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It's why Obama didn't put anyone in jail for this mess. He should have. We'd be in much better shape.

JumpCrisscross 3y ago
> He should have. We'd be in much better shape We’d be in better shape if we’d kept the rules we wrote after 2008 to keep 2008 from happening again.
- readthenotes1 3y ago
  We'd be in better shape if we kept the rules we wrote after 1929 to keep 1929 from happening again.
  - vkou 3y ago
    Except 1929 didn't happen again, the problems in 2008, and in 2023 were completely different. The problems in 2023 were made significantly worse by the rollback on liquidity rules in 2017, which, if we may recall, was not a year that Obama was exerting any influence on banking rules.
    - KirillPanov 3y ago
      https://en.wikipedia.org/wiki/Glass–Steagall:_Aftermath_of_repeal https://en.wikipedia.org/wiki/Glass–Steagall:_Aftermath_of_r...
- makomk 3y ago
  No we wouldn't. This is not a repeat of 2008, the rules written to keep 2008 from happening again wouldn't have stopped it, and the media has been bullshitting people about this for, basically, partisan reasons. 2008 was caused by default risk and in particular, by the banking system failing to adequately protect against the fact that lots of loans would default at the same time in a recession or housing price crash. The rules were focused on stopping that. The current problem is duration risk - banks hold a bunch of extremely safe but long-duration fixed interest assets like US Treasures and government-backed mortgage securities, the Fed has increased interest rates very rapidly, and that means the interest banks have to pay on their savings is now higher than they get on those asssets. None of the rules foresaw such aggressive interest rate rises, and to some extent this kind of duration mismatch is just how banks work full stop. The media is misleading people about this because they really, really want it to be a story about right wing anti-regulation politicians causing a repeat of the last crisis.
  - JumpCrisscross 3y ago
    > None of the rules foresaw such aggressive interest rate rises The Fed has stress tested for duration since Dodd-Frank. The unsophistication of SVB’s duration simulations was specifically flagged by supervisors ex ante. Subjecting SVB, Signature and First Republic to LCR requirements would have thrown up early red flags. (You’re partly correct in that the definition of liquid assets is too broad: Treasuries of all kinds get equal weight.) > media is misleading people about this because they really, really want it to be a story about right wing anti-regulation politicians The 2017 rollback was bipartisan.
twoodfin 3y ago
Who and for what? Losing lots of money?
- SturgeonsLaw 3y ago
  Repackaging junk instruments and calling them AAA is fraud, right? How about we start with the people who did that
  - cloverich 3y ago
    If people blindly invest their money this is somewhat inevitable to occasionally happen. Its great when regulations can prevent it but thats an ideal, not a 100% attainable reality.
    - prepend 3y ago
      It’s fraud because ratings companies knowingly lied and misled investors. There was also substantial, systematic mortgage fraud by lenders. I’m sure if banks had donated and lobbied less, some would be in jail.
      - JackFr 3y ago
        What specifically did the credit rating agencies lie about? Again, what was the fraud by lenders? You seem to have to taken the view that securitization turns fraud by borrowers into fraud by lenders.
        wbl 3y ago
        In several deals mortgages were claimed to met underwriting but a substantial fraction had not. There was significant civil litigation on this matter but no prosecutions in part because showing knowledge by a particular person was hard.
        prepend 3y ago
        Moodys rates mortgage backed security as A when many mortgages lacked proper documentation and underwriting and were not worth the amount of the mortgage at time of issuance. [0] They were rated as prime but were actually junk. There was no criminal investigation because the US DoJ decided not to. Civil suits didn’t get far because it was hard to gather information without criminal jurisdiction. Obama got almost $50M from Wall Street for his 2008 election and it paid off well for his donors. [1] With that much fraud, there should have been more criminal convictions rather than bonuses as usual. [0] https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the... [1] https://www.opensecrets.org/industries/recips.php?ind=F&cycle=2008&recipdetail=A&mem=Y&sortorder=U https://www.opensecrets.org/industries/recips.php?ind=F&cycl...
juve1996 3y ago
The president can't unilaterally put anyone in jail, and I doubt it would have much positive impact at all.

