[Liberator]

I'm just gonna deal with the flaw in understanding you seem to have about banks:

Wouldn't you blame the banks for actually giving the people the loans without doing proper background checks? None of these banks were forced to give out these crappy loans, it was simply easier to do so. The banks just jumped on it because it could make them a ton of money.

Banks exist to make they're account holders and stock holders money.  Not to fund some nutjob social scheme.  Banks make loans because you sign a contract with them saying that you'll pay the loaned amount plus some agreed upon amount above the loaned amount as a fee for receiving the loan.  The situation we have was precipitate, at least in part, by politicians deciding that it would be good for they're political fortunes for they're constituents to have access to affordable housing.  That's a good thought, admirable thought, one that deserves examination.  The problem stems from the fact that you have people who understand less about how good fiscal management than I understand about attracting a female.  They released the reins and the horse took off and for a while it was a great ride, but horse has tried to jump a ravine that was too wide and now we're stuck with a lamed up horse and no one wants to put it out of it's misery.

Using less anologies, a person who makes $30,000 at the hairdressers with 3 kids and no savings has ABSOLUTELY no business buying a house worth 3 times they're annual income much less 10 times, like they were doing at the peak of the bubble.  It's like asking the gangster to leave your incisors in when he beats you to a pulp for reneging on a deal.  Nothing but trouble.

[Blue Lion]

I'm just gonna deal with the flaw in understanding you seem to have about banks:

Oh goodie.

Banks exist to make they're account holders and stock holders money.  Not to fund some nutjob social scheme.

I assume the following story will tell me how these banks did this to make money and not out of some social scheme. This was a good preface so I can tell.

Banks make loans because you sign a contract with them saying that you'll pay the loaned amount plus some agreed upon amount above the loaned amount as a fee for receiving the loan.

I'm glad you explained the concept of a loan to me.

The situation we have was precipitate, at least in part, by politicians deciding that it would be good for they're political fortunes for they're constituents to have access to affordable housing.  That's a good thought, admirable thought, one that deserves examination.  The problem stems from the fact that you have people who understand less about how good fiscal management than I understand about attracting a female.  They released the reins and the horse took off and for a while it was a great ride, but horse has tried to jump a ravine that was too wide and now we're stuck with a lamed up horse and no one wants to put it out of it's misery.

So who's the one with bad fiscal policy? The banks or the politicians? Because I have yet to see anyone tell me how these banks were FORCED to give these loans out, forced to ignore salary levels and credit checks and forced to engage in any of this activity.

"The stupid politicians made it easier for banks to give out stupid loans!"

Using less anologies, a person who makes $30,000 at the hairdressers with 3 kids and no savings has ABSOLUTELY no business buying a house worth 3 times they're annual income much less 10 times, like they were doing at the peak of the bubble.  It's like asking the gangster to leave your incisors in when he beats you to a pulp for reneging on a deal.  Nothing but trouble.

So why did the banks give the loan? Banks can't reject loan applications based on ability to pay?

Let me see if I get this right.....

Politicians, in an effort to garner votes among the poor (people would be using these loans to buy homes) passed laws forcing banks to give loans to people who couldn't possibly pay them back. Banks, knowing they had zero say in the matter, gave out these loans they knew couldn't be paid back. They then sold those loans to other institutions, earning a nice fee.

And it's NOT

Banks use relaxed lending laws to give massive amounts of credit to people who couldn't get it before in an effort to get in on the giant rise in housing prices?

Really? People were (and are) getting huge loans and giant lines of credit because the government made them do it? These poor defenseless banks didn't have a say in the process that made them crazy rich until it all fell apart and we needed people to blame?

[Kosh]

So why did the banks give the loan? Banks can't reject loan applications based on ability to pay?

To make money off of it, duh. Whenever you take out a loan that amount of money gets added to the banks balance sheets because they assume you will pay it back, they only get into trouble and have to write it down if you default.

Banks use relaxed lending laws to give massive amounts of credit to people who couldn't get it before in an effort to get in on the giant rise in housing prices?

Because for them that's where the profits were.

Are they supposed to help the banks or leave them on their own?

They're supposed to stop situations like 1929 or what is happenening now from happening, and they didn't. The main selling point of the 1913 federal reserve act was to setup a system to stop bank panics.

The fact that they did get a subpoena means they do answer to them.

A subpoena IS answering to Congress.

Congress can subpeona anyone for anything, that they had to go to such an extreme measure to get answers (the fed did ignore an info request leading to this) shows the contempt for congress.

[Blue Lion]

To make money off of it, duh. Whenever you take out a loan that amount of money gets added to the banks balance sheets because they assume you will pay it back, they only get into trouble and have to write it down if you default.

That's my point. This is not a "evil politicians made us" scenario (well not entirely), this is a "lets make a ton of money off these new lenders cause of this new law!"

Because for them that's where the profits were.

They made an assload of money selling these mortgages to investors. Not because the lawmakers wanted them to give houses to poor people for votes.

They're supposed to stop situations like 1929 or what is happenening now from happening, and they didn't. The main selling point of the 1913 federal reserve act was to setup a system to stop bank panics.

Two things:

1. It's kinda hard to thank the Fed for banking panics they avert.

"Hey. Remember that banking panic that didn't happen?"
"....No?"
"Thank the Fed!"

