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The 'Warning' about the financial meltdown

Bamaro

Bamaro

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Oct 19, 2001
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PBS's Frontline has a very good show out now showing how congress was warned back in 98 about the scam being perpetrated on the investing public by wallstreet. Brooksley Born, who was chairman of the Commodity Futures Trading Commission, after being stonewalled by Greenspan, Ruben & Summers, took her concerns to congress but was ignored as Greenspan, Ruben & Summers routinely dismissed her concerns. There was a document called the Concept Release which strongly warned that the complete lack of regulation on OTC derivatives was setting up the economy for fraud leading to the financial crash. While Born tried to shed light on what was referred to as a 'dark market' she was blocked every step of the way and warned by the likes of Greenspan, Ruben & Summers not to release the Concept Document.
Another striking case how we were warned but ignored the warnings.

FRONTLINE: the warning | PBS

Before you dismiss the need for meaningful regulations you should follow the above link or watch the show. Wallstreet is ruled by greed that knows no bounds.
 
When I worked at Marsh, I had a few executives tell me that the final gutting of the Glass Steagall Act in 1999 was the last straw, and that now all markets would be corrupted by financial derivatives, spelling doom for our banks and insurance industry. In other words, everyone who was paying attention in the late 90s predicted this. Warren Buffet was very public in his denouncement of these financial "instruments" and the need to regulate financial institutions.

In the end, deregulation was the primary culprit, not regulation. You simply cannot trust anyone with that much money. It is too tempting.
 
I don't know what to say but we the people keep electing these idiots to server our country... I mean themselves. Nothing will ever change until the public starts voting these guys out of office. If the next guy is the same way, then don't re-elect him. Eventually they will get the picture that if they do not do there job, they will not keep it for long. Alas, the American public doesn't have the balls to do that though, they'll keep re-electing and electing the same type of people over and over. Nothing will ever change yet we will all complain when they do not do there jobs.
 
Bamaro said:
PBS's Frontline has a very good show out now showing how congress was warned back in 98 about the scam being perpetrated on the investing public by wallstreet. Brooksley Born, who was chairman of the Commodity Futures Trading Commission, after being stonewalled by Greenspan, Ruben & Summers, took her concerns to congress but was ignored as Greenspan, Ruben & Summers routinely dismissed her concerns. There was a document called the Concept Release which strongly warned that the complete lack of regulation on OTC derivatives was setting up the economy for fraud leading to the financial crash. While Born tried to shed light on what was referred to as a 'dark market' she was blocked every step of the way and warned by the likes of Greenspan, Ruben & Summers not to release the Concept Document.
Another striking case how we were warned but ignored the warnings.

FRONTLINE: the warning | PBS

Before you dismiss the need for meaningful regulations you should follow the above link or watch the show. Wallstreet is ruled by greed that knows no bounds.
Click to expand...

There were alot more warnings than just this. During the early years of the Bush Administration, Republicans in Congress tried to reign in Freddie Mac and Fannie Mae. Democrats in Congress shouted them down and claimed they were trying to prevent people from gaining access to housing. Now, I'm not saying that it was only the fault of the democrats, because the Republican party was also part of the problem, but facts are facts.
 
These big corporations pay our congressmen well. Their biggest contributors are corporate America. The Obama administration is full of these corporate lobbyist and former banking execs that benefitted from the fall of our economy. Anyone that thinks that this bunch in Washington will ever impose any meaningfull regulations on the very companies that controll them are just fooling themselves.
 
Bama323 said:
There were alot more warnings than just this. During the early years of the Bush Administration, Republicans in Congress tried to reign in Freddie Mac and Fannie Mae. Democrats in Congress shouted them down and claimed they were trying to prevent people from gaining access to housing. Now, I'm not saying that it was only the fault of the democrats, because the Republican party was also part of the problem, but facts are facts.
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True that the idea that everyone should own their own house is false and loaded with problems. OTC derivatives were used as a device to facilitate this by making money easily available to anyone who wanted a mortgage regardless of their credit worthiness.
Between the huge financial lobby and the repeated insistence of Greenspan, Ruben & Summers that no regulation was needed, congress chose to do nothing.
 
Remind me who the President was in 1999?

I'm not sure it's necessarily a regulation vs. deregulation, but rather a lesson in how you can't combine the two, particularly in the way our country has now done it. You can't deregulate, let the folks in the market get overextended, and then NOT let them crash. What would be more effective as a regulation than folks going to the poorhouse who are used to making millions of dollars? THAT'S capitalism.

What we have now done is told those "greedy capitalists" that they don't need to worry about overextending themselves or doing stupid stuff solely out of greed, because we have their back to the tune of about $1 trillion. Does that make sense in a long-term view of things?

I'm just wondering how long we can postpone the eventual crash that is coming. Short-term comfort at the expense of long-term security is where we seem to be.
 
jthomas666 said:
But...but...capitalism is the cure for all our ills...Bodhi told us so!!! :biggrin2:
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I think Dave Ramsey hit it right on by saying Capitalism can be taken to an extreme where it becomes harmful. He had a caller call in and say that we needed to go to a full fledged total "free market" and Dave told him he didn't think he knew what he was asking for.