> He should have. We'd be in much better shape We’d be in better shape if we’d kept the rules we wrote after 2008 to keep 2008 from happening again.

readthenotes1 3y ago
We'd be in better shape if we kept the rules we wrote after 1929 to keep 1929 from happening again.
- vkou 3y ago
  Except 1929 didn't happen again, the problems in 2008, and in 2023 were completely different. The problems in 2023 were made significantly worse by the rollback on liquidity rules in 2017, which, if we may recall, was not a year that Obama was exerting any influence on banking rules.
  - KirillPanov 3y ago
    https://en.wikipedia.org/wiki/Glass–Steagall:_Aftermath_of_repeal https://en.wikipedia.org/wiki/Glass–Steagall:_Aftermath_of_r...
makomk 3y ago
No we wouldn't. This is not a repeat of 2008, the rules written to keep 2008 from happening again wouldn't have stopped it, and the media has been bullshitting people about this for, basically, partisan reasons. 2008 was caused by default risk and in particular, by the banking system failing to adequately protect against the fact that lots of loans would default at the same time in a recession or housing price crash. The rules were focused on stopping that. The current problem is duration risk - banks hold a bunch of extremely safe but long-duration fixed interest assets like US Treasures and government-backed mortgage securities, the Fed has increased interest rates very rapidly, and that means the interest banks have to pay on their savings is now higher than they get on those asssets. None of the rules foresaw such aggressive interest rate rises, and to some extent this kind of duration mismatch is just how banks work full stop. The media is misleading people about this because they really, really want it to be a story about right wing anti-regulation politicians causing a repeat of the last crisis.
- JumpCrisscross 3y ago
  > None of the rules foresaw such aggressive interest rate rises The Fed has stress tested for duration since Dodd-Frank. The unsophistication of SVB’s duration simulations was specifically flagged by supervisors ex ante. Subjecting SVB, Signature and First Republic to LCR requirements would have thrown up early red flags. (You’re partly correct in that the definition of liquid assets is too broad: Treasuries of all kinds get equal weight.) > media is misleading people about this because they really, really want it to be a story about right wing anti-regulation politicians The 2017 rollback was bipartisan.

twoodfin 3y ago

Who and for what? Losing lots of money?

SturgeonsLaw 3y ago
Repackaging junk instruments and calling them AAA is fraud, right? How about we start with the people who did that
- cloverich 3y ago
  If people blindly invest their money this is somewhat inevitable to occasionally happen. Its great when regulations can prevent it but thats an ideal, not a 100% attainable reality.
  - prepend 3y ago
    It’s fraud because ratings companies knowingly lied and misled investors. There was also substantial, systematic mortgage fraud by lenders. I’m sure if banks had donated and lobbied less, some would be in jail.
    - JackFr 3y ago
      What specifically did the credit rating agencies lie about? Again, what was the fraud by lenders? You seem to have to taken the view that securitization turns fraud by borrowers into fraud by lenders.
      - wbl 3y ago
        In several deals mortgages were claimed to met underwriting but a substantial fraction had not. There was significant civil litigation on this matter but no prosecutions in part because showing knowledge by a particular person was hard.
      - prepend 3y ago
        Moodys rates mortgage backed security as A when many mortgages lacked proper documentation and underwriting and were not worth the amount of the mortgage at time of issuance. [0] They were rated as prime but were actually junk. There was no criminal investigation because the US DoJ decided not to. Civil suits didn’t get far because it was hard to gather information without criminal jurisdiction. Obama got almost $50M from Wall Street for his 2008 election and it paid off well for his donors. [1] With that much fraud, there should have been more criminal convictions rather than bonuses as usual. [0] https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the... [1] https://www.opensecrets.org/industries/recips.php?ind=F&cycle=2008&recipdetail=A&mem=Y&sortorder=U https://www.opensecrets.org/industries/recips.php?ind=F&cycl...

juve1996 3y ago

The president can't unilaterally put anyone in jail, and I doubt it would have much positive impact at all.