Make Risky Loans!

Slam-dunk!

The institutions are no longer responsible for extending loans to anyone who walks through the door with a spread just a smidge above LIBOR. We are.

As of this morning, we are also banned from valuing 799 financial companies. In its latest racket, the SEC banned short selling on 799 financial companies.

Government to people: Bubbles = good. Get used to them. We will make it happen.

Community Reinvestment Act

"The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions."

So banks "meeting the needs of their entire community" get to merge with other, similar banks, thus creating ever larger banks meeting the needs of ever larger communities. How endearing.

This is just not true Don. I have a study that shows its' not and I'll post it when I get a chance.

Have you even talked about CDS's here? I'm not sure you have but they sound like as much of a smoking gun as you're gonna find on the disaster and they were a product of deregulation no regulation.

If as I'll show CRA had little to do with this my next question will be for you to point to one other significant regulatory change (increase in regulation) that resulted in the crisis.

The fact that you're going with the worn out CRA's fault meme tells me you have very little.

Theories need to be testable/ and falsifable. I think the unregulated free market theory is failing the second test in 90 years.

"Theories need to be testable/ and falsifable. I think the unregulated free market theory is failing the second test in 90 years."

So what you're saying is that the free market should be held to an ideal standard (ie perfectly smooth operation) and with an idealized alternative (ie government being able to flawlessly and seamlessly run things in a way that the markets never could)? Shouldn't government intervention get held up to a scientific method standard rather than crying for more government when a previous intervention failed?

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I agree with your assessment that the CRA is partially responsible, but the real trouble came from the Clinton Era Legislation that caused the expansiveness of banks to be more stringently based on lending to riskier borrowers. However, we are all responsible in some way. The banks should have been more responsible and simply expanded less, showing less profitability in the short term, but staying in business (which is hard for me to swallow as a business man). Also, the borrowers are, in my opinion, responsible above all others. PAY YOUR BILLS YOU LAZY FREELOADERS. This is a societal problem. Our country has become a group of people who are so used to having everything handed to them, now we just demand it without understanding the consequences. All Americans need to get back to a mentality of personal responsibility, not instant gratification.

From Simon:

"This is a societal problem. Our country has become a group of people who are so used to having everything handed to them, now we just demand it without understanding the consequences."

Simon,

You are correct. When the free handouts from goverment started in the new deal it was called "assistance". Now it is called "entitlements". Think of the difference in the definition of each!