tell us more about the origins of the 2008/09 crash.
.
Originally Posted by lustylad
Republicans simply did not believe in regulations for Wall Street. It's true Bush recommended a watchdog agency for Freddie Mac and Fannie Mae. However, Freddie Mac and Fannie Mae were victims and were not the cause of the problem. At a high level here you go.
Originally Posted by
IIFFOFRDB 
Astro-turf this... http://www.zerohedge.com/news/2013-1...are-inevitable
Simply put, a financial crisis doesn’t happen accidentally, but follows after a prolonged period of excesses (expansionary monetary policies and/or fiscal policies leading to excessive credit growth and excessive speculation). The problem lies in timing the onset of the crisis. Usually, as was the case in Asia in the 1990s, macroeconomic conditions deteriorate long before the onset of the crisis. However, expansionary monetary policies and excessive debt growth can extend the life of the business expansion for a very long time.
http://www.zerohedge.com/news/2013-1...are-inevitable
IIFF, your guy does not talk about the financial meltdown of 4th quarter 2008. I will agree that he is half right when he says "fiscal policies leading to excessive credit growth. Several ingredients all came together that allowed the meltdown to occur.
1. Gram / Rudd Act which allowed banks/insurance companies/mortgage companies become a single entity. No separation of duties. This was one factor.
2. Subprime loans were processed with fraud. (i.e. no credit check, no income verification check and in some cases the buyer's inccome was padded by thousands of dollars). Home buyers were allowed to finance at 97% instead of 80.
3. You had unethical behavior, unlawful behavior and uncontrollable greed by Wall Street. This was allowed to occur because there were no regulations.
4. The mortgage lender sold the fraudulent loans to Wall Street brokerage firms.
5. Wall street firms packaged these sub-prime mortgages into a security and sold them to someone else.
5a. Here is when the additional deception comes in. The rating houses like Moody's and Standard and Poors gave these securities 'AAA' ratings instead of 'CCC' rating.
5b. This allowed the securities to be easily sold to unsuspecting customers and fully saturate the market.
6. A perfect example of this was when BOA sold their mortgages to Freddie Mac and Fannie Mae. This why Freedie Mac and Fannie Mae went bankrupt, once the homeowner stop paying their mortgage. BOA has agreed to pay Billions of Dollars in fines for their deceptive practice.
7. All of these steps had to occur for the Wall Street meltdown to happen and they did.
8. There was no law on the books to prevent something like this from happening, a cascade of events mixed in with deception and fraud. AIG, Lehman Brothers, Merrill Lynch, Morgan Stanly and the big banks went bankrupt once these unregulated securities lost their value.
9. Republicans didn't believe in regulations for Wall Street at the time.
10. The BOA and Freddie Mac/Fannie Mae was just on example. These securities were sold all over world.
11. In addition to mortgage backed securities, Wall streets were executing unregulated risky transactions like the Credit Default Swap.
12. Did you hear the recent testimony before congress by the CEO of Chase Bank ? "Our traders did not understand the Credit Default Trade" This was about when Chase Bank lost about 2 Billion in 5 months. They forced the executive who was leading the team of traders to resign.
