Greenspan: “I don’t think anyone could imagine greedy banks hijacking derivatives and crashing them

[Junkdrawer]

...into the world’s banking system.”

OK, I paraphrase, but not by much. That’s basically the line.

But it appears that somebody did:

I'm sure the knowledgeable people already know this. But it turns out that one of the features of the 2005 Bankruptcy bill was to put derivative counter parties at the front of the line ahead of other creditors in bankruptcy proceedings. Actually, from what I can tell, they don't just go to the head of the line. They got to skip the line entirely. As the Financial Times noted last fall, "the 2005 changes made clear that certain derivatives and financial transactions were exempt from provisions in the bankruptcy code that freeze a failed company's assets until a court decides how to apportion them among creditors." As the article notes, ironically, this provision which Wall Street pushed for and got to protect investment banks actually ended up hastening the collapse of Lehman and Bear Stearns last year.

…

http://www.talkingpointsmemo.com/archives/2009/03/im_sure_the_knowledgeable_people.php

Recapping, no one anticipated this, yet legislation was passed by Congress in 2005, the peak sales year of the mortgage crisis, that put Credit Default Swap payouts at the TOP of the creditor’s list.

[HysteryDiagnosis]

1. How could anyone envision anything of the sort???

http://en.wikipedia.org/wiki/Keating_Five



Circumstances
See also: Savings and Loan crisis

The U.S. Savings and Loan crisis of the 1980s and early 1990s was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. taxpayer.<1> The accompanying slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.<2>

The Keating Five scandal was prompted by the activities of one particular savings and loan: Lincoln Savings and Loan Association of Irvine, California. Lincoln's chairman was Charles Keating, who ultimately served five years in prison for his corrupt mismanagement of Lincoln.<3> In the four years after Keating's American Continental Corporation (ACC) had purchased Lincoln in 1984, Lincoln's assets had increased from $1.1 billion to $5.5 billion.<4> Such savings and loan associations had been deregulated in the early 1980s, allowing them to make highly risky investments with their depositors' money. Keating and other savings and loan operators took advantage of this deregulation.<4><5> Savings and loans established connections to many members of Congress, by supplying them with needed funds for campaigns through legal donations.<5> Lincoln's particular investments took the form of buying land, taking equity positions in real estate development projects, and buying high-yield junk bonds.<6>

Corruption allegations

The core allegation of the Keating Five affair is that Keating had made contributions of about $1.3 million to various U.S. Senators, and he called on those Senators to help him resist regulators. The regulators backed off, to later disastrous consequences.

[FreakinDJ]

13. Every 20 yrs the GOP will enable Corp. raiders to the US treasury

thats what this is all about...

Not that 85% of Corps pay no taxes at all, but they want the unhindered right the "Raid the US Treasury" at will

[KewlKat]

2. Ah, like noone predicted the housing bubble HAD to burst?

Gee, we could go on and on. Why are all the professionals so blind to truth and common sense? Dare I say corporate greed, power and more money then they or theirs could ever spend? We the people saw this whole tsunami coming, years ago! Can we say "deregulate", or free hand? or administrative secrecy? or my way or no way? of signing statements? or W and the mob above the law?

[Epiphany4z]

3. add that to all things these people never imagined

plans being flown into buildings,iraq war not turning out,looting,...do republicans have any imagination..

[proud2BlibKansan]

4. “If we open up our borders….we could suppress wages of middle class jobs”

- Alan Greenspan

Then Greenspan further claims that we don’t need money to be happy, it’s all about the pecking order order in our society! Americans are viewed as a flock of chickens, who need to be shipped off to the labor arbitrage slaughter house!

http://blog.noslaves.com/alan-greenspan-recommends-wiping-out-the-middle-class/

[Joe Chi Minh]

5. Brilliant signature!

[marketcrazy1]

6. this is proof that

not only did they see this coming, they also planned in advance the best way to profit from this collapse..............

[Junkdrawer]

12. That's what I'm thinking... n/t

[MannyGoldstein]

7. So Change The Law

Duh...

[adamuu]

8. Can i have a link to the no-one-envisioned comment? n/t

[Junkdrawer]

11. I paraphrased what he's been telling the press....

in particular what he told CNBC in their "House of Cards" special.

It was on YouTube, but CNBC has it pulled.

I purposely used Condi's 9/11 phrasing in my paraphrase.

[adamuu]

14. I understand. n/t

[MichiganVote]

9. Oh really? And no one could imagine a trillion dollar war for NO WMD!

Just like no one could imagine planes trying to land inside buildings or regulators paid for a job they don't do and shysters like MADE-OFF plea bargaining while living in a 5th Ave. apartment and oh, did I mention the billions of dollars lost in a war made by Halliburton...

Sure, nobody can imagine anything like that....except the crooks who do it

[azul]

10. Gee, no one could foresee that when the pitchforks and torches came out

in 2010 when the shit really hit and broke the fan that Greenspan and Graham and Limbaugh would end up horribly exampled as future warnings against corruption and mis-statements.

Good show that may forseeably be, but they were just the sell-out mouthpieces, and we'll still be hypnotized to abjectly fear peaking behind the curtain: cianazis hiding in the bushes and woodwards - in plain sight.

[nichomachus]

15. If Greenspan couldn't imagine that

he was too incompetent to run a hot-dog cart, never mind the Federal Reserve.

[HillbillyBob]

16. Duh!!!!! I have realise the rpigs and their banker cronies

wanted IT ALL since long before ronnyraygun and Im just a rube.
Doesn't anyone remember the S&L from the 80's?
Iran Contra? YOU know they were siphoning profits off from there too.
I could go on and on DEA and CIA dealing heroin and crack cocaine?
How much of those proceeds ended up in the pockets of the money party and the Campaign Bribes.
Hell the robber baron families got their start in the euphemisticly named 'China Trade' ie opium to china, tea and porcelain back here and to England.
Slave trade? NPR is talking about how our robber barons created the Banana Republics
http://en.wikipedia.org/wiki/United_Fruit_Company had help from the US army, justice, state and other organs of our federal government, putting down strikes(with deadly effect) putting in place bought and paid for governments. When disease attacked the banana plantations our government aided the Bananaman with troops , arms logistics. As a big for instance.
Our country's history is rife with dirty lowdown even unlawful swindles.
Is it even any surprise that the money party has screwed millions out of their retirement and life savings?
In short it is all of a piece of putting forth the meme of the American Dream then stealing it all from those of us who actually make the American Dream possible.

[HillbillyBob]

17. PS i started my reply before leaving the puter for a bit

I thought it had gone, but when I returned it had not ..so I just now got around to getting it out..