BOYCOTT THE TOO BIG TO FAILS!

[mrgybe]

[mac]

Mrgybe--reread this, thinking I might have to apologize. Not quite. It is Isobars who made the most outrageous and inaccurate claims, and much of your post was actually logical and made sense. But you did say these two things:

The banks handed out money like drunken sailors for years........they did so partly due to pressure from Congress to make loans to low income customers, partly because they had the security blanket of Fannie Mae/ Freddie Mac and a variety of insurance products they believed would insulate them from risk, and partly due to greed for easy profits that ran roughshod over proper risk management. It would be easy to blame Bush, but this started well before he took office....there is plenty of blame to go around here.
I respectfully disagree the potential burden from Washington is not part of the equation.[quote]

True that there is enough to blame, and if you didn't mean to imply that Freddie Mac and Fannie Mae were causes and side with the anti-regulatory crew that helped stimulate this bubble, maybe you want to be more careful in your writing. I saw no mention in your comments of the various things that stimulated the bubble, including the deregulation and deliberate lack of oversight during the Bush administration.

About anger, I wouldn't respond at all if I thought you were completely of Isobars (angry) ilk. I enjoy an argument in which I learn something, and I'm a happy guy. Remember, don't assign motives without enough information.

[swchandler]

While there's plenty of blame to be shared by government, banking/mortgage companies, Wall Street, and realtors, I have to say that the many folks over the nation leveraging off the sharply increasing real estate values over the years should take a large share of the blame. It's been really clear to me that for many years escalating real estate values were increasingly moving out of line with people's income. Still though, needless to say, everybody wanted to be on the band wagon of this seemingly ever growing "industry", and that's why the momentum ultimately resulted in this house of cards collapsing.

I know this view on things can be seen as a bit simplistic, but from my perspective, it's so clear. I have to say that most of my life, I wasn't able to afford a home. Over the years, I watched in wonderment at how property values in Santa Barbara, and most other desirable communities, relentlessly climbed to truly ridiculously high levels. It was only when I was retiring in 2004 did I buy a place, and as things turned out, that was edging toward the actual height of the market. Still though, I bought what I could afford, put 20% down, and I totally avoided adjustable rate mortgages in favor of a notable higher fixed rate of interest. At the same time, I totally zeroed my credit card debit.

When I perceived that the house of cards was becoming increasingly shaky, I virtually cashed out on my more risky financial investments, and ultimately lost very little treasure in the financial crash.

So, as I see it, while greed at all levels contributed to the recession, I think that not enough emphasis is being put on the irresponsibility of the average American that was driven by a desire to get rich on increasing property values.

Now, as most of you know by now, I'm definitely not aligned with isobars' take on things. Irrespective of how we got to where we are right now, I'm all for prudent legislation needed to monitor the financial and banking industries. In addition, I'm strongly behind limiting compensation of CEOs and corporate directors of financial and banking firms (along with other publicly owned firms) as a way to stem greed and better support growth, investment, workers and stockholders. Why pad the pockets of the few at the expense of the much larger segment of Americans that also have a stake in the game?

[mac]

Check this out for a before the disaster analysis of what the repeal of Glass-Steagall was supposed to do: http://www.federalreserve.gov/boarddocs/speeches/2002/20020208/default.htm

[mrgybe]

[windoggie]

[mrgybe]

[mrgybe]

[swchandler]

mrgybe,

I understand your concern about the government dictating limits on what corporate executives can earn in salary and bonuses. No doubt, it's a very sensitive subject. However, check out this blowback article that was recently featured in the LAT.

http://www.latimes.com/news/opinion/opinionla/la-oew-spicer8-2010jan08,0,1573040.story

[mac]

This is actually constructive. Mrgybe is right, consumer debt was the sector that grew dramatically, mortgage and credit card. But the magnitude of fannie/Freddie complicity is overstated. About 2 Trillion in subprime loans, about 200 billion in Freddie/Fannie. The suggestion posed initially, that laying off mortgage loans on those organizations, has lulled the banking industry into a sense of security, is a pretty good one.

The original thread of the post was consumers should boycott the bad banks, then Isobars told us how awful regulation would be with these socialists in Washington. Well, we've already seen how awful de-regulation in the hands of zealots can be--with the collapse of Enron and the mushrooming of sub-prime loan. the other significant factors--the role of the Federal reserve in stimulating (overheating?) the economy just in time for elections, and consumers, in financing a spending spree on the expectation that they could flip their house. True that consumers and both parties deserve lots of blame, but not quite so pat as Isobars in insisting that it's all the fault of consumers. There was a lot of hard selling of borrowing, and a fair amount of fraud and Federal reserve policies involved in keeping that real estate baloon inflating.

Mrgybe is right, control over compensation doesn't fix that, it is just grandstanding to the angry street. What is needed is some thoughtful regulation, preferably bi-partisan, that reinstalls some level of fiscal controls and separation of investment and commercial banking, without squelching innovation. Might be hard now that the Republicans have decided that they are the party of no.