NonBlond wrote:
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You're a blind ideologue making excuses.
MBSs and CDOs were enabled by the merging of commercial, retail and investment banks, which was enabled by the shredding of Glass Steagall.
The distinction between commercial and retail was already more than fuzzy before Gramm Leach Bliley; Citi, Morgan Chase and many other banks already crossed the commercial/retail line. Once those conglomerations were able to add investment banking, brokers and insurers, the whole mess hit the fan. Suddenly capital markets were awash in derivatives precariously leveraged 60:1 or more on MBSs made possible by the appetite for them among commercial/retail banks. That is what fed the market.
Of course Clinton still denies this. He signed the Act! Thanks to Rubin's assurances and the heat from the Republican-monopolized Congress that was pushing for this above all else! In fairness, they had Clinton tied up in Monica Lewinsky's blue dress at the time, so he had little room to move.
But Gramm drove the repeal of Glass Steagall, bringing on the securities bubble, just as he pushed through the CFTA, enabling the Enron debacle. He's a real prince.
And Gramm's successors are the loons who now tell us to ignore problems with our health care system? Give me a break!
And you are an uniformed partisan who makes up facts, obviuously does not have a solid grasp of finance and drops buzz words to make it sound as if they are more knowledgable than they really are.
Both MBS's and CDO existed before the repeal of glass steagall and have NOTHING to do with the change. Virtually every type of debt is securitized, not just mortgages and is a very common practice with credit card receivables, car loans, retailers credit receivables, etc.
IF GS was NOT repealed, what provisions did it have which would have prevented banks and brokerages doing the same thing, just as separate entities?
Capital markets would have been awash in derivatives REGARDLES of whether or not the banks owned the investment banks since this liquidity was the result of low interest rates and the gov't dictating policy to FNM and FRE which ignored their own credit guidelines.
If clinto felt that strongly he could still have vetoed the bill and let it be overridden. And go back and look at how many democrats voted to repeal it. It passed by a WIDE margin and the biggest proponent was Rubin, who collected $150 million in bonuses for running CITI into the ground.
You claimed that the repeal caused the meltdown but absoltely nothing would have happened had consumers not been greedy and responsible with their mortgages. Investment banks don't make mortgage loans and it wasn't the commercial banks which made the bulk of the bad subprime loans, it was the under regulated mortgage lenders like Indymac and countrywide, which have NOTHING to do with glass steagall.
Furthermore, there is NOTHING inherently wrong with banks owning investment firms. The fact that others were recklessly overleveraging is the fault of the internal bank officers, not the fault of the original law. In your example, the brewers would be liable for producing beer that ends up causing a DWI fatality.
PLEASE stop reading non-financial websites trying to push this lie as it is completely false.
NOTICE THAT IT WAS NOT THE COMMERCIAL BANKS THAT WENT UNDER BUT THE INVESTMENT BANKS so clinton was correct by claiming that the invetsment banks owned by commercial banks were better able to withstand the meltdown and provided a cushion.
If you disagree and think you are right, then kindly expalin how NOT owning an investment bank would have changed how the banks dealt with mortgages. ave bough them from independentince keeping investment banks separate from commercial banks had no bearing on most banks would have downing an invetsment bank had NOTHING to do with the banks most major banks would have done the
Judge it!
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