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View Diary: Iceland Solves Banking Crisis by Indicting Bankers, Forcing Mortgage Relief (191 comments)

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  •  You made this really easy to understand! (23+ / 0-)

    Great job making the comparison clear and simple.

    Thank you for this - tipped, rec'd, and bookmarked.

    •  Don't bookmark this... (0+ / 0-)

      First off, financiers weren't categorically breaking the law. If you think the financial collapse was due to illegal activities, you are just wrong.

      Second, bankers have not gotten off scott free. Some banks have gone out of business, with their bankers losing their jobs. Lehman Brothers. Bear Stearns. Washington Mutual, Etc. Those banks were allowed to fail and their assets were given to other banks who could better manage them. The owners of the banks saw their stock prices plummet. The people controlling the banks got hurt pretty bad.

      Look, I agree with the statement in the block quotes in the diary. But our situation has different elements that should be exploited. First, requiring banks to recognize mortgage securities losses would cripple the banking system if not kill it. Lending would cease, and you'd see a depression. This is the very broad concensus amongst the smartest people - which is why you saw Congress act in bipartisan fashion to bail out the financial sector. It had to be done. It was in the best interest of the people. Because the government bought up the "toxic assets" it stabilized the market, and now, the government has begun reselling those "toxic assets." There's been a resurgence in the mortgage securities market in the last few months - because when done correctly, they're a pretty good and stable investment.

      •  Parroting Wall Street's Bullshit (9+ / 0-)

        Everything you write is pro-Wall Street Propaganda.  

        The financial collapse was due in part to Wall Street's crimes.  Was everything illegal?  Of course not.  However, the mortgage industry and mortgage backed securities, were based upon illegal activities.  It was the collapse of this house of cards which caused our current financial collapse.

        Bankers have gotten off scott free.  Getting laid off or having the value of your stock holdings crash also happened to millions of innocent Americans.  Just because these things happened to guilty Wall Streeters doesn't mean the Wall Streeters were punished.  Criminals get punished by prison sentences, not by suffering from a crashed economy in the exact same way as millions of innocent people are.  

        Finally, there were many different ways to go, instead of bailing out the bankers with government money, to save the economy.  The fact that Wall Street controls Congress, and thus was able to pass pro-Wall Street legislation bailing themselves out, while others suffer, means little more than we live in a corrupt country.  The government didn't buy everyone's "toxic assets."  They only bought those owned by Wall Street.   Here too, Wall Street gets bailed out, while the rest of us suffer.

        And let's not look at the billions in bonuses paid for with our tax payer dollars, or how certain Wall Streeters pay 15% Federal Income tax while the rest of us working slobs pay more.      

                 

        •  Well, if you're wanting people to get punish for (1+ / 0-)
          Recommended by:
          Woody

          things that weren't illegal, you're in the wrong country.

          I'm not pro Wall Street. I'm pro Wall Street compared to most people on this site. There were not many different ways to go instead of TARP to save the economy. There wasn't. If you think there were, list them out, and I will shoot them down one by one.

          The government bought banks' toxic assets, because the banking system had to be saved. It was a strategic move to mitigate the worst of what would have happened without intervention and to prevent a catastrophic domino effect that would have likely created 30% unemployment and 15% GDP contraction. It's not about playing favorites with the bankers, it's about keeping the economy alive. Saving the banks helped everyone.

          You know those credit cards a lot of people on this site are living on because they lost their jobs? That lending would have ceased, and our friends here would be out on the street looking for food. But that didn't happen because the banks and the economy were put on life support.

          •  Why would we have had no banking system (4+ / 0-)
            Recommended by:
            TimmyB, Dr Stankus, JesseCW, atana

            if we had not bailed out these dysfunctional banks? You say,

            The government bought banks' toxic assets, because the banking system had to be saved.
            We didn't save the banking system, we saved a handful of crooked banks. Why was that necessary in order to save our economy?

            Is it necessary to have out of control thieves running our economy and our government in order to have an economy? Is that what you're saying?

            When I read comments that parrot Wall Street's take on this crime, it sounds like the writer thinks the economy consists entirely of capital. What about labor? Isn't the work people do of any value? Lincoln thought labor was superior to capital because there is no capital without labor first creating it. Can't we do that any more?

          •  How About Punishing Actual Crimes? (6+ / 0-)

            Certainly we can agree that there were some crimes commited.  Why don't we punish those criminals?  After all, Bush I got over 1,000 felony convictions for the much smaller ''Savings and Loan Scandal.''

          •  You're pro-wall street. (5+ / 0-)
            Recommended by:
            Eric Blair, BradyB, TimmyB, atana, Linda Wood

            Why claim you're not?

            The government bought banks' toxic assets, because the banking system had to be saved.
            It's called receivership.  You close them down, the speculators invested in all that bad debt get fucked, then you break up the good bits into a whole raft of new banks.

            Not complicated.   Not hard.  And it wouldn't have left us with no banking system.

            You know those credit cards that banks are using to steal huge chunks of the income of many of the banks caused to be unemployed?

            Had we broken up those banks, instead of further empowering them to buy our politicians, the being exploited through those cards wouldn't need to live off them, because they'd have jobs.

            Fear is your only God.

            by JesseCW on Fri Feb 24, 2012 at 08:13:16 PM PST

            [ Parent ]

            •  THANK YOU for saying this so well! (0+ / 0-)

              "Finance" has become the leading industry in America. And so many people inebriated on the concept of it think it is the entire economy!

            •  I'm for most streets (0+ / 0-)

              I like good infrastructure spending...

