A 100 billion here a 100 billion there... who cares?

[JBond]

Does anyone care? Somebody has some serious explaining to do. Where is the Justice Department? Every six months or so oil executives are made to testify about why their companies are successful, employing hundreds of thousands of people and God forbid make a profit. Where is the do-nothing 15% approval congress? Why are the robber barons in the financial community immune to prosecution?

I think we all know why the government has selectively spent yours and mine money on certain companies in insane bailouts. Why do certain companies get to live and other sacrificed?

Follow the money to congress.:bang2:

[BrAinPaiNt]

Does anyone care? Somebody has some serious explaining to do. Where is the Justice Department? Every six months or so oil executives are made to testify about why their companies are successful, employing hundreds of thousands of people and God forbid make a profit. Where is the do-nothing 15% approval congress? Why are the robber barons in the financial community immune to prosecution?

I think we all know why the government has selectively spent yours and mine money on certain companies in insane bailouts. Why do certain companies get to live and other sacrificed?

Follow the money to congress.:bang2:

You don't think they have them back room meetings, and later deny it, before they ever get questioned just to catch up on old times do you.

Big Oil pays Big Money to politicians and not just to one party.

[JBond]

You don't think they have them back room meetings, and later deny it, before they ever get questioned just to catch up on old times do you.

Big Oil pays Big Money to politicians and not just to one party.

Fair enough, but they are not going out of business. Oil companies pay $4000 a second in taxes. They are not requiring a trillion dollar payoff to keep afloat. They are not wrecking my 401K. That is my point.

This is not a partisan issue. This is congress openly being paid off to hand a trillion dollars of U.S. citizens money to bankers who are outright crooks. At least when I buy gas, I get a tangible product that helps me be productive. I can chose to buy gas or not. I have no choice on them handing over a trillion dollars to crooks.

[BrAinPaiNt]

Fair enough, but they are not going out of business. Oil companies pay $4000 a second in taxes. They are not requiring a trillion dollar payoff to keep afloat. They are not wrecking my 401K. That is my point.

This is not a partisan issue. This is congress openly being paid off to hand a trillion dollars of U.S. citizens money to bankers who are outright crooks. At least when I buy gas, I get a tangible product that helps me be productive. I can chose to buy gas or not. I have no choice on them handing over a trillion dollars to crooks.

You get no complaint to me. It may not fit the exact term of Corporate Welfare by some but it does to me.

You got fannie and freddy and today I read they are taking over AIG as well.

Used to be that those touting the capitalist system would let the companies live or die by their own hands instead of stepping in.

I am also not sure why the government would be doing government guaranteed loan options for private businesses.

In the end the tax payer gets stuck with the bill.

Just like how credit card companies INTENTIONALLY target lower income people or middle class people knowing they will have trouble paying their debts. Or giving poor credit rated persons more credit on cards to help them get deeper in debt.

Then when they want to make it harder for those people to get out of debt through bankruptcy they contact the government...the card company actually writes the proposal/bill themselves and it gets signed into law because they have business dealings with the government or president.

We are paying off all of our credit cards. We only have one left. The last one we saved up the money and wanted to pay it off with one lump sum. The person on the credit card end tried to tell us we could not do that. I said bs and they admitted that we could. They would rather you have to pay out over a long time in order to get more interest money from you. What kind of crap is it when you have had trouble paying the debt, then finally want to pay it all off and they try and prevent you from doing it. Futhermore what gets me is the idea that if you pay the debt off in full early, they do the opposite of what they should do...instead of that helping your credit rating, it hurts because if you keep paying on it for years that is what helps it.

Of course that makes no difference because I know people who have went bankrupt over credit cards and less than a month later they get pre-approved credit card applications from the very companies they just filed bankruptcy with.

So they make it harder all the way around for someone to pay off a credit card by changing laws, telling lies on the phone or trying to persuade you not to pay off your debt. Yet they are more than willing to take the debt of these multimillion dollar corps while at the same time letting them keep some of the profits.

