Registered: Oct 2001
04-19-12 12:48 PM
Some of the attitudes displayed here are exactly why the so-called reforms are a joke. There is more effort being put into deflecting blame and protecting political constituencies than protecting the taxpayer. As the article pointed out, the reforms would have done nothing to prevent the crisis. D-F and the Volcker rule addressed areas that were not really issues.
There are three fundamental problems, and they are still unaddressed. One, is the system that allows originators of mortgages to assign them with no residual liability. If brokers are on the hook somehow for fraudulent loans, they have some skin in the game.
Two, the government has no business sponsoring GSE's. Maybe at one time it was a good idea, but now, there is plenty of private capital to do that job. We are paying an enormous cost , hundreds of billions at a minimum, but it is off the front page because there are a lot of forces that want to continue this game. If we have learned anything , it is that the government should no tbe involved. We got shoddy, arguably corrupt, management from the political hacks like Franklin Raines who were installed to run these firms. We got political interference with their regulation and management.
Three, there was a massive failure of regulation, stemming from both too much and too little government intrusion into the credit process. Too much, as in CRA and conditioning mergers, etc on payoffs to ACORN and other democrat-affiliated parasites. Too much , as in congress and reguglators forcing lenders to expand loans to borrowers with bad credit. Too little, in the Fed and bank regulators allowing a range of toxic products and practices, from no doc to very high loan to value rations to flawed securitizations.
We didn't learn the lesson of the S&L crisis, which was fundamentally an issue of moral hazard. Sadly, we learned nothing or, worse, the wrong lesson, from the latest crisis. That almost insures another one, and judging from how the last one dwarfed the S&L crisis, it should be a doozy.