The Watchmen

Discussion in 'Economics' started by ByLoSellHi, Jun 7, 2009.


    On National Public Radio's 'This American Life' with Ira Glass today (at 11:00 a.m. eastern):

    The Watchmen


    One of the biggest questions about this financial crisis gripping our economy: How did it happen? Wasn't someone supposed to watching things? Making sure people were acting prudently? Stopping, say, the largest insurance company in the world from making a 185 billion dollar bet that it couldn't make good on? This week, we hear the stories of the people who were supposed to be overseeing things.
  2. And most importantly: Who watches the watchmen?

  3. Just listened to it; excellent.

    Things I did not know:

    FDR's comptroller created necessity of 'ratings agencies' after banking crisis to ensure banks could not hold 'below investment grade' products.

    S&P, Moody's and Fitch are only three ratings' agencies that have 'approved' status so as to be able to rate certain products.

    The same algorithm used to rate traditional borrowers throughout history was used to rate the new, no-credit history, no wage stated, no stated employment types of loans, too, which partially led to the crisis we experienced.

    I did not know that the big three ratings' agencies began to downgrade the credit ratings they previously assessed on certain products such as RMBSs while the Dow was at its all time high in 2007, before the crash, and that this accelerated the crash as it forced banks to have to sell off bonds and other instruments that were suddenly 'below investment grade.'

    I did not know that institutions such as AIG, GE Capital, GMAC actually get to pick which government agency regulates their activity.

    I did not know that the Office of Thrift Supervision is, by far, the favorite regulator (regulator of choice) because it is so inherently weak, and that this is why AIG picked it as its regulator.

    I did not know that the people who work at government regulatory bodies such as the OTS are actually paid by the COMPANIES they regulate, and not the government (i.e. taxpayer).

    I never realized that the CDO/RBMS/CBMS crisis was, in most part, created by the fact that the credit agencies would have caused their own death sentence if they refused to rate impossible to truly evaluate securities (such as liar loans) as the Wall Street firms such as Goldman or JP Morgan would simply go to the 'guy across the street' and give that ratings agency all their business.
  4. Someone watching?

    The "watchers" were busy adding more arsenic to your drinking water. Corrupt filth.

    The leader was on perpetual vacation and his minions were busy deregulating and bending the tax payer over.

    What do you expect to be the outcome of 8 years pandemic culture of incompetence and corruption?

    Corruption and crookedness starting from the "base" on up to their leader. Good thing we kicked them out of power, otherwise we'd be more F'ked than we already are.

  5. The same people are still in power.

    Granted, they are in 'protect our money' mode rather than 'let's make as much money as we can' mode, but all the talk of 'change' is window dressing and hollow.

    I will predict that while the middle class continues to shrink, financial services will continue to rob much of the wealth in this country in coming years, and that we continue to follow in Britain's footsteps in terms of welfare state, high taxation and more of a rich man-poor man society, decimating the hallmark of the American Empire along the way - a relatively large middle class.

    "Value work over wealth." lmao.
  6. Sad but true.