This page contains a single entry from the blog posted on March 4, 2010 11:31 AM. The previous post in this blog was Public soccer stadium project is colossal flop. The next post in this blog is Are public employee unions' days numbered?. Many more can be found on the main index page or by looking through the archives.

E-mail, Feeds, 'n' Stuff

Thursday, March 4, 2010

Will the Fed be a good watchdog for bank consumers?

Sounds like the fox guarding the henhouse to us. And Oregon's Democratic senator, Jeff Merkley, shares our suspicions.

Comments (9)

No, it will be a terrible watchdog for consumers.

How many 'watchdog consumer protection' agencies are wasting money already?
These are the thieves that gave away a trillion of your money for NOTHING.

Barney Frank had another great line on this the other day: "Asking the Fed to protect consumers is like asking me to judge a Miss America contest"

I've done a bit of research into where short sales and foreclosures are occuring with the greatest frequencies and found they are concentrated in the kind of neighborhoods one might expect -- transitional, minority/first generation immigrant and low income areas.

There were all manner of government policies promoting home ownership and requiring loans in these areas -- private parties did what comes naturally in response to the policies, which is come up with creative financing vehicles and suffer or permit lax underwriting standards.

So here we are taking a look back and wondering, in effect, how to prevent a repeat the government is going to regulate the government. What a tangled web it is.

"These are the thieves that gave away a trillion of your money for NOTHING."

I'm not going to go very far in defending the Federal Reserve. I think it was seriously complicit in promoting the housing bubble, especially under Greenspan, and it didn't recognize the impending crisis in the bank industry, or the structural causes of that crisis.

But once everything began to fall apart and we were looking at the possibility of a true financial meltdown and depression, it seems that there was no acceptable alternative to bailing out the banks. At that point, the problem became everyone's, not just wealthy bankers'. And actually, much of that staggering sum of money that the government lent and invested in the banks has now been paid back, and most of the rest of it probably will be before long (which, of course, doesn't mean the rest of the economy will recover soon).

So saying the bank bailout money went for nothing is pretty ridiculous. It suggests that we should have just let the banks fail, as if that were a viable choice or still an issue.

The important matter is what we need to do now: make sure that banks pay back all they owe us and make sure, through new laws and regulations, that they're never allowed to endanger all of us on such a grand scale again.

Agreed Richard, a degree of intervention was needed.
But recall being warned that if it wasn't spent, we would face unemployment rates above 8 percent.

Go get um , Merk !
Oh , and Wyden if you can't figure out what to do , just follow our Junior Senator

D: you've got your programs confused. The one Richard is defending is the bank bailout. The one that involves spending to stem the recession is the stimulus. Chalk and cheese.

Grady, in addition to the many studies showing that lending under the Community Reinvestment Act had nothing to do with the subprime crisis or the residential mortgage meltdowns, you could bother reading something on the subject rather than taking Faux News as gospel --

Point: None of the big fish in the subprime crises were in any way required to do anything by the Community Reinvestment Act -- nonbanks, which wrote the vast majority of liars' loans, NINJA loans and what not, are not covered by CRA.

Point: If the banks are so smart and the government so stupid, why did the banks create even more toxic financial waste in the commercial sector, where there are no CRA rules?

Point: If banks were only lending to the poor and minorities because of CRA requirements that banks, you know, actually be willing to make loans where they get deposits, why were the poor and minorities given the MOST EXPENSIVE, HIGHEST DEFAULT RISK LOANS, rather than better, prime loans that they qualified for? Read "Busted" by the NY Times financial writer who went tits up on his expensive DC house for a good primer. And read "Our Lot: How real estate came to own us" for an even better overview. The point is, anyone pointing the finger at CRA for having anything to do with our troubles is basically saying "I don't know what I'm talking about but I do like to bash government, so here goes . . ."

Clicky Web Analytics