Neo-Capitalism

pqrdef

A._Badger wrote: »

Your analysis stumbles at the first hurdle - history. The genesis of the debt problem was that the US government encouraged institutions to lend money to people who couldn't afford to pay for their loans.

Wouldn't have mattered, without the house price crash.

A._Badger

pqrdef wrote: »

Wouldn't have mattered, without the house price crash.

Chicken and egg. The one guaranteed the other.

purch

State Control is another word for Communism

I would think it was another word for Fascism too :eek:

TruckerT

A._Badger wrote: »

The genesis of the debt problem was that the US government encouraged institutions to lend money to people who couldn't afford to pay for their loans

But banking is, or was, a centuries-old and 'highly-respectable' profession - they should have been the first to identify, and retreat from, the excessive risks they were taking. Neither government 'encouragement' (I haven't heard that one before...), nor government regulation should have played any part in a simple and obvious business decision

TruckerT

A._Badger

TruckerT wrote: »

But banking is, or was, a centuries-old and 'highly-respectable' profession - they should have been the first to identify, and retreat from, the excessive risks they were taking. Neither government 'encouragement' (I haven't heard that one before...), nor government regulation should have played any part in a simple and obvious business decision

TruckerT

No, I'm afraid you clearly don't know the facts. The US government runs Fannie Mae and Freddie Mac. They did what they were told and lent to whom they were instructed to lend.

It's just as I said. This government thing people speak so well of started the entire process, at the behest of politicians.

By all means hang bankers from lampposts. But after you've strung up the politicians.

purch

N.B. Neither Fannie Mae nor Freddie Mac make home loans.

They are both............. government-sponsored enterprises chartered by Congress to keep money flowing to mortgage lenders, to help strengthen the U.S. housing and mortgage markets, and to support affordable homeownership. We are a national mortgage finance company, but we don’t offer home loans. We stand behind mortgage lenders – local and national banks, thrifts, credit unions, and other financial institutions in all 50 states – to securitize or buy the mortgage loans they originate, enabling them to replenish their funds so they can lend to other homeowners. Similarly, we work to keep funds flowing to support affordable rental housing.

Thrugelmir

TruckerT wrote: »

There is still a school of thought that the bank failures were caused, not by the banks' own stupidity, but by the absence of a nanny-government telling them that they were 'going too far'

Banks became retailers. As securitisation of debt (invented by the UK banks) created what appeared to be an endless supply of cheap money. Trouble was the basic rules of risk were forgotten in the stampede for growth and market share. Now the tables are turned.

In a couple of weeks going to talk that's going to be given the ex head of regulatory risk at HBOS. Will be interesting Q&A session as well.

A._Badger

purch wrote: »

N.B. Neither Fannie Mae nor Freddie Mac make home loans.

They are both............. government-sponsored enterprises chartered by Congress to keep money flowing to mortgage lenders, to help strengthen the U.S. housing and mortgage markets, and to support affordable homeownership. We are a national mortgage finance company, but we don’t offer home loans. We stand behind mortgage lenders – local and national banks, thrifts, credit unions, and other financial institutions in all 50 states – to securitize or buy the mortgage loans they originate, enabling them to replenish their funds so they can lend to other homeowners. Similarly, we work to keep funds flowing to support affordable rental housing.

In this case that's a distinction without a difference.

Even Wikipedia gets it right (more or less) http://en.wikipedia.org/wiki/Fanny_mae#The_mortgage_crisis_from_late_2007

If you're looking for the root of the bad loans in the US, this is where you'll find it.

Thrugelmir

A._Badger wrote: »

If you're looking for the root of the bad loans in the US, this is where you'll find it.

Not the case as RBS appears to have involved in $30 billion (out of $200 billion) of "dubious" mortgages sold to the FM's.

Appears the Fed has grounds for its proposed legal action to recover losses. So the UK taxpayer may have yet another tab to pick up.

A._Badger

Thrugelmir wrote: »

Not the case as RBS appears to have involved in $30 billion (out of $200 billion) of "dubious" mortgages sold to the FM's.

Appears the Fed has grounds for its proposed legal action to recover losses. So the UK taxpayer may have yet another tab to pick up.

I don't dispute that RBS (and others) were involved - not my specialist area, I freely admit - but you're not suggesting US government home loan policy wasn't at the root, are you? It might make a good controversial book if you are.