The 25 People At The Heart Of The Economic Meltdown

[Me.]

Included are Greenspan, Clinton, *, Gramm & Dodd

http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy

[Idealism]

1. Not too bad of a report but the part on Clinton is flawed

Bill Clinton, former US president
Clinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans.

In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%.

1. The CRA had nothing to do with this. In fact, studies have shown that the CRA- if anything- helped prevent what would have been a larger fall in the subprime markets.

2. Glass-Steagall was repealed by over a 75% margin (closer to 80%) by Congress, which meant that Clinton couldn't veto it and he had no power over whether the resolution was passed or not. All he did was sign his name to it, although I suppose we could fault him for that...

Other than these two missteps by the author, it is a solid piece. Greenspan outranks all on this crisis, but Bush comes in a close second, followed by Gramm for his bullshit Commodities and Futures Modernization Act that he slipped through Congress on an omnibus budget resolution.

[aquart]

3. I still fault Bill for signing the repeal. I just do.

[Idealism]

5. That is your perogative and I wholeheartedly support it n/t

[Me.]

6. For My Part

I still feel the burn over NAFTA, which has nothing to do with this report but could've kept manufacturing jobs in this country, which would be a real help right about now.

[FredStembottom]

9. And, without which, I doubt we will recover.

I believe that this crisis is just a value reckoning on a country that no longer designs and makes anything.
There just is no actual value here anymore.
Merely pushin' papers around for fees isn't enough to sustain us.

We need to raise tariffs and localize production inside our political borders.

[Me.]

10. We Used To Be So Good At It

The quality of the work and design was so much better. Really such a shame, I do hope there's a way to bring it back.

[FredStembottom]

27. I repair old antique radios as a hobby......

....and hopefully a side business if the econ. recovers.
Seeing this parade of All-American products has given me a very nuanced view of American quality.
It wasn't all good! Cheepnis was already a prominent factor in so many of these dear, old radios.
Although, 1st rate quality was also an American virtue - but it cost more.

Just FYI.

[navarth]

19. hear, hear

couldn't agree more

[mod mom]

17. More than NAFTA was MFN Status for China-imho.

Clinton to renew Normal Trade Relations with China



June 2, 1999
Web posted at: 4:51 p.m. EDT (2051 GMT)


WASHINGTON (AllPolitics, June 2) -- President Bill Clinton will notify Congress Thursday that he is renewing China's most-favored-nation (MFN) trading status -- now known as Normal Trade Relations (NTR) -- for another year, CNN has confirmed.

MFN/NTR status offers low tariffs and treats countries as normal trading partners.

The formal notification, required by the Thursday deadline, is expected to trigger a major debate in the House and Senate due to allegations of Chinese espionage against the U.S. and other recent diplomatic tensions, including charges China tried to influence the 1996 presidential election with illegal campaign contributions.

One of the first speak out against Clinton decision, Rep. Nancy Pelosi (D-California), derided the president for making the decision near the 10th anniversary of the Tiananmen Square massacre.

-snip

http://www.cnn.com/ALLPOLITICS/stories/1999/06/02/china.mfn/



Clinton Proposes Renewing China's Most-Favored Trade Status

Congressional reaction mixed amidst larger China policy issues


WASHINGTON (AllPolitics, June 3) -- President Bill Clinton on Wednesday proposed renewing most-favored-nation (MFN) trade status for China, saying it was "clearly in our nation's interest" as he urged Congress to support the request.

-snip

House Speaker Newt Gingrich welcomed Clinton's recommendation for renewing MFN status for China, and vowed to work in a bipartisan manner to ensure that China receives it from Congress.

Gingrich, joined by Reps. Bill Archer (R-Texas) and Philip Crane (R-Ill.), made his comments in a letter to Clinton.

-snip

House Democratic leader Richard Gephardt issued a statement Wednesday opposing Clinton's plan to extend China's trading status for another year.

http://www.cnn.com/ALLPOLITICS/1998/06/03/china.trade/

[Me.]

18. Good Point

It was certainly a huge factor, however, no one forced all these companies to go there, only the lure of an extra dime influenced companies to fold up their tents here. It became a domino effect. At some point companies couldn't compete unless they did the same. Wal-Mart truly was an immense factor in this shift.

[Winterblues]

22. It isn't NAFTA that is at fault it is the Health Care situation

How could any American Corporation compete with other countries when one of their major expenses is providing Health Care Insurance for it's workers. Corporations in other countries do not have this HUGE expense. Their countries provide for their people. Without the ability to outsource or move production to third world countries they would fail anyway. NAFTA would never even be considered if the USA had a National Health Care Policy..Pretty much 90% of our Economic Crisis stems from lack of National Health Care. Republicans are over 90% responsible for this as well..

