Welcome Jim, good to have you back. And thanks for taking this on — in the midst of everyone trying to clawback bonuses that are already out the door, nobody was addressing the much bigger problem of bonuses yet-to-be-paid.

Can you tell us what happened when the bill was marked up today? Any changes?

Hi Jane,
It’s great to be back at Fire Dog Lake. I really appreciate you hosting this discussion, which of course, has been pretty much all that DC has been focused on in the last 96 hours or so. And yes, I just got back from the markup of the Grayson-Himes bill, which I hope will be a positive contribution to the effort to make sure that TARP institutions are responsive to the fact that the American taxpayer is now a shareholder.

Hi Jim! Do you foresee any potential problems getting the Republicans in Congress to approve the Pay for Performance Act?

No real substantive changes. And I should note that the bill does not invalidate previously existing contracts. It simply forbids their payment as long as an institution is in the TARP and if those contracts don’t meet a performance and reasonableness standard. It’s important to remember, though, that most people in the financial services sector are not paid pursuant to contract.

Welcome Rep. Himes – as a former Goldman-Sachs executive, can you give us some perspective on this whole bonus system – are people so engrained in it and expect it so much that Wall Street can’t function without it?

I asked Bill Black to take a look at the bill. He was concerned about the bonus structure:

it’s not enough to require that they be “performance based.” The single greatest cause of the crisis is (purportedly) performance based executive compensation. It is essential that payments be based on long-term performance. It is essential that the “performance” be due to the officers’ actions, e.g., if the entire industry booms and proves abnormally profitable the officers’ efforts are not the cause of the performance and they should not gain. The bill has no claw back provisions should the bonuses paid prove to be the result of accounting fraud. The bill does not deal with any of the multitude of evasions that are common in industry (e.g., resetting option prices). There is an extensive literature on how to do this correctly. Treasury should be required to follow best practices, not common (abusive) industry practices.

I think he had only seen an outline, however. Are there any attempts to deal with making bonuses based on long-term performance? Any amendments on that front?

CTBob,
Great to hear from you. I gotta tell you, I’m not much good at predicting Republican behavior. I’ll note that Rep. Lance of NJ, who has become a friend, is on the bill. Based on the GOP comments in the markup, I don’t think that will be free for him. I’m confused, though by why the GOP is standing in the way of good fiduciary responsibility. You may hate the TARP, but it’s there, and as long as it is, it seems a major dereliction of fiduciary obligation to not perform oversight.

I noticed that Brad Sherman’s amendment to limit compensation to $1 million a year for TARP recipients didn’t get a single vote. Can you tell us what your concerns on that front were?

Hello, Congressman, thank you for taking time today to chat with us.

As a former Goldman-Sachs employee, what did you think of your colleague Maxine Waters’ pointed questioning about the firm’s involvement in this whole mess, to Secretary Geithner yesterday? Do you think GS is a little too much at the center of everything going on, and appears to be making money coming and going on the runup as well as the wind-down?

More generally, do you think the Obama Administration understands how angry the American people are at the appearance of self-dealing on behalf of a very few Masters of the Universe, people who seem to be entirely out-of-touch with the suffering the rest of us are going through?

Thanks again for your appearance here today. Best wishes with your questions tomorrow.

Toby,
The fact is that bonuses have long ceased to have their original meaning, which if I remember my Latin, has something to do with “good”. Now they are generally wired to performance in that a banker, in a good yeard will get a huge bonus for good performance. No bonus, though, is usually the equivalent of a pink slip. What’s really at issue here, though, is the one way nature of the comp schemes. If you take a huge bet and win, you win big. If you lose, your loss is limited to your job, and the last year notwithstanding, there are usually more of those across the street.

It worries me that the GOP’s lack of wanting any oversight on TARP may be political in nature, almost hoping that it fails to bring the economy back so they can blame the majority.

Jane,
That’s exactly right, and really key. See my point to Toby. Too many people were getting paid fabulously for last quarter’s spectacular trades. Turns out those trades need to season before we know whether they were long term smart. The bill gives great discretion to Treasury and the regulators to determine the standards of performance and reasonableness.

Goldman seems to pop up at every point in the financial meltdown, and not in a good way. It is a major villain in this disaster. Whatever it is now calling itself it remains an investment bank, a creature of a paper economy that has collapsed. So my question is: Is there any reason why Goldman should exist?

Jane,
Yes, that’s right. I actually opposed it because there was no process or systematic thought in setting a cap. Yesterday the amendment had a $500,000 cap, today $1m. Those might be too high, too low, right for some institutions and not for others, etc. I don’t know, because I have no basis on which to judge. My hope is that treasury and the regulators will really dig into this and develop intelligent standards.

“One way nature” is something I worry about tