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Military.com Forums Hot Topics & Current Events Point-Counterpoint Did Clinton cause the banking crisis?|
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+++http://articles.moneycentral.msn.com/Investing/Extra/did-clinton-cause-the-banking-crisis.aspx
On Wall Street and Main Street they call William Jefferson Clinton the "Comeback Kid," but it's not because of some Election Day surprise. It's because almost everything he did regarding financial-services regulation has come back to haunt us. If it wasn't apparent before, the former president's handiwork became clear when President Barack Obama announced his plans for sweeping financial-services reforms. Obama's efforts to bring fair dealing to the mortgage markets, rules to the derivatives marketplace and restraint to big financial companies underscore the missteps of Clinton's second term. We had weakly regulated markets when Clinton took office, but by the time he left, they were an invitation to lawless dealing. For the ease of it, Willie Sutton would have traded his gun and mask for a briefcase and necktie. My poor wife..I'm going to have a raging ****on for weeks over this article. |
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No. But he undoubtably contributed to it. - |
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Experienced Member |
guiltless? no way.
"The cause" of it? No way. |
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Experienced Member |
I would say no. But, he did preside over the dotcom bubble. And, it is when that bubble burst that people saw that housing was holding its value. As soon as that happened people said, "hmm, everything else is down except for housing". That is essentially when it all started. Then, once Greenspan lowered the Fed Funds Rate to 1% to kick the can (recession) down the road, that gave people the incentive to start another bubble. And, that bubble just happened to be housing.
But, what is even more scary was how the housing bubble was helped by government bodies and legislation. CRA essentially made banks hand out loans to people who were not going to pay the money back. Banks knew this, so they took advantage of the fact that Fanny and Freddie would buy these loans. And, it was Fanny and Freddie who packaged these loans into securities (Wall Street created the more elaborate investment products). Many people think that it was Wall Street that came up with the securitization process, but it was good 'ol Fanny and Freddie. Once this mechanism was in place, every bank knew that they could take on risky loans without risking their reserves. So, they accelerated their efforts. Shoot, there was even the emergence of mortgage brokers (non-banks selling mortgages). And, from there it is all pretty obvious. I won't put all of the blame on one guy. But, I do add Clinton to the pile of people to blame. I blame just about every politician, banker and bureaucrat that had any part in this; and that is just about every one since FDR. But, most of the blame goes to Greenspan. He created the bubble when he cut rates and had easy credit for everybody. And, with the "Greenspan Put", the banks had no reason to fear failure; because they knew that if they failed that they would be bailed out. |
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Member |
No. It was caused by thousands of people that work hard at it for years. Easy credit, easy profits, easy money for all. Besides Clinton was busy with interns. He could not have made such a mess. |
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Lead Moderator MILITARY HISTORY Freedom!!!  |
Given he demanded loans for Folks who didnt even have to show a source of earned income... Well..read between the lines... The hedge business against these hoaky loans were also underwritten then... But what did he know...he and Bush Sr...were riding the Reagan economic tidal wave of prosperity... Irregardless, We need to focus upon the here and now...in my opinion... Where do We go from this low point? |
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Experienced Member |
citation needed. |
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----------------  Proud Member ----------------  |
Collateralized Debt Obligations were invented in '87--the Reagan Years--by Drexel Burnham Lambert. Big surprise they're trouble... The Credit Default Swaps from JP Morgan Chase, used to hedge (and more often to speculate, since you don't need to own any of the risk pool in a CDO to take out a CDS...like owning fire insurance on your neighbor's house knowing his son is an arsonist) came out of Newt Gingrich's congress--11,000 pages without debate, and signed by President Clinton. These shenanigans have been years in design and implementation. If Ronnie Reagan was the King of deregulation, then Slick Willie and the Bushes were certainly the Clown Princes. I've been studying up on CDOs and CDSs for a few months now, and the part I'll never understand is how such tools of manipulation could ever be considered part of a free market solution to building wealth...except in the short term, of course...and for the Paulsons of the world. MBA-grade snake oil. We start with long prison sentences and restitution. Takes balls. Now go a-way or I shall taunt you a second time! |
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Member |
The UK end of this crisis was set in motion by the Thatcher administration.
The massive deregulation that Mrs T presided over was largely what led to our current problems. Until that deregulation, different parts of the banking sector were segregated, and many of the current problems could not have arisen. A clear case of dogma over practicality. |
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Member |
he definetly didn't help it, but he also isn't the soul cause of it.
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Highly Experienced Member |
What I find funny is that the Repubs are still trying to blame Mr. Clinton for everything after they controlled Congress for MOST of the Clinton Admin and then 6 years when they controlled BOTH Congress and the Presidency and then 2 years then they controlled the Presidency and had a tie in the Senate.
Based on the way the Repubs talk there are only 3 alternatives 1) The Repub party must have been COMPLETELY ineffective or 2) Mr. Clinton must have been the most effective president ever to have been able to control things not only when the Repubs controlled Congress but also when they controlled BOTH Congress and the Presidency. LOL or 3) The Repubs are making excuses for their FAILURES (ie telling selfserving lies). IMO number 3 is what is happening. |
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Member |
There is none, just more nonsense. Low/no documentation loans were an invention of the mortgage industry. |
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You didn't bother to read the article. |
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Experienced Member |
The article is(rightfully) blaming clinton for allowing the republicans to push through banking deregulation which set the industry up for a massive fall. The article says nothing about how "he demanded loans for Folks who didnt even have to show a source of earned income" subprime loans were pushed by the banks. No one forced them. they wanted them since they were easy money. |
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ya, i know that. That was sort of the point. Edit; And you're reading comp is only up to partisan standards. |
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Experienced Member |
so then you agree that clinton didn't "demand loans for Folks who didnt even have to show a source of earned income" and that "Low/no documentation loans were an invention of the mortgage industry."? |
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Member |
The comment was made by strob and has no basis in reality. |
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Courage is doing the right thing when no one is looking. |
Yes, but so did Bush 1 Bush 2, Reagan, Carter, the House of Reps, the Senate, the financial machine, the people, repubs, the dems, the independants and so on. They all sat siolently by while they lets this happen. Blaming isnt the answer now, its now stop the g-damn bleeding and not let this happen again. GRAYMAN |
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No, I agree the article did not address such. To wit: [edit] Regulatory changes 1995 In July 1993, President Bill Clinton asked regulators to reform the CRA in order to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden.[52] Robert Rubin, the Assistant to the President for Economic Policy, under President Clinton, explained that this was in line with President Clinton's strategy to "deal with the problems of the inner city and distressed rural communities". Discussing the reasons for the Clinton administration's proposal to strengthen the CRA and further reduce red-lining, Lloyd Bentsen, Secretary of the Treasury at that time, affirmed his belief that availability of credit should not depend on where a person lives, "The only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live." Bentsen said that the proposed changes would "make it easier for lenders to show how they're complying with the Community Reinvestment Act", and "cut back a lot of the paperwork and the cost on small business loans".[36] By early 1995, the proposed CRA regulations were substantially revised to address criticisms that the regulations, and the agencies' implementation of them through the examination process to date, were too process-oriented, burdensome, and not sufficiently focused on actual results.[53] The CRA examination process itself was reformed to incorporate the pending changes.[40] Information about banking institutions' CRA ratings were made available via web page for public review as well.[36] The Office of the Comptroller of the Currency (OCC) also moved to revise it's regulation structure allowing lenders subject to the CRA to claim community development loan credits for loans made to help finance the environmental cleanup or redevelopment of industrial sites when it was part of an effort to revitalize the low- and moderate-income community where the site was located.[54] During one of the Congressional hearings addressing the proposed changes in 1995, William A. Niskanen, chair of the Cato Institute, criticized both the 1993 and 1994 sets of proposals for political favoritism in allocating credit, for micromanagement by regulators and for the lack of assurances that banks would not be expected to operate at a loss to achieve CRA compliance. He predicted the proposed changes would be very costly to the economy and the banking system in general. Niskanen believed that the primary long term effect would be an artificial contraction of the banking system. Niskanen recommended Congress repeal the Act.[55] Niskanen's, and other respondents to the proposed changes, voiced their concerns during the public comment & testimony periods in late 1993 through early 1995. In response to the aggregate concerns recorded by then, the Federal financial supervisory agencies (the OCC, FRB, FDIC, and OTS) made further clarifications relating to definition, assessment, ratings and scope; sufficiently resolving many of the issues raised in the process. The agencies jointly reported their final amended regulations for implementing the Community Reinvestment Act in the Federal Register on May 4, 1995. The final amended regulations replaced the existing CRA regulations in their entirety.[56] (See the notes in the "1995" column of Table I. for the specifics) [edit] Legislative changes 1999 In 1999 the Congress enacted and President Clinton signed into law the Gramm-Leach-Bliley Act, also known as the "Financial Services Modernization Act". This law repealed the part of the Glass-Steagall Act that had prohibited a bank from offering a full range of investment, commercial banking, and insurance services since its enactment in 1933. A similar bill was introduced in 1998 by Senator Phil Gramm but it was unable to complete the legislative process into law. Resistance to enacting the 1998 bill, as well as the subsequent 1999 bill, centered around the legislation's language which would expand the types of banking institutions of the time into other areas of service but would not be subject to CRA compliance in order to do so. The Senator also demanded full disclosure of any financial "deals" which community groups had with banks, accusing such groups of "extortion".[57] In the fall of 1999, Senators Christopher Dodd and Charles E. Schumer prevented another impasse by securing a compromise between Sen. Gramm and the Clinton Administration by agreeing to amend the "Federal Deposit Insurance Act" (12 U.S.C. ch.16) to allow banks to merge or expand into other types of financial institutions. The new Gramm-Leach-Bliley Act's FDIC related provisions, along with the addition of sub-section § 2903(c) directly to Title 12, insured any bank holding institution wishing to be re-designated as a financial holding institution by the Board of Governors of the Federal Reserve System would also have to follow Community Reinvestment Act compliance guidelines before any merger or expansion could take effect.[58] At the same time the G-L-B Act's changes to the "Federal Deposit Insurance Act" would now allow for bank expansions into new lines of business, non-affiliated groups entering into agreements with these bank or financial institutions would also have to be reported as outlined under the newly added section to Title 12, § 1831y. (CRA Sunshine Requirements), satisfying Sen. Gramm's concerns.[59][60] In conjunction with the above "Gramm-Leach-Bliley Act" changes, smaller banks would be reviewed less frequently for CRA compliance by the addition of §2908. (Small Bank Regulatory Relief) directly to Chapter 30, (the existing CRA laws), itself. The 1999 Act also mandated two studies to be conducted in connection with the "Community Reinvestment Act": [61] the first report by the Federal Reserve, to be delivered to Congress by March 15, 2000, is a comprehensive study of CRA to focus on default and delinquency rates, and the profitability of loans made in connection with CRA; [62] the second report to be conducted by the Treasury Department over the next two years, is intended to determine the impact of the Act on the provision of services to low- and moderate-income neighborhoods and people, as intended by CRA.[63] On signing the "Gramm-Leach-Bliley Act", President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act".[64] |
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Member |
Now that is funny. How are you going to stop it? More regulation? More big governament? I thought you was one of them libertarians.... |
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Again for those that have a problem with the written language: the comment was made by strob and questioned. |
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Again, for those who cant follow the thread, I was responding to karlhungusjr..not you. Not everything revolves around you. |
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------------------- Proud Member Derelict Veterans' Group -------------------  |
So are you dismissing this out of hand or do you have something to back up your opinion? Personally I think the Banks caused the Banking problem. But I have nothing but the fact that most of the largest ones fail to back up my opinion Todays politics remind me of an old saying. - "Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas?" - Joseph Stalin |
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Man you is slow. You don't even remember where you have stirred. Funny, slow guy. |
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---------------- Proud Member ---------------- |
Now go a-way or I shall taunt you a second time! |
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Experienced Member |
You forgot Nixon.. How could you forget Nixon? The man that took us off the gold standard once and for all.. |
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If you read further on, you'll see that they did not follow this advice, as common sense as it was at the time, and now. |
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Blame is not the anwser when Bush isn't the one getting the blame, is it? Blame is also not the issue...if you want to honestly fix a mess, you have to know what created it. The Dem's in general and Obama and Frank in specific, have used this issue to create an even more dire end result. They've said over and over again: We must act now to fix this, we cant wait. Yet they are yet to do one single thing that actually will address the core problems. Instead they create a monster that does not exist, and ignore the one that does. |
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Lead Moderator MILITARY HISTORY Freedom!!! |
"Government regulators refused to approve such decisions when a lender was under investigation for not producing satisfactory statistics on loans to low-income people or minorities. Under growing pressures from both the Clinton administration and later the George W. Bush administration, banks began to lower their lending standards. Mortgage loans with no down payment, no income verification and other "creative" financial arrangements abounded." Search on "ireports" I first heard about "no income" verification through CNN... So much for Governmental "regulations" without specific, well thought out plans and objectives... The topic might be germane to universal health, foreign policy and TARP also... Although I admit that throwing enough sheet at the wall...something may stick... This is no time to be timid..but We must pursue well thought out...comprehensive plans...and well scoped end goals...across the board... |
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Experienced Member |
I understand all that. But I asked for proof that Clinton "demanded" loans for people with no income. Your post is a rehash of the article. Clinton allowed the deregulation that was a major factor in the current crisis(and he did so in a large part due to the republican congress) |
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Military.com Forums Hot Topics & Current Events Point-Counterpoint Did Clinton cause the banking crisis?
