You are concentrating on the subprime issue caused by government instructing banks to loosen their loan requirements to help poor and disadvantage. Coupled with Fannie Mae and Freddie Mac, CRA and ACORN people who were not qualified for loans contributed to the financial meltdown. However not all collapsed mortgage loans were subprime in nature. There many banking CEO’s who wanted to meet their earning requirements for bonuses by pumping up earnings in a short time by accepting many loans as possible (earnings are thru fees and points). They did that by instructing mortgage orginators and underwriting departments not to verify the loan applicant’s info, and even encourage lying on the loan application for conventional mortgage loans. So far that is not illegal because the bank is risking itself with bad loans, the fraud occurs when these loans are bundled and the rating agencies give it a AAA rating and sold into the after market. This act IS FRAUD.
True your proposals may eliminate future fraud, but letting the fraudster get away with it will not solve the problem either. One thing about government regulations, it cannot account for every scheme possible, if such regulations existed no one in this country can conduct business. These fraudster will find another way to get around Glass Steagall or worst outright violate the act on a wide scale hoping they become too big to fail to nullify any government attempt to punish them. The only way to solve this is to eliminate this generation of fraudster, because the young ones down the road will become the middle managers or worst CEO’s, and since they survived current crisis richer and not prosecuted, they will be emboden to repeat the scheme. We barely survived this collapse, the next time we may not be too lucky. Remember what happen to Gov Huckabee when he got soft and let one criminal get away, four police officers are dead because of it. We barely survived this collapse, the next time we may not be too lucky. The last thing I need twenty years from now is find out we had a melt down caused by a banking CEO who began his career as a mortgage originator that made sale man of the year via liar loans in 2008.
As I stated before, you and I disagree on what the root cause of the problem is and what the fix is. Fair enough, you have your opinion, I have mine which is based on the fact that I spent 4 years working in the industry. Not saying my opinion or perspective is any more valid than yours, mine's just formulated on what I've personally SEEN and KNOW.
There many banking CEO’s who wanted to meet their earning requirements for bonuses by pumping up earnings in a short time by accepting many loans as possible (earnings are thru fees and points). They did that by instructing mortgage orginators and underwriting departments not to verify the loan applicant’s info, and even encourage lying on the loan application for conventional mortgage loans.
This may come as a surprise to you, but MANY companies (yes, outside Banking) do whatever they can do prop up their earnings as much as possible so their C level folks can hit their target bonuses. I've worked in Advertising, the Auto Industry and Banking and seen that behavior across all three. The fact that Banks did it and continue to do it by the way, is nothing new.
The difference between Banks and other companies is the mechanism they used, collateralization, securitization and bundling are all direct results of the very laws and regulations that were aimed at the Banking industry, designed to implement "social engineering" and create permanent Democrat voting blocks. That has been pointed out above by more than just this writer (me.)
Imagine if the same scenario had happened with oh, say AUTOMOBILES, where the Government were to implement a program designed to sell cars to people who couldn't otherwise afford them, with the promise of cheap, easy money, government rebates and dealers pressured to sell cars. Oh wait, that DID happen via Cash for Clunkers, at the cost of more than $24,000 U.S. Taxpayer dollars per vehicle (Source: Edmunds.com) and now we have high rates of vechicle re-posession as a result.
You see, it's GOVERNMENT MEDDLING in Markets that causes these problems, that's the root cause analysis. The rest of the facts on record here on this thread are also valid, but the fact remains if you want to really SOLVE the problem the ROOT of it must be dealt with, the rest are symptoms that will ultimately be resolved once the root cause has been dealt with.
Have a good evening.