so you obama people

[tyward]

I read something today that seemed to ring true. It was about how I am expected to believe that poor people, who could not make their house payments, brought down the banking system of the most powerful nation on earth. Somehow I don't think so...

[mho]

I read something today that seemed to ring true. It was about how I am expected to believe that poor people, who could not make their house payments, brought down the banking system of the most powerful nation on earth. Somehow I don't think so...

Then you need to do some more research on the subject. I wouldn't fault homeowners as much as I would the government for forcing banks out of the business of redlining. Government regulations do have a place in businesses, but regulations that promote unsound and high risk practices with other people's money are unacceptable, imo.

[tyward]

Actually, I see the problem as industry specific deregulation. Although there were many regulations set up in the early 1930's to help prevent the systemic breakdown of the American (and worldwide) financial markets, many of those regulations were gutted during the past eight years. The most problematic change, which I wrote about in 2004, was the raising of the leverage percentages, allowing banks and other financial institutions to increase the spread on the money that they actually held in different types of escrow. Profits were great while house prices, as well as other asset valuations where high. The problems began when things began to fall and the multiples began to build. The truth is that subprime borrowers are a fractionally small part of the problem; wait until commercial paper and credit card debt hit the fan...

[SMCengineer]

Actually, I see the problem as industry specific deregulation. Although there were many regulations set up in the early 1930's to help prevent the systemic breakdown of the American (and worldwide) financial markets, many of those regulations were gutted during the past eight years. The most problematic change, which I wrote about in 2004, was the raising of the leverage percentages, allowing banks and other financial institutions to increase the spread on the money that they actually held in different types of escrow. Profits were great while house prices, as well as other asset valuations where high. The problems began when things began to fall and the multiples began to build. The truth is that subprime borrowers are a fractionally small part of the problem; wait until commercial paper and credit card debt hit the fan...

Unfortunately, the reasoning that "deregulation" caused this financial crisis is merely a platitude. In no way can anyone economically explain how "deregulation" caused a speculative bubble of this magnitutde. Over-leveraging is not a result of deregulation. That is, unless the deregulation you're referring to is artificial manipulation of interests rates, in which you would be correct.

Oh, and I would add commercial real estate onto the list you mentioned.