              Seriously though. If you think bringing down the whole banking system and rebuilding it from the ground up is not complicated and not hard, I think we're through here. And that is exactly what you're talking about. The banks all have financial instruments that have them tied together. Plus, government knows a hell of a lot less about finance than people at the banks, so you're going to be left with a system that is far less stable than if you bail out the people with core competencies in banking, and let them get shitty profits for a while - which is what is happening.

              •  s----- profits? Have you been paying close (0+ / 0-)

                attention to the bounce back in mortgage lending (actual) and the fees, spread between the giveaways at the Fed and the lending credit card rates and others?  It is off the charts, up 600% in spreads for home loans and the cards are usurious as never before. That's the bankers reality of the mega banks. Their portfolios are POS, but their activities are business as usual, only with better margins.

                This signature....is currently under construction..

                by BeeDeeS on Tue Feb 28, 2012 at 07:16:16 AM PST

                [ Parent ]

      •  Losing your job isn't the same as going to jail (4+ / 0-)
        Recommended by:
        elwior, Spoc42, Dr Stankus, JesseCW

        And lots of the folks that caused the crisis but lost their job still ended up with lots of money from their previous bonuses based on one-way bets.

        And like Paul Krugman, I think there were definitely illegal activities that call for jail time. That is not to say they were the root of the financial crisis; deregulation was a bigger part, but illegal actions contributed. And of course the bankers had an inordinate amount of influence over the political process, such that they were able to make shady practices legal.

        Could you expand on what other different elements should be exploited? All you say there is that we had to bail out the banks, and I agree with that.

        •  Well, we don't put people in jail when they don't (0+ / 0-)

          break laws. There was not rampant law breaking. Some, sure. But if you take away all of the law breaking that happened, you still have a financial crisis that looks very similar to what played out.

          And let's be honest here, it wasn't "deregulation" that caused the crisis. It was regulation. It was government guarantee of sub-prime loans. That was the regulation that enabled the banks to act so cavalier in their lending practices. When your pay is based on volume of loans without regard to the performance of those loans, you make shitty loans. Incentives drive behavior, and regulations created incentives for banks to get very rich by being irresponsible in their lending. And it wasn't even so much irresponsibility in most cases. Lending to these people was a new idea without a recent test case.

          As far as things to exploit in our financial crisis, I think we're doing a pretty good job. Because we're the world's reserve currency, we could perform quantitative easing without a severe erosion in living standards. That has worked out well. Had Iceland tried that, they would have had a much harder time. Next, since our problems began in housing, the government's buying of toxic assets from banks to create a market turned out well. Mortgage securities should be pretty safe. Housing prices are historically very stable. As long as you can cut out the bubble-building incentives, they do have a lot of value. So I think that was executed fairly well.

          •  heh (5+ / 0-)

            we could have made whole all the underwater real estate in this country for about 2X TARP. Instead we paid out much more so that these assholes could continue to play their derivative games.

            And this:

            And let's be honest here, it wasn't "deregulation" that caused the crisis. It was regulation. It was government guarantee of sub-prime loans. That was the regulation that enabled the banks to act so cavalier in their lending practices. When your pay is based on volume of loans without regard to the performance of those loans, you make shitty loans. Incentives drive behavior, and regulations created incentives for banks to get very rich by being irresponsible in their lending. And it wasn't even so much irresponsibility in most cases. Lending to these people was a new idea without a recent test case.
            Might be the dumbest thing I have ever read.
          •  You act as if the bankers that made these (4+ / 0-)
            Recommended by:
            Dr Stankus, JesseCW, BradyB, atana

            shitty loans had nothing to do with the government deciding to guaranty them, as if there was no connection between the politicians who made these guarantees and the bankers who benefitted from them, as if we're all operating in a political vacuum.

            Your statement that,

            When your pay is based on volume of loans without regard to the performance of those loans, you make shitty loans
            also suggests that for these elite, high-minded banks to make loans without regard to the performance of the loans was not only legal but business as usual. Aren't they in any way responsible to their depositors, their shareholders, their investors?

            Or is this so-called banking system just plain and simple racketeering, with the admonition, "let the buyer beware" used as a legal cover?

          •  Talking about honesty (4+ / 0-)
            Recommended by:
            Eric Blair, BradyB, atana, Linda Wood
            It was government guarantee of sub-prime loans.
            It's a right wing talking point and a canard that has been widely disproved in financial circles.

            You know, if you want to talk about honesty, what caused the financial meltdown is a very complex subject and millions of pages have been written about it. But what unraveled the crisis is not hard to understand and it most definitely was not the government guaranteed sub-prime loans. The AIG underwriting of derivatives and how those derivatives where being accounted for by the big banks and used to misrepresent their balance sheets played an immensely, not bigger, but immensely bigger role than anything Fanny and Freddy had anything to do with it. Just J.P. Morgan alone was counter party to $45 trillion, not billion, trillion with a t, as in three times the Gross Domestic Product of the U.S., in derivatives. Guess who was insuring those? Guess who couldn't make good on all that insurance? Guess who called derivatives "financial weapons of mass destruction"? Who was leveraging their assets 30 and up to 45 times? Fanny and Freddie? I don't think so.

            Look, if you are going to ask people to be honest you should start by being honest yourself. Perhaps it is just ignorance. But ultimately where all of it really began was with Alan Greenspan, by his own admission, refusing to enforce regulations that were on the books. This refusal to regulate, following his Randian dogma, allowed all this to happen. He admitted as much in front of Congress when he said I was wrong, you can hear him in his own voice.

            So to make the claim

            It was government guarantee of sub-prime loans.
            Is dishonest to say the least. On the other hand greed played the central role in this whole debacle.

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