The Blame Game

[PBzeer]

After reading, and reading, and reading, I have yet to find any relevant passage in the Gramm-Leach-Bliley Act that has to do with securitization, which is the vehicle for the excesses of Fanny Mae and Freddy Mac. What it did do, was enable diversification in the banking industry. The kind of diversification that allowed Bank of America to buy Merrill Lynch, rather than Merrill failing or being a bailout recipient.

Why then, would the finger be pointed at this particular piece of legislation? Quite simply, because it can be tied to McCain.

If you want to look at a timeline of relevant legislation to the enabling of Fanny and Freddy, you can look here.
Articles: The Subprime Lending Industry: An Industry in Crisis

[chucklesR]

John,
I think your link says that securitization began in the 30's with the New Deal - GLB had to do with financial service providers being able to merge with insurers, which freed up money and put more players in the game.
How that muddied the sub-prime market comes out to more players in the game = dirty playing to get a bigger piece of that higher paying sub prime loan and an apparent disregard for the higher risk involved.

The whole mortgage backed securities business doing derivatives and secondaries etc. really muddied the water by bundling and packaging good with bad until it was so muddy no one knew what they were getting until it flopped.

A combination of deregulation, lack of oversight, lack of funding for the entities doing oversight (chronic govermental problem) and lack of enforcement because of a known lack of resources then got coupled with the short term investment mentality left over from the dot com boom where investors simply couldn't move securities with a 5% return when Joe Subprimer was selling 9% ROI with the same AAA rating.
They (subprime bundles) had the same rating because of that lack of regulation and oversight (read funding, and foresight by legislatures) didn't have any rules that SAID they HAD to rate them at less - so they didn't.

Blame the folks who wrote the rules, with loopholes that they probably didn't even know where there because they are politicians not qualified to do anything but talk pretty in a sound bite. Blame the lobbies because they knew, but figured they could pass the paper faster than the pyramid could collapse, blame Joe Public for never truly holding Congress responsible.

This is of course a simplied version of a simplified version more takes books, and I'm sure those will be coming out in the future.

[PBzeer]

Just got done listen to Dodd rail about a lack of awareness about Fanny and Freddie. Yet, from an article in the JournalInquirer (Connecticut) he states:

But while Dodd, the chairman of the Senate Banking Committee, insisted that the firms known as Fannie Mae and Freddie Mac were “in sound situation” and “good shape,” he also ripped the administration and the Federal Reserve Bank.

He said their failure to prevent bad lending practices had led to “unprecedented hardship” and turmoil in the nation’s financial markets, and that the Fed “was aware of this problem 3½ years earlier.”

Not only is it evident he didn't have a clue, he was central to not bringing to a vote a measure specifically designed to address the problem in 2005-06. Which I am sure was unconnected to his ranking as the number one recipient of Fanny and Freddie donations.

[PBzeer]

Chuck, I'm not really worried about pointing fingers at individuals. In fact, I'm tired of the political posturing being done rather than identifying the problems and coming up with workable solutions.

Unfortunately, this is what happens when politicians are in charge of economic decisions.

[chucklesR]

GovTrack: Senate Record: FEDERAL HOUSING ENTERPRISE REGULATORY REFORM... (109-s20060525-16)

Yeah, Dodd didn't know nothing. Here's John telling them what was coming in 2005.

[PBzeer]

And Barney Frank is trying to claim it was the GOP that killed it. Even though it was the Dem Congress in 2006 that wouldn't allow a vote on it.

[chucklesR]

John,
The last action:
Jul 28, 2005: Committee on Banking, Housing, and Urban Affairs. Ordered to be reported with an amendment in the nature of a substitute favorably.

Which means in short - killed by amendment requests, never made it out of committee.

by the 109th Congress, both chambers had a republican majority.

It was then rewritten and re-introduced by Hagel as S. 1100 - which is much the same - and has been squashed by the Dem's.

It's a two way cluster screw.

[PBzeer]

Thanks for the research Chuck. You're obviously more patient or a better keyworder than I to wade through everything.

It does show, contrary to Obama's assertions, that McCain has at least made an effort.

[cardiacpaul]

Unfortunately, what the blue-hairs down here are hearing (and believing) is the current TV ad...

"McCain will cut Social Security in half....."
"If McCain had his way, your Social Security would be gone now"

and my favorite...

"If my opponent had his way, the millions of Floridians who rely on it would have had their Social Security tied up in the stock market this week ... millions would've watched as the market tumbled and their nest egg disappeared before their eyes," the Democratic presidential nominee said. "

sigh.

[PBzeer]

And not even a distortion, just a plain flat out lie.