I'm Always Amazed When People Say The Crash Was "That Party's Fault!" But...

There are people who don't hold the banks responsible in the least. They have been told by MSNBC or FOX that it must have been the fault of "the other party!". WTF People???

Here's something I was surprised to see in today's London Telegraph: A Banker admitting it was the banks fault...

http://www.telegraph.co.uk/finance/...-as-a-world-war-says-BoEs-Andrew-Haldane.html

 

Of course it is. But the problem is our government rewards failure with bailouts.

 

"The banks should have done more" is a common complaint these days in every country.

However it had been the common feeling during the past decades that the speculation driven prices for real estate would never end, that they were infinite.

The common nonsense at the time had been "land is limited so buy now no matter what it costs."

And the banks were showing phantom ("paper") profits from these many loans, so they chased more profits, despite the risks of default.

It then became 1929 all over again, except back in 1929 the speculation was in equity shares of stock, whereas this time the speculation was in real estate loans and the re-selling of these loans at "derivatives."

But no system is foolproof because fools are so ingenious. And a fool and his money are soon parted.

You can blame the banks, but ultimately those who deserve the most blame are the silly people who borrowed over their heads thinking that this was how they would someday get rich -- by borowing.

 

Watch a lot of FOX do you?

 

no actually not at all. and please give me a chance to edit the submission before you jump all over it.

 

Too many people trying to live beyond their means doesn't really help the situation either.

 

While the banks certainly hold the lions share of blame there's more than enough blame to go around. After all those "toxic assets" started out at as bad loans that were basically mandated by congress, approved by fannie and freddie, and gobbled up by people of all stripes. Of course this will be denied by many, how could social engineering ever go awry?

 

Yes you have got the picture. Unbridled unregulated greed. Then too big to fail. A very sad commentary on "capitalism" and on Wall Street. Just more proof you cannot trust these sharks any further than you can spear them. And more proof the regulation is unavoidable, even if unpleasant to some.

 

I think punishment would have work better than regulation , in many cases what banksters & co did was common crime so put them in jail for breaking the law .
Sometimes i wonder how different are the interests of the rich in California (or London) from the rich in Texas (or Rome) .

 

I hope you're not giving a pass to congress, which mandated those bad loans, fannie and freddie, which approved those bad loans, and citizens who signed those bad loans. The way I see it the govt spilled the oil, fannie, freddie, and loan applicants spread the oil and the banks lit the match. Sadly the new regulations will probably do nothing to fix the problem and will probably screw something else up. From everything I've read Dodd-Frank has put new regs on everyone except the big banks at the heart of this mess. Nothing surprising about that. I've said it before if this govt passed a law intended to make baby food safer, I'd probably have to buy new snow tires.

 

Come now. While you cannot really trust banks, if they were not pushed to make loans to people who could never pay it back there wouldn't have been such a gap in the first place. Why would our government make banks lend to losers? Why would that ever be a good idea?

Real estate loans are no longer going to those who don't qualify. But GM is lending for cars by the same standards that got us in trouble with real estate.

 

Abolishing Glass-Stegal was the beginning. Banks should never use pensions and savings and the like as investments. Keep them separate. Next, make lending standards proper and decent when compared to a lendee's financials.

People will always try and get money from banks, its up to them to filter out the individuals who can't/won't pay it back for whatever reason. Proper oversight to keep everyone in line.

Which all makes for a good start.

 

The banks were under political pressure from liberals to make more loans to minorities and low income borrowers.

They knew the loans were risky but bleeding heart libs would not listen.

 

The actual start of the recession was the social engineering by Dodd and Frank that thot everyone should own a house. They forced fanny and freddie to take toxic loans from local banks. These loans were made to ANYONE that could sign their name. The fact that they had no money or no job was of no importance. Finally all these toxic loans crashed the banking system.

That people is what started the whole recession-----------social engineering by two of the most leftwing people in Congress. It is a great example of why the government should stay out of the privates sector arena.