2. IF you assume the buddy buddy system that has been generalized here, wouldn't you have to agree that they would have done what they could to help their buddies in this crisis?

If these guys have this "scratch my back" thing going on and STILL managed to screw it up and it all go to hell, then I am not worried because these guys suck at corruption then.

Congress can subpeona anyone for anything, that they had to go to such an extreme measure to get answers (the fed did ignore an info request leading to this) shows the contempt for congress.

You're showing the mechanism by which Congress is exerting its authority. We've already established they answer to Congress, we've seen how they must comply with audits by other parts of government.

Them trying to get out of one request is a dick move, and sure to fail, but it is not "These guys are above the law!"

[Liberator]

They're not above the law, they just think they are, that applies to both Fed managers and also, unfortunately, Congress these days.

[Blue Lion]

And it's time to show them they aren't. They have rules and laws they have to follow because it's their job to watch these things.

[Kosh]

[quote\
That's my point. This is not a "evil politicians made us" scenario (well not entirely), this is a "lets make a ton of money off these new lenders cause of this new law!"
[/quote]


Which is exactly what I said, and the fed should have reigned it in.

You're showing the mechanism by which Congress is exerting its authority. We've already established they answer to Congress, we've seen how they must comply with audits by other parts of government.

By that logic Mark McGuire also answers to congress.

1. It's kinda hard to thank the Fed for banking panics they avert.

Like what?

[Blue Lion]

Which is exactly what I said, and the fed should have reigned it in.

That's what I've said since the thread started. They don't need to be removed or replaced, they need to do their job.

By that logic Mark McGuire also answers to congress.

We know they answer to Congress because a law exists that says they do. If my boss calls me in for a meeting and I don't go... I STILL answer to my boss.

Like what?

You want me to point out when we didn't have banking panics?

[Kosh]

That's what I've said since the thread started. They don't need to be removed or replaced, they need to do their job.

No it isn't, you said we should give them all kinds of new powers. Are you not understanding what you said earlier or are you just trolling?

You want me to point out when we didn't have banking panics?

You made the claim, you back it up.

We know they answer to Congress because a law exists that says they do. If my boss calls me in for a meeting and I don't go... I STILL answer to my boss.

Congress can subpeona anyone for any reason.

[Blue Lion]

No it isn't, you said we should give them all kinds of new powers. Are you not understanding what you said earlier or are you just trolling?

As I've said before, I think they need new powers, but new powers wouldn't have solved this particular crisis. Considering the article wasn't even about this crisis and the thread only derailed to it later, my opinion on the Federal Reserve as a whole could be somewhat different.

You made the claim, you back it up.

Uh ok...

"every single time the Fed changed or didn't change an interest rate and it didn't lead to a banking panic"

You're asking me to show how good driving averts accidents by pointing out all the times I didn't have an accident.

Remember any point in the past 100 hundred years where we didn't have a banking panic? Then.

Congress can subpeona anyone for any reason.

And here is the reason.......

The Fed answers to Congress.

Why do you think they're using a subpoena? They're supposed to answer to Congress and they're not.

[Kosh]

They're supposed to answer to Congress and they're not.

I think so too.

I think they need new powers, but new powers wouldn't have solved this particular crisis.

Then they don't need no powers, simple as that.

You're asking me to show how good driving averts accidents by pointing out all the times I didn't have an accident.

No, I'm asking you to point out all the accidents that would have happened if you weren't a good driver.

[BloodEagle]

No, I'm asking you to point out all the accidents that would have happened if you weren't a good driver.

 

[Blue Lion]

I think so too.

We know that, we don't think that.

Then they don't need no powers, simple as that.

Someone has to and I can say for sure whoever has it will mess up at some point. To expect a regulatory agency to never make mistakes is kinda weird. It's never going to happen.

No, I'm asking you to point out all the accidents that would have happened if you weren't a good driver.

[Liberator]

BL, he's asking you point out times in economic history where the fed has done they're job and it's been all over the news.  It's not news when somethings works the way it's supposed to, it's only news when it doesn't.

[Kosh]

BL, he's asking you point out times in economic history where the fed has done they're job and it's been all over the news.  It's not news when somethings works the way it's supposed to, it's only news when it doesn't.

[Blue Lion]

BL, he's asking you point out times in economic history where the fed has done they're job and it's been all over the news.  It's not news when somethings works the way it's supposed to, it's only news when it doesn't.

That's what I said when I said...

Two things:

1. It's kinda hard to thank the Fed for banking panics they avert.

"Hey. Remember that banking panic that didn't happen?"
"....No?"
"Thank the Fed!"

He then said "like what?"

As you've pointed out, that's almost impossible to do. So does he really want me to point out all the banking panics that didn't happen or is he just being argumentative because he's run out of arguments?

[Kosh]

That's what I said when I said...

I'm pretty sure that is not what you meant.

[Blue Lion]

I even gave a fake example to spell out what I meant.

[Kosh]

And that made it quite clear you didn't understand what I was asking.

[Blue Lion]

What exactly was your point then when you said

"They're supposed to stop situations like 1929 or what is happenening now from happening, and they didn't. The main selling point of the 1913 federal reserve act was to setup a system to stop bank panics."

This outta be good.