He said a "full fledged free market" in its purist state would mean no more disclosures to the consumer about anything, whether it meant the small writing you see on commercials, no disclosures regarding food products, loans, investments etc. Without any regulation the consumer is TOTALLY on his own with regards to research and homework.

He also said a part of the problem with "capitalism" today is no one is "leaving anything back" in the market. He said everybody is trying to squeeze every ounce of profit from each and every sale and leaving nothing back in the market. It's draining the consumers. Rather than taking 40-50% profit margin we are taking 60-70-80% profit margin and draining the pockets of the consumer-hence leaving no room for "lower prices" etc.

But anything taken to an extreme is dangerous.
 
RamJamHam said:
Remind me who the President was in 1999?

I'm not sure it's necessarily a regulation vs. deregulation, but rather a lesson in how you can't combine the two, particularly in the way our country has now done it. You can't deregulate, let the folks in the market get overextended, and then NOT let them crash. What would be more effective as a regulation than folks going to the poorhouse who are used to making millions of dollars? THAT'S capitalism.

What we have now done is told those "greedy capitalists" that they don't need to worry about overextending themselves or doing stupid stuff solely out of greed, because we have their back to the tune of about $1 trillion. Does that make sense in a long-term view of things?

I'm just wondering how long we can postpone the eventual crash that is coming. Short-term comfort at the expense of long-term security is where we seem to be.
Click to expand...
Unfortunately it doesn't work that way. They always get their money first and by the time it all crashes down, they have already made out handsomely.
Just like the CEO who pumps up his company for the short term, pockets huge bonuses and 'retires' on his golden parachute when the company finally has to pay the piper.
 
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Bamaro said:
Unfortunately it doesn't work that way. They always get their money first and by the time it all crashes down, they have already made out handsomely.
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Exactly - in this case, they games the system and made billions of dollars in bonuses before the system crashed.

It is just a different kind of ponzi scheme, as it requires continued cash inflow or market inflation to support itself. Once payouts exceed inflow, the system collapses. The biggest difference - this was legal. Maddoff went to jail. No one who set this up will go to jail. They all just go home and retire in obscene comfort...
 
NYBamaFan said:
Maddoff went to jail. No one who set this up will go to jail. They all just go home and retire in obscene comfort...
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this is the part that astonishes me the most. let's pretend for a second that you are a retired 66 yr old living in a nice expensive home in a great neighborhood. You have a few million in your retirement savings. You also have just one yr left to pay off the mortgage on your home. Then one day out of the blue, you have no money in your retirement account, which means you can't afford your house and probably not even a decent apartment. Meanwhile your neighbor, who also is the ceo of the company that destroyed your retirement account, just got a $20mil bonus and is swimming in his pool. I know what I would do- I would have the worlds brightest nightlight courtesy of a molotov cocktail thrown over the fence.
How has nothing happened to these people? Either from legal prosecution or from personal violence, these people completely got away with it.
 
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jthomas666 said:
But...but...capitalism is the cure for all our ills...Bodhi told us so!!! :biggrin2:
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I know you are mainly digging at Bodhi here but capitalism is just the machine. The greed and corruption come from man. Get rid of the greedy and corrupt men and capitalism will work just fine.
 
Bamabuzzard said:
That shouldn't be a hard problem to fix... ;)
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I agree, by sending these people to prison instead of letting them just retire would probably go along way to keep out corruption. There is also too much scratching of backs between business and government. When you have this "I'll scratch your back if you scratch mine", it can only lead to corruption.
 
swoop10 said:
I know you are mainly digging at Bodhi here but capitalism is just the machine. The greed and corruption come from man. Get rid of the greedy and corrupt men and capitalism will work just fine.
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Do you really want to bring the concept of original sin into this? :biggrin2:
 
dayhiker said:
Do you really want to bring the concept of original sin into this? :biggrin2:
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LOL....No I don't. We already have some on here who want to go back in time and hold others responsible for actions during that time. I sure don't want to go back any further and give them the excuse to blame women for Eve's sin.:p_green:
 
swoop10 said:
LOL....No I don't. We already have some on here who want to go back in time and hold others responsible for actions during that time. I sure don't want to go back any further and give them the excuse to blame women for Eve's sin.:p_green:
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So you're saying this economic meltdown and spending beyond our means is the fault of women? Nicely played.
 
dayhiker said:
So you're saying this economic meltdown and spending beyond our means is the fault of women? Nicely played.
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Not at all. You brought up the origanal sin, so I assumed you meant Eve eating the apple. There are some who like to bring up past sins of white men from way before our lifes began and think we should still pay for them. So I was just playing along those lines by saying I didn't want them blaming women today for Eve's origanal sin. Sorry if I didn't expain it well enough in the first post.
 
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