Imagine if one of us were in debt with a credit card company. We decided we wanted to be bailed out so we file bankruptcy. But then we say...you know what we want you to take our debt away but we still want to keep an item we bought on the card.(say a expensive tv we bought on the card) Do you think they would go for that?

Crazy stuff.

[Sasquatch]

Let's see, Henry Paulson, who was appointed by George W. as the Treasury Secretary, is the former CEO of Goldman Sachs.

[JBond]

Let's see, Henry Paulson, who was appointed by George W. as the Treasury Secretary, is the former CEO of Goldman Sachs.

What is your point? Congress created this mess.

[Sasquatch]

What is your point? Congress created this mess.

How did they do that?

[JBond]

The people who started this mess were Democrats in congress who wanted to be "fair". They created these financial institutions to help the "dis-advantaged". In fact this mess was started under Jimmy Carter and was compounded by Clinton.

Fannie and Freddie were giving special treatment in the form of lower interest rates and all the loans were guaranteed by the government. In order to get this special treatment they were mandated to give loans to people who had no right to own a home because the couldn't afford it. The incredible high risk loans were then sold to investors as no-risk investments because it was all "guaranteed". All the while the people running these groups pocketed hundreds of millions of dollars.

Non-government banks were forced to keep up or the federal government would have taken over all the housing industry instead of just half of it, and they would be out of business.

This would have never have happened at all if big government had not stuck it's nose into private matters. Everything government touches turns to crap.

[ScipioCowboy]

You don't think they have them back room meetings, and later deny it, before they ever get questioned just to catch up on old times do you.

Big Oil pays Big Money to politicians and not just to one party.

You're bumming me out again, man. Stop it.:p:

[Sasquatch]

A slightly more substantive assessment of the origins of the current financial crisis.

Foreclosure Phil
Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown."

David Corn May 28 2008
Mother Jones

Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.

Gramm's long been a handmaiden to Big Finance. In the 1990s, as chairman of the Senate banking committee, he routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street; during this period, the sec's workload shot up 80 percent, but its staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt's memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.

But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."

It didn't quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)

But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.

In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the cftc's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."

These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause." In 1998, Greenberger's division at the cftc proposed applying regulations to the burgeoning derivatives market. But, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."

Now, belatedly, the feds are swooping in—but not to regulate the industry, only to bail it out, as they did in engineering the March takeover of investment banking giant Bear Stearns by JPMorgan Chase, fearing the firm's collapse could trigger a dominoes-like crash of the entire credit derivatives market.

No one in Washington apologizes for anything, so it's no surprise that Gramm has failed to issue any mea culpa. Post-Enron, says Greenberger, the senator even called him to say, "You're going around saying this was my fault—and it's not my fault. I didn't intend this."

Whether or not Gramm had bothered to ponder the potential downsides of his commodities legislation, having helped set off an industry free-for-all, he reaped the rewards. In 2003, he left the Senate to take a highly lucrative job at ubs, Switzerland's largest bank, which had been able to acquire investment house PaineWebber due to his banking deregulation bill. He would soon be lobbying Congress, the Fed, and the Treasury Department for ubs on banking and mortgage matters. There was a moment of poetic justice when ubs became one of the subprime crisis' top losers, writing down $37 billion as of this spring—an amount equal to its previous four years of profits combined. In a report explaining how it had managed to mess up so grandly, ubs noted that two-thirds of its losses were the fault of collateralized debt obligations—securities backed largely by subprime instruments—and that credit default swaps had been "key to the growth" of its out-of-control cdo business. (Gramm declined to comment for this article.)

