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  •  In addition (0+ / 0-)

    The people selling the loans knew that they could "package" and sell them without fully disclosing what the package consisted of.

    If they had to fully disclose the loans before selling, most of them wouldn't have sold.  

    Again, that could have been prevented with reasonable regulation.

    Were existing laws broken?  Yes, and part of the problem was the Bush administration's inclination to not enforce the laws

    •  You're asking the feds (0+ / 0-)

      to get a little too far down in the weeds, I think.

      I'm not opposed to some level of regulation. But it becomes problematic when you start asking the government to make specific note of each and every loan transaction that happens. As is the case with many economic problems like this, the symptoms of crisis only become apparent at the point where no real action can be taken to stop the end result. It's one thing if, say, the federal reserve is handing out loans like candy. It's another thing entirely to ask for complete oversight and quality control over ever loan disbursed by "Mom and Pop's Bank."

      The bottom line, for me, is that nobody should expect the government to protect him from anyone else. Laws exist, sure, and they are broken - and our governmental and legal systems are, or necessity, REACTIONARY in nature only. The federal government, especially, moves far too slowly to be an effective preventative force.

      •  No - I am asking for same regulations (0+ / 0-)

        that have kept the banking system safe since the end of the great depression to be applied to the new financial instruments that were created in order to circumvent those regulations.

        I am not asking the federal government to look at each loan, rather I am asking for sensible regulations that enforce disclosure.

        We are also not talking about "mom and pop" banks, but major institutions such as Countrywide.  

        Regulations had existed, and they worked.  They were circumvented, and the people in charge had a religious belief in the "power of the free market" to prevent abuse.  

        •  Abuse happens (0+ / 0-)

          whether there are regulations or not. Sounds more like what you are asking for is the federal government to open up its checkbook whenever non-federal organizations break the law - and quite frankly, that doesn't make any sense. In doing so, you'd hold taxpayers accountable for stuff they didn't actually do wrong. . . .

          •  I can't see how you draw that conclusion f (0+ / 0-)

            from what I said.  Where did I mention opening a federal checkbook?  

            As for abuse happening whether there are regulations or not (or whether they are enforced or not) that is a pretty rediculous statement.  Reasonable regulations, well enforced, will not 100% eliminate abuse, but they will reduce it tremendously.

            Murder happens whether we have laws against it or not. Perhaps we should give up on murder laws

            •  I'm not saying to give up on laws (0+ / 0-)

              But the point is that the state isn't held liable for murders that do happen, and it shouldn't be held responsible for other 'bad stuff' that people do which happens to be illegal.

              The other issue to consider here is what regulations ought we to introduce. There has to be a balance, I would assume, between preventing people with a certain degree of credit problems from gaining access to substantial loans and still encouraging people with limited funds to pursue home ownership. Clearly, if this debacle has shown us anything, it is that not EVERYONE is in a position, fiscally, to be able to own a home, and consequently not everyone who wants to own a home should be offered a loan to do so. But where do we draw the line?

              Part of the issue, I think, is a misplacement of trust in the banking system. We tend to assume that the banks are absolutely safe - you put your money in, and you can just go get it whenever you please. Banks don't work that way - they take your money and let other people use it, and you get a certain amount of interest because of that (it's an oversimplification, but a necessary one that captures the gist of how banks work). It isn't always safe - and when banks loan money to people who shouldn't be getting loans, customers at the bank suffer losses. I could keep all of my money under my mattress, but there are risks associated with that too. The point is that no means of storing money is ever going to be 100% safe - nor should they be. We live in a risk-reward oriented society (which, for the record, is a wonderful thing). Putting your money in the bank is a risk (not a huge one, but it is a risk). And if the banks start doing stuff you don't like, you can take your money and put it in a different bank. Or in your mattress. Or anywhere, really. Why, exactly, is it the government's responsibility to provide direct supervision over anyone's money?

              •  Because when people can't trust in the system (0+ / 0-)

                the entire system breaks down.

                BTW - I am an MBA, and I own a business.  I know how banks work.

                Your statement of

                And if the banks start doing stuff you don't like, you can take your money and put it in a different bank

                is fine, IF you have a way of knowing what the bank is doing. But generally speaking you don't.  That's what regulations are for - to provide a reasonable level of safety

                We assumed that banks were safe for two reasons

                1)The FDIC guaranteed them

                1. In exchange for the guarantee, the banks had to abide by a set of regulatory requirements that increased the safety.  

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