With Obama putting another Clinton cabinet in, guess we are headed down the same road... because he sure doesn't know what to do.  Thats called no experience... so folks, we are in for a very rough ride..

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#3) On December 02, 2008 at 10:56 AM, huntoon23 (< 20) wrote:

No experience? Like Bush?

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#4) On December 02, 2008 at 11:59 AM, DarkToast (74.66) wrote:

Bush had plenty of experience running businesses into the ground.

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#5) On December 02, 2008 at 12:36 PM, zygnoda (26.69) wrote:

A real reform in the tax code is needed where all pay a fair share. From the poorest to the richest. Perhaps some type of flat tax with no deductions and no refunds. 

Ugh!  What a horrible idea. 

 

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#6) On December 02, 2008 at 6:34 PM, DemonDoug (92.09) wrote:

olegal you are out of your mind.  the democrats had no power until the bust was well underway.  your race-biting classism and extreme partisanship are coming through all too clearly.

This is not to absolve clinton from signing the gramm-leachy bill with repealed glass-steagall.  but note it was republicans mr. "americans are whiny" gramm that was the lead on that bill.  And yes, it was under clinton's watch that the reserve requirements for banks were virtually eliminated in 1995.  But bush's administration was warned multiple times, as was greenspan, by many respected economists, and they chose to do nothing except fight a bunch of people that had nothing to do with 9/11.

So stop with the sore loser blame game BS.  Anyway it's the fiat currency/federal reserve system that is the ultimate cause of all this anyway.  At least Obama has some good people on his team, and yes even some republicans.

The best thing Obama could do is lower the payroll tax, and end the mortgage interest deduction.  Neither will happen though.

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#7) On December 02, 2008 at 9:30 PM, guiron (< 20) wrote:

From what I have read, it wasn't Bush that caused all this trouble.  Check back to the Clinton Admen.  that is where it really started.  Bush tried to get it stopped, but the Democrats  kept voting against him and saying there was not a problem..

Give me a break. Somehow even Bush's glaring and well documented failures are foisted off on Clinton now. Shirking responsibility is not a sign of strong character or capable leadership.

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#8) On December 02, 2008 at 9:33 PM, guiron (< 20) wrote:

Anyway it's the fiat currency/federal reserve system that is the ultimate cause of all this anyway.

I disagree. It was a group of unregulated asset classes leveraged to the sky. This has happened before, repeatedly. We don't need onerous regulation, but we need regulation which provides transparency and a clearinghouse for asset classes which bubble up and get out of control.

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#9) On December 02, 2008 at 9:35 PM, guiron (< 20) wrote:

BTW, bubbles and crashes created by loose credit backed by unregulated securities has happened even under gold-backed currency.

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#10) On April 05, 2010 at 10:29 AM, AmandaG33 (< 20) wrote:

It is interesting to read some articles which were written in the beginning of this crucial word wide crisis. "They warned us but Us eased loan rules" is a crucial and everything explaining phrase. These huge and bad loans had caused this crisis. People were taking loans like crazy despite the fact that they sometimes couldn't really afford them. It doen't matter if they pay out a loan or not - the most important thing for them was just TAKE. And USA government had even eased loan rules... I will never understand this situation but whatever. The best thing that this crisis is almost over now and we have overlived that. Thanks for the interesting article by the way. I will be waiting for more nice ones fro myou in the nearest future.
Sincerely, Amanda Gillson from no credit check loans

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