[Me.]

23. Health Care Is Certainly Part Of The Equation

But NAFTA and MFN nations did so much harm. And I know from first hand experience how Wal-Mart influenced the move of manufacturing to China. There was a lot of double dealing, bare knuckles and outright blackmail behind the scenes, all to Wal-Mart's advantage. And as Wal-Mart's had such a huge chunk of the consumer market, it pushed it on one direction and our treaties and laws didn't put any brakes on the process.

[Winterblues]

25. NAFTA is about trade with Canada and Mexico, has nothing to do with China

But you bring up a good point and that is the manufacturing base throughout the world has an unfair advantage over any American Manufacturer. Instead of creating an even playing field through Health Care Expense reductions Republicans have taken the easier road for them of just using cheap labor from around the world at American's expense..There really would be much less need for either NAFTA or GATT if Americans had Single Payer Health Care priovided by our Government

[mod mom]

16. Read this PBS Frontline:

Worth an entire read:

A chronology tracing the life of the Glass-Steagall Act, from its passage in 1933 to its death throes in the 1990s, and how Citigroup's Sandy Weill dealt the coup de grâce.


On April 6, 1998, Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp (the parent of Citibank), to create Citigroup Inc., the world's largest financial services company, in what was the biggest corporate merger in history.

The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking. The merger effectively gives regulators and lawmakers three options: end these restrictions, scuttle the deal, or force the merged company to cut back on its consumer offerings by divesting any business that fails to comply with the law.

-snip

Citicorp and Travelers quietly lobby banking regulators and government officials for their support. In late March and early April, Weill makes three heads-up calls to Washington: to Fed Chairman Greenspan, Treasury Secretary Robert Rubin, and President Clinton. On April 5, the day before the announcement, Weill and Reed make a ceremonial call on Clinton to brief him on the upcoming announcement.

-snip

Weill and Reed have to act quickly for both business and political reasons. Fears that the necessary regulatory changes would not happen in time had caused the share prices of both companies to fall. The House Republican leadership indicates that it wants to enact the measure in the current session of Congress. While the Clinton administration generally supported Glass-Steagall "modernization," but there are concerns that mid-term elections in the fall could bring in Democrats less sympathetic to changing the laws.

-snip

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html


How the Gramm-Leach-Bliley Act became law -
On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. President Bill Clinton signed this bill into law on November 12, 1999.

Bill Clinton -
So we know that the topic of that late night phone call between Bill Clinton and Sandy Weill, the man whose career began in the subprime mortgage business, was the Community Reinvestment Act. We know that Phil Gramm, who was the one most strongly pushing for gutting CRA (Leach actually supported it) threatened to torpedo the legislation if the White House did not reach an agreement.

So why did Clinton go along? His writings are silent on the subject. He seemingly held the trump card with the threat to veto any legislation that did not meet his approval. And why is it Sandy Weill who makes the phone call to Clinton? At this point not enough evidence is available to finally connect the dots, but whatever it is, it cannot possibly benefit Bill Clinton. The reason for the silence may be that for the Clintons the repeal of Glass-Steagall may prove far more embarrassing in the long run than Monica Lewinsky.

-snip
http://www.theminorityreportblog.com/story/pilgrim/2008/09/19/the_players_in_paving_the_way_to_the_wall_st_meltdown

[navarth]

20. good grief

another mountainous reason to be pissed off at Bill Clinton. And yet: it was either him or Bu$h I, or Bob Dole. Yeeesh...

This whole thing's broken.

[Idealism]

24. The only piece missing from that is the true problem

Clinton could not veto the repeal of Glass-Steagall, nor the Gramm-Leach-Blilley, as the votes passed with over 75% of Congress in favor, hence the term veto-proof. Here is the breakdown by Wikipedia on the votes.

http://en.wikipedia.org/wiki/Glass-Steagall#Repeal_of_the_Act">Glass-Steagall Act- Repeal of the Act

The bill that ultimately repealed the Act was introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA) in 1999. The bills were passed by a 54-44 vote along party lines with Republican support in the Senate<9> and by a 343-86 vote in the House of Representatives<10>. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bipartisan bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. Without forcing a veto vote, this bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999. <11>


http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act">Gramm-Leach-Bliley Act- Legislative History

Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November.<4> <6> On November 4, the final bill resolving the differences was passed by the Senate 90-8 <7> and by the House 362-57.<8> This legislation was signed into law by Democratic President Bill Clinton on November 12, 1999.<9>

[navarth]

2. recommend.