 

You cannot compel lenders to bring about "social justice" outcomes...
then provide them a "government backed" repository in which to discard risks...

and expect nothing bad to happen.

National Homeownership Strategy; http://www.politicalforum.com/political-opinions-beliefs/259729-big-fed-democrats-meltdown.html

 

The difference between the Republicans and the Democrats with regards to listening to the economic elites in the USA is that the Republicans will lie on their backs and spread their legs anywhere and anytime at a word, while the Democrats need to be wooed with flowers and a date before they give it up. In the end, though, they both put out.

 

foreign outsourcing doesn't help either all those people that had those jobs that were shipped overseas could no longer pay their loan payments

 

Everyone was working between 2004 and 2008 what are you talking about?

 

And when ya spend a year or so reading various books and studying reports on the causes of the meltdown, you'll come to the very unspectacular conclusion that the list of who was at fault runs clear down to the people taking out the mortgages. There were a huge cast of villains, for certain, but there was no single, overarching one, no matter how hard partisans try to make one fit their own political tastes.

See - Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States

 

While the repeal of Glass-Stegal certainly made things much worse, the real problem is the OTC derivatives which has no oversight or transparency. My worry is they will try to reinstate Glass-Stegal and make things worse yet again. Let's face it we would not get well reasoned legislation we would get the ideological flavor of the day.

 

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Very well said. I know I'll be repeating that at some point.

 

Agree with the OP although ive seen Fox discuss exactly this, cant say ive seen then say blame squarely on the Dems (perhaps i missed that). However any fair minded person would see its a combination of the Clinton/ Bush era that was the problem, largely as the posters above have mentioned through a lack of regulation. Im a firm believer we'd all be better off if this monetary system was closely looked at (debt money system), the FED is meant to be in place to stop these boom bust cycles.....they fail BIG time at it. The Fed needs to be totally transparent and work for the people, banks simply can not be too big to fail.

 

Okay so these are two perfect examples of what I was talking about in the OP. "It's all the Other Side's fault! Those poor, poor, bankers were just victims of Liberal meanies! They never KNEW they were screwing people, abusing credit default swaps and derivitives and raking in billions by doing what would eventually be put on the taxpayer! No no no! It must be the LIBERALS! What tripe.
The moment the leash was taken off, the dogs fed as ravenously as they could. We the LibDems at least partly to blame? Of course. Were the ConservaRepubs? of course. Were the banks? Absolutely. But if that doesn't fit the political agenda o the person posting? It can't be true!

This is at least reasonable and intelligent but I think you over-reach. One of our neighbors was being foreclosed on by BofA. She refi'd while her hubby was on a TOD in Afghanistan. She was told spcifically, that the payment at the end of the 3 year ARM, would go up around $50 - $70, worst case scenario $125 or so. She's no expert and her hubby was doing a walk-about with the ForCons, but before heading off to the wilderness, said it sounded okay. The payment went up $620.
Were they naive? Of course. A LOT of that went on because unlike stocks, this was an industry that mostly unregulated and worse, had zero enforcement. Even people who were fairly sophisticated in these matters, found themselves in trouble.
But more importantly, if the banks hadn't been allowed to own insurance companies and stock brokerages, there would have no bailouts. Period. it's that simple and there is no escaping it.

 

There wouldnt be a housing market crash if people never bought what they couldn't afford. It's as simple as that. Except for the few cases of outright bank fraud, every single bad loan is the fault of the person signing his name on the bottom line...on every page. It's not the cars fault you blew through a red light...it's YOUR fault for hitting the gas. Not a singgle banker forced someone to sign a loan. Theres a reason people live above their means. They're stupid. That's not the banks fault. It's not even the govt fault...unless pyou want to blame it on public school

 

Think you got that backwards, sport. Democrats are akin to the high school slut that has slept with the entire football team and half of the male workers at the local Dairy Queen.