The Big Takeover -- How Wall Street insiders are using the bailout to stage a revolution

rollingstone ^ | Mar 19, 2009 12:49 PM | MATT TAIBBI

[Realism]

Thats the way I see it....

Deregulation isn't dishonest or immoral, but regulations are to keep people honest and moral. It's like revoking speed limits and saying now don't go too fast, it's dangerous.

[ex-snook]

Wall Street made money when they screwed up the system and they will make money to unscrew it. Their key to riches is campaign contributions to politicians — an ‘investment’ in deregulation with great returns.

They love it when a plan comes together.

[r9etb]

It took decades of lobbying to repeal the Glass Steagel Act. The Glass Steagall Act was finally repealed in 1999 by Clinton.

Clinton signed the bill, true enough ... but Phil Gramm (R, TX) was the fellow who pushed it through Congress which, at the time, was controlled by the Republicans.

It's a bipartisan failure.

[Lorianne]

Well said.

[dennisw]

Credit default swaps were unregulated...still are
Plus AIGs main credit default swap operation was in London where there is less scrutiny

[Realism]

Soon to be followed by the Commodity Futures Modernization Act of 2000 another major blow to market stability.

[dennisw]

It may have leanings to blame big rich wall street bankers, but it also offers very good evidence, IMO, to blame them. Goldman-Sachs has fingerprints all over this and people in position to make it happen just as stated here. You can definitely blame the Federal Reserve too for its super easy money policy. Wall Street could not have schmemed and profited with out. There would have been no housing/real estate bubble or commodities bubble

[dennisw]

It may have leanings to blame big rich wall street bankers, but it also offers very good evidence, IMO, to blame them. Goldman-Sachs has fingerprints all over this and people in position to make it happen just as stated here. You can definitely blame the Federal Reserve too for its super easy money policy. Wall Street could not have schmemed and profited with out. There would have been no housing/real estate bubble or commodities bubble

[21twelve]

“These over leveraged derivatives and the ability for certain institutions to use them wasn’t legal 10-12 years ago.”

The banks had to find some other way to make up for the lost revenue because they were forced not to in their normal home loan business (CRA). I imagine it went something like “Hey - you’re making us make these low-rate loans. We need somewhere else to make a profit - can’t we be more like Wall Street investment firms?”

I’m not sure I have it right, but the way I understand it - the original $5,000 downpayment from the homeowner turns into a $300,000 assest (the house) for the bank. The bank, under the new rules, is able to leverage that $300,000 by 20 or 30 times or something like that, which the bank invests, and it now has 20 x $300,000 = $6,000,000 worth of assets.

But, the house is overinflatted, the investments are overinflatted, and when the homeowner’s adjustable rate starts to kick in and his monthly payement goes from $900/month to $3,200 per month and he can’t make it, the house goes back to the bank. A few empty houses can be absorbed. A tidal wave of them can’t. So now the bank owns a $100,000 - but that translates into a loss of 20 x $200,000 = $4,000,000 in its investments.

Anyway - that’s my simplified version of what happened from what I can glean from reading FR and watching the news.

[Tarpon]

Yep, that’s how it works. One Republican and it’s bipartisan. Just like the granddaddy the CRA signed by Jimmy Carter — I bet that was bipartisan as well.

So lets fire them all.

[algernonpj]

That’s also my understanding.

Better yet, there were mortgages with no down payment, or where you got money back at the closing.

I wish I could run my personal finances that way.

[algernonpj]

“Yep, that’s how it works. One Republican and it’s bipartisan. Just like the granddaddy the CRA signed by Jimmy Carter — I bet that was bipartisan as well.

So lets fire them all.”

It had to have taken a few more than one republican to pass the repeal pushed by Clinton.

[Realism]

Yeah, thats pretty much the way I understand it also. Insane.

[Realism]

Senate R-90 D-8 and by the House R-362 D-57

[Tarpon]

Those numbers look a little suspect.

[Realism]

Historical facts can be disappointing. We should look to see who actually fixes the mistake, our people or some global entity.

[algernonpj]

“It is a major error to blame this all on the Government. Follow the money and see who made billions wrecking our financial system

Clue—It wasn’t Barney Frank or Chris Dodd. They were bit players”

Thanks for posting. Please add me to your ping list.

Here’s an article posted today about the ‘men behind the curtain’:
(CFR Corporate Members Get Lion’s Share of Bailout FUND)

http://www.thenewamerican.com/economy/commentary-mainmenu-43/915

[Tarpon]

When did the Republicans ever have 90 Senators.

[Realism]

Oops your absolutely right.

Senate:
Yes R-52 D-38 = 90
No - R-1 D-7 = 8

House:
Yes - R 207 D 155 = 362
No - R 5 D 51 = 57

Thats better

[Tarpon]

Yep that's better, isn't that the usual ... both parties are in the same sinking boat with no principles to anchor to.

And Bush signed off on it.

Did you read what this ADDI 2003 crap was all about? You couple that with the fed making interest rates zero and Katy bar the door.

Around here there were illegal alien warm body fraud rings with the mortgage brokers taking out loans for the loan origination cash. The state is now prosecuting, but who couldn't see this coming. Only the Washington clowns.