Awfully sorry to see Dodd's name there. Damn.

[4 t 4]

7. I don't think this is right

when sub-primes were starting to be handed out the banks inflated the prices of the houses to get a little insurance and it didn't go south with the people not being able to make their payments, it went south when the so called insurance policies (credit default swaps) began to call in their markers once again it is not the people but the banks inflating the prices of the houses and the banks trading all the cds

Bill Clinton, former US president
Clinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans.

In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%.

[Idealism]

8. Dodd doesn't have near the blame as this article says he does

Dodd 'pressured' Fannie and Freddie to take on more mortgage-backed securities (because that is what the government created them to do), but at the time of this crisis, these two GSE's held not even 35% of the total market share of sub-prime MBS. The lion share was being bought by these investment banks and banking affiliates (like Countrywide, Long Beach Capital and Bank of America, Wells Fargo). Fannie and Freddie, for the most part, acted exactly how they were supposed to- buy assets from banks so that the banks could loan more money out to people. The lending the banks did was irresponsible, but you can't fault Fannie and Freddie for that as they don't have any say over who the banks lend to.

Another aspect of why Fannie and Freddie aren't really as big a piece of this as everyone else says is this: they bought MBS that were rated AAA down to BB (although most of their assets are AAA tranche). What annoys me is how LITTLE blame these bullshit rating agencies get in this mess. If not for Moodys, Fitch, and S&P rating sub-prime filled mortgage backed securities and asset backed securities (for anyone who doesn't know: sub-prime is shitty credit, shitty credit= high risk), then perhaps institutions buying these AAA rated securities would think differently about how safe these investments were.



Why is there no mention of the rating agencies and their deplorable roll in hyping trash paper as AAA-worthy assets?? WHY DAMMIT!

[natrat]

11. yea dodd is a peach, i like his tarp bill that provides no accountability-he is a crook

[Idealism]

13. The TARP was descipable, yes, I agree

but he was not preeminently responsible for the statutes and accountability of it. I would really blame Pelosi and Reid more on failure to negotiate a better deal on TARP. When compared to the interest English banks are paying their government for direct injections of cash and ownership, ours is like having your lunch money only 94% stolen as opposed to 88%. Gordon Brown's plan was much better written than ours, and at least had a decent interest rate.

Another thing to remember: TARP had nothing to do with those responsible for this mess, rather it was a potential solution to the mess, albeit one horribly written and even worse performed.

[undergroundpanther]

4. Greenspan was an Ayn Rand cultie..

Nuff' said.

http://www.commondreams.org/view/2008/10/25-6
http://www.huffingtonpost.com/2008/10/24/greenspan-shrugged-how-di_n_137465.html

[snot]

12. Rec'd; but the author's research seems shallow.

E.g., Gordon Brown's prolly too recent to have much responsibility -- weren't most of the most destructive policies put in place before he came along?

[Festivito]

14. IMO a smokescreen to hide the blatant April 2004 SEC decision.

where banks had been limited to lend TEN TIMES their holdings, the SEC made it UNLIMITED. (Six months before the November elections - hint.)

And the so-called liberal media did not report this meeting until ... October 2008. OVER FOUR YEARS LATER.

They're just trying to spread the blame again.

[Hubert Flottz]

15. There is nothing wrong with the economy if you're a globalist

and you're pulling for the one world government.(New World Order)

[navarth]

21. It's doing a great job of creating CHEAP LABOR

we are a commodity to them.

[TheKentuckian]

26. NAFTA is only a scratch

I even will admit we probably need Canada and Mexico to compete with emerging super economies around the world. It is the sell out to China and others around the Pacific rim that put us completely over the barrel. How were we ever going to compete with people in a completely different standard of living, environmental standards, laws, and governments?

[SmileyRose]

28. I put 60% of the blame on the general public

Yes, I realize there is no shortage of borrowers who were flat out lied to regarding fancy mortgages. Yes, I realize the credit card companies have done a lot of bait and switch. Yes I know corporations were lying about their financial health to get more investors.

However.

An awful large portion of us were living far above our means and did not care.
An awful large portion of us wanted the quick profits and the future be damned.
An awful large portion of us cared more about cheap consumerism than support for the blue collars.


We got fat. We got lazy. We got greedy. -- not all of us, but enough of us that here we are.