Must watch

[zerojunkie]

http://www.pbs.org/wgbh/pages/frontline/warning/view/

Another great episode of Frontline on the financial catastrofuck. I thought it was a pretty fascinating insight into a Clinton-era fight between the Greenspan Fed and the then regulators of the OTC derivatives market. The same derivatives that amplified the housing markets collapse into something that could potentially make the entire economy crumble. Give it a view if you have an hour to kill.

It's pretty shameful that Wall st. is still against the regulation of these even after the events of the past year. It's good to see that the administration is starting to harass them about it though, but I hope the impetus doesn't end there.

[PETA]

What regulation would have prevented this problem?

Citing the bundling of mortgages and sale of bonds on their revenue stream as if it was the exclusive cause of the RE collapse is quite incomplete. The failure of the federal government to rein in Fannie and Freddie lead to the big private players to get into the same game. And, lets not leave out the bond rating agencies who called those bonds AAA, oh, but in this case AAA meant something different than AAA in other cases... the list of problems is long and the fact that people such as Barney Frank torpedoed attempts to regulate Freddie and Fannie means there's plenty of blame to go around

[zerojunkie]

Originally Posted by PETA

What regulation would have prevented this problem?

Citing the bundling of mortgages and sale of bonds on their revenue stream as if it was the exclusive cause of the RE collapse is quite incomplete. The failure of the federal government to rein in Fannie and Freddie lead to the big private players to get into the same game. And, lets not leave out the bond rating agencies who called those bonds AAA, oh, but in this case AAA meant something different than AAA in other cases... the list of problems is long and the fact that people such as Barney Frank torpedoed attempts to regulate Freddie and Fannie means there's plenty of blame to go around

I never said it caused the RE collapse, I said it amplified its effects.

It's hard to say what regulations would've prevented it from happening. Brooksley herself never really made any real recommendations as to what the regulations should look like. Her efforts were quashed at the fact finding stage. But you point out a pretty good starting point in your reply. How about some rules or oversight on how the things are rated? It's pretty obvious that leaving them deregulated and without oversight had a major part to play in this specific aspect of the meltdown. And if that's not enough, take a cue from Greenspan's about-face on the issue.

[vinnie97]

Barney Frank doesn't have a problem with the corruption that lead to the crash of 2008:

http://georgewashington2.blogspot.co...bad-loans.html

“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

[PETA]

Originally Posted by zerojunkie

I never said it caused the RE collapse, I said it amplified its effects.

I think it would be more accurate to call it one of the contributing factors rather than singling it out for specific scorn.

Originally Posted by zerojunkie

It's hard to say what regulations would've prevented it from happening. Brooksley herself never really made any real recommendations as to what the regulations should look like. Her efforts were quashed at the fact finding stage.

Then it makes the claim that regulation would have prevented the collapse more difficult to support does it not?

I'm not claiming that it couldn't have helped. I'm simply noting that banging the drum about regs is not very useful without specific recommendations abnout what types of regs would have helped.

Originally Posted by zerojunkie

But you point out a pretty good starting point in your reply. How about some rules or oversight on how the things are rated? It's pretty obvious that leaving them deregulated and without oversight had a major part to play in this specific aspect of the meltdown. And if that's not enough, take a cue from Greenspan's about-face on the issue.

I've repeatedly made that point here. And it isn't even regulation. TRANSPARENCY from credit ratings agencies so the method used to reach their ratings was readily available. The typical consumer (like me) will still remain oblivious but the sophisticated consumer of bonds won't and the market will correct for it. Plus, its a lot cheaper than gov't regulation.

[zerojunkie]

Originally Posted by vinnie97

Barney Frank doesn't have a problem with the corruption that lead to the crash of 2008:

http://georgewashington2.blogspot.co...bad-loans.html

Barney Frank being the head of the House Banking Committee is about as stupid as Ted Stevens being the head of the Senate Committee that controlled communications.

Originally Posted by PETA

I think it would be more accurate to call it one of the contributing factors rather than singling it out for specific scorn.

Yes it's fair to call it a contributing factor, but by doing so you marginalize exactly how much it contributed to the severity of the crisis. Credit default swaps and collateralized debt obligations are the financial tools at the heart of the financial sector's near collapse and just the kind of derivatives congress left to the financial sector to self-regulate...that worked out well.

Originally Posted by PETA

Then it makes the claim that regulation would have prevented the collapse more difficult to support does it not?

I'm not claiming that it couldn't have helped. I'm simply noting that banging the drum about regs is not very useful without specific recommendations abnout what types of regs would have helped.

You're not new to DDM. If we were out there providing solutions to these problems we wouldn't be wasting so much time in the political section of a board devoted to dance music.

Originally Posted by PETA

I've repeatedly made that point here. And it isn't even regulation. TRANSPARENCY from credit ratings agencies so the method used to reach their ratings was readily available. The typical consumer (like me) will still remain oblivious but the sophisticated consumer of bonds won't and the market will correct for it. Plus, its a lot cheaper than gov't regulation.

Uh, the "sophisticated consumers" are the ones the government is bailing out right now.

[PETA]

Originally Posted by zerojunkie

Uh, the "sophisticated consumers" are the ones the government is bailing out right now.

fair point