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Financial crisis was caused by: "widespread failures in financial regulation and supervision", including the Federal Reserve's failure to stem the tide of toxi

Financial crisis was caused by: "widespread failures in financial regulation and supervision", including the Federal Reserve's failure to stem the tide of toxic assets "dramatic failures of corporate governance and risk management at many systemically important financial institutions" including too many financial firms acting recklessly and taking on too much risk. "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions and by households that put the financial system on a collision course with crisis. ill preparation and inconsistent action by government and key policy makers lacking a full understanding of the financial system they oversaw that "added to the uncertainty and panic". a "systemic breakdown in accountability and ethics" at all levels Note how government is only named in failing to prevent and fix the issue, hence the root cause lying absolutely with corporate/private greed. Blaming government for not better regulating and preventing corporate/private greed is a weird criticism for government. It's like saying the government causes domestic violence by not putting a camera in everyone's house. From https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis#Causes https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_cr...

Ray20 3y ago
For 20 years before the crisis, the American government promoted numerous policies to lower mortgage lending standards. The 2008 crisis is a natural price for such policies. "Corporate/private greed" - is an explanation aimed at children, I don’t understand how a mentally capable person can seriously listen to this BS.
- vouwfietsman 3y ago
  > the American government promoted numerous policies to lower mortgage lending standards Again, where do you think these reforms come from, exactly? Grassroots movements? Where do you think the standards were before they were lowered and why were they initially higher? Do you think these ideas are voted into effect by individual citizens well informed on the facts of how it would affect the economy? Or based on advice by experts who did the same? If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards or lobbied against it. But they didn't, did they? Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? It's ridiculous. A cat and mouse game between legislation and reckless behavior is not a moral equilibrium where both sides are responsible for the outcome. Sometimes an explanation aimed at children is the right explanation, and all the adults are just shifting the blame and hiding behind the status quo.
  - FeepingCreature 3y ago
    > If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards Wouldn't that have been illegal on multiple grounds?
    - vouwfietsman 3y ago
      No, quite the opposite. It's almost always possible to be safer than what is lawfully required, instead its hard to be riskier than what is lawfully required. Refusing to sell mortgage backed securities based on subprime mortgages is unlikely to cause you to be prosecuted. In fact, I do it every day. The strawman that supposedly justifies taking the risk anyway (everybody else is doing it and we would lose to the competition) is coherent but equivalent to "Billy was also doing it, and he's getting all the girls" when you got caught smoking cigarettes at school.
  - Ray20 3y ago
    >Again, where do you think these reforms come from, exactly? From the federal government. That's the whole point. >they could've easily formed internal agreements to simply not lower their own standards No.These policies were literally designed to make it illegal. >Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? Yes. >Sometimes an explanation aimed at children is the right explanation But this is not the case
  - ETH_start 3y ago
    The government was guaranteeing a significant fraction of subprime mortgages. This meant risk-free gains for corporations that bought the securities backed by them. That in turned guaranteed a rise in the market demand for MBSs backed by subprime mortgages, and with it, systemic risk. It was an inevitable consequence of the policy: https://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html https://www.nytimes.com/1999/09/30/business/fannie-mae-eases... Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
ETH_start 3y ago
You're providing those explanations without context. These are all explanations provided by a government committee composed of the very same politicians responsible for creating the government programs that caused the financial crisis: In its January 2011 report, the Financial Crisis Inquiry Commission (FCIC, a committee of U.S. congressmen) The political elite is thoroughly captured by the public sector institutions responsible for the financial crisis: https://www.cnbc.com/id/25713791 https://www.cnbc.com/id/25713791 They spent a combined $170 million to cultivate allies during that period, a bit less than the American Medical Association and a bit more than General Electric (GE is the parent company of CNBC). At the same time, their executives have consistently led the mortgage-banking sector in campaign giving to members of Congress, contributing a combined $16.2 million since 1997. People who have lobbied on their behalf have played or are playing roles in the presidential campaigns of both Republican John McCain and Democrat Barack Obama. Defenders, including President Bush and Treasury Secretary Henry Paulson, say the nation's two major mortgage companies -- which own or guarantee roughly half of the nation's $12 trillion in outstanding mortgage debt -- are more vital than ever to the smooth functioning of the nation's jittery financial markets.

Ray20 3y ago

For 20 years before the crisis, the American government promoted numerous policies to lower mortgage lending standards. The 2008 crisis is a natural price for such policies. "Corporate/private greed" - is an explanation aimed at children, I don’t understand how a mentally capable person can seriously listen to this BS.

vouwfietsman 3y ago
> the American government promoted numerous policies to lower mortgage lending standards Again, where do you think these reforms come from, exactly? Grassroots movements? Where do you think the standards were before they were lowered and why were they initially higher? Do you think these ideas are voted into effect by individual citizens well informed on the facts of how it would affect the economy? Or based on advice by experts who did the same? If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards or lobbied against it. But they didn't, did they? Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? It's ridiculous. A cat and mouse game between legislation and reckless behavior is not a moral equilibrium where both sides are responsible for the outcome. Sometimes an explanation aimed at children is the right explanation, and all the adults are just shifting the blame and hiding behind the status quo.
- FeepingCreature 3y ago
  > If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards Wouldn't that have been illegal on multiple grounds?
  - vouwfietsman 3y ago
    No, quite the opposite. It's almost always possible to be safer than what is lawfully required, instead its hard to be riskier than what is lawfully required. Refusing to sell mortgage backed securities based on subprime mortgages is unlikely to cause you to be prosecuted. In fact, I do it every day. The strawman that supposedly justifies taking the risk anyway (everybody else is doing it and we would lose to the competition) is coherent but equivalent to "Billy was also doing it, and he's getting all the girls" when you got caught smoking cigarettes at school.
- Ray20 3y ago
  >Again, where do you think these reforms come from, exactly? From the federal government. That's the whole point. >they could've easily formed internal agreements to simply not lower their own standards No.These policies were literally designed to make it illegal. >Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? Yes. >Sometimes an explanation aimed at children is the right explanation But this is not the case
- ETH_start 3y ago
  The government was guaranteeing a significant fraction of subprime mortgages. This meant risk-free gains for corporations that bought the securities backed by them. That in turned guaranteed a rise in the market demand for MBSs backed by subprime mortgages, and with it, systemic risk. It was an inevitable consequence of the policy: https://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html https://www.nytimes.com/1999/09/30/business/fannie-mae-eases... Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

ETH_start 3y ago

You're providing those explanations without context. These are all explanations provided by a government committee composed of the very same politicians responsible for creating the government programs that caused the financial crisis: In its January 2011 report, the Financial Crisis Inquiry Commission (FCIC, a committee of U.S. congressmen) The political elite is thoroughly captured by the public sector institutions responsible for the financial crisis: https://www.cnbc.com/id/25713791 https://www.cnbc.com/id/25713791 They spent a combined $170 million to cultivate allies during that period, a bit less than the American Medical Association and a bit more than General Electric (GE is the parent company of CNBC). At the same time, their executives have consistently led the mortgage-banking sector in campaign giving to members of Congress, contributing a combined $16.2 million since 1997. People who have lobbied on their behalf have played or are playing roles in the presidential campaigns of both Republican John McCain and Democrat Barack Obama. Defenders, including President Bush and Treasury Secretary Henry Paulson, say the nation's two major mortgage companies -- which own or guarantee roughly half of the nation's $12 trillion in outstanding mortgage debt -- are more vital than ever to the smooth functioning of the nation's jittery financial markets.