Gramm's record as a reckless deregulator has not affected his rating as a Republican economic expert. Sen. John McCain has relied on him for policy advice, especially, according to the campaign, on housing matters. The two have been buddies ever since they served together in the House in the 1980s; in 1996, McCain chaired Gramm's flop of a presidential campaign. (Gramm spent $21 million and earned only 10 delegates during the gop primaries.) In 2005, McCain told a Wall Street Journal columnist that Gramm was his economic guru. Two years later, Gramm wrote a piece for the Journal extolling McCain as a modern-day Abraham Lincoln, and he's hailed McCain's love of tax cuts and free trade. Media accounts have identified Gramm as a contender for the top slot at the Treasury Department if McCain reaches the White House. "If McCain gets in," frets Lynn Turner, a former chief sec accountant, "we'll have more of the same deregulatory mess. I like John McCain, but given what I know about Phil Gramm, I wouldn't vote for McCain."

As a thriving bank exec and presidential adviser, Gramm has defied a prime economic principle: Bad products are driven out of the market. In John McCain, he has gained an important customer, so his stock has gone up in value. And there's no telling when the Gramm bubble will burst.

David Corn is Mother Jones' Washington, D.C. bureau chief.

[ABQCOWBOY]

How did they do that?

I know you didn't just ask this question.

:laugh2:

[JBond]

Sasquatch, So congress did do this. That's what I said. The rest of your article is a bunch of opinions offered by libs.

[Sasquatch]

Sasquatch, So congress did do this. That's what I said. The rest of your article is a bunch of opinions offered by libs.

Feel free to refute the specific factual assertions made in the article. That shouldn't be too hard to do if they are fabricated.

[JBond]

Feel free to refute the specific factual assertions made in the article. That shouldn't be too hard to do if they are fabricated.

So do you believe that the fact that Obama's economic team that personally made hundreds of millions of dollars had nothing to do with it? Privatize the profit and socialize the risk. Your article also never mentions why banks were forced to give loans to undeserving people. I didn't see one thing about the stupid fair housing acts or affordable housing acts. The fact is that banks were forced under threat of fines if they did not give loans to people that did not deserve them. Too much regulation is the problem. Remember government is the problem, not the solution.

[Sasquatch]

So do you believe that the fact that Obama's economic team that personally made hundreds of millions of dollars had nothing to do with it? Privatize the profit and socialize the risk. Your article also never mentions why banks were forced to give loans to undeserving people. I didn't see one thing about the stupid fair housing acts or affordable housing acts. The fact is that banks were forced under threat of fines if they did not give loans to people that did not deserve them. Too much regulation is the problem. Remember government is the problem, not the solution.

Fair Housing Act was passed in 1968. The Affordable Housing Act was passed in 1990. The current crisis has more to do with fed policy, consolidation, the lack of regulation, and the mismanagement of financial risk by the private sector.

The roots of crisis
Much blame for the current economic turmoil can be placed squarely at the door of Alan Greenspan and the Fed
Guardian (http://http://www.guardian.co.uk/commentisfree/2008/mar/21/therootsofcrisis)

The US federal reserve's desperate attempts to keep America's economy from sinking are remarkable for at least two reasons. First, until just a few months ago, the conventional wisdom was that the US would avoid recession. Now recession looks certain. Second, the Fed's actions do not seem to be effective. Although interest rates have been slashed and the Fed has lavished liquidity on cash-strapped banks, the crisis is deepening.

To a large extent, the US crisis was actually made by the Fed, helped by the wishful thinking of the Bush administration. One main culprit was none other than Alan Greenspan, who left the current Fed chairman, Ben Bernanke, with a terrible situation. But Bernanke was a Fed governor in the Greenspan years, and he, too, failed to diagnose correctly the growing problems with its policies.

Today's financial crisis has its immediate roots in 2001, amid the end of the Internet boom and the shock of the September 11 terrorist attacks. It was at that point that the Fed turned on the monetary spigots to try to combat an economic slowdown. The Fed pumped money into the US economy and slashed its main interest rate - the Federal Funds rate - from 3.5% in August 2001 to a mere 1% by mid-2003. The Fed held this rate too low for too long.

Monetary expansion generally makes it easier to borrow, and lowers the costs of doing so, throughout the economy. It also tends to weaken the currency and increase inflation. All of this began to happen in the US.

What was distinctive this time was that the new borrowing was concentrated in housing. It is generally true that lower interest rates spur home buying, but this time, as is now well known, commercial and investment banks created new financial mechanisms to expand housing credit to borrowers with little creditworthiness. The Fed declined to regulate these dubious practices. Virtually anyone could borrow to buy a house, with little or even no down payment, and with interest charges pushed years into the future.

As the home-lending boom took hold, it became self-reinforcing. Greater home buying pushed up housing prices, which made banks feel that it was safe to lend money to non-creditworthy borrowers. After all, if they defaulted on their loans, the banks would repossess the house at a higher value. Or so the theory went. Of course, it works only as long as housing prices rise. Once they peak and begin to decline, lending conditions tighten, and banks find themselves repossessing houses whose value does not cover the value of the debt.

What was stunning was how the Fed, under Greenspan's leadership, stood by as the credit boom gathered steam, barreling toward a subsequent crash. There were a few naysayers, but not many in the financial sector itself. Banks were too busy collecting fees on new loans, and paying their managers outlandish bonuses.

At a crucial moment in 2005, while he was a governor but not yet Fed Chairman, Bernanke described the housing boom as reflecting a prudent and well-regulated financial system, not a dangerous bubble. He argued that vast amounts of foreign capital flowed through US banks to the housing sector because international investors appreciated "the depth and sophistication of the country's financial markets (which among other things have allowed households easy access to housing wealth)."

In the course of 2006 and 2007, the financial bubble that is now bringing down once-mighty financial institutions peaked. Banks' balance sheets were by then filled with vast amounts of risky mortgages, packaged in complicated forms that made the risks hard to evaluate. Banks began to slow their new lending, and defaults on mortgages began to rise. Housing prices peaked as lending slowed, and prices then started to decline. The housing bubble was bursting by last fall, and banks with large mortgage holdings started reporting huge losses, sometimes big enough to destroy the bank itself, as in the case of Bear Stearns.

With the housing collapse lowering spending, the Fed, in an effort to ward off recession and help banks with fragile balance sheets, has been cutting interest rates since the fall of 2007. But this time, credit expansion is not flowing into housing construction, but rather into commodity speculation and foreign currency.

The Fed's easy money policy is now stoking US inflation rather than a recovery. Oil, food, and gold prices have jumped to historic highs, and the dollar has depreciated to historic lows. A euro now costs around $1.60, up from $0.90 in January 2002. Yet the Fed, in its desperation to avoid a US recession, keeps pouring more money into the system, intensifying the inflationary pressures.

Having stoked a boom, now the Fed can't prevent at least a short-term decline in the US economy, and maybe worse. If it pushes too hard on continued monetary expansion, it won't prevent a bust but instead could create stagflation - inflation and economic contraction. The Fed should take care to prevent any breakdown of liquidity while keeping inflation under control and avoiding an unjustified taxpayer-financed bailout of risky bank loans.

Throughout the world, there may be some similar effects, to the extent that foreign banks also hold bad US mortgages on their balance sheets, or in the worst case, if a general financial crisis takes hold. There is still a good chance, however, that the US downturn will be limited mainly to America, where the housing boom and bust is concentrated. The damage to the rest of the world economy, I believe, can remain limited.

[JBond]

I stopped reading after the first line. They don't even understand the definition of a recession. Of course you know we are still growing. I'm leaving work and will continue this fun tonight when I have a chance to pull the info I need. Catch ya later.

[Aikbach]

Congress screwed the pooch again, they accepted kick backs and are now scrambling to prop up a company that would otherwise cause for investigation that would reveal their own corrupt butts should be in a sling.

The road to socialism is alive and well, buy outs are now the default excuse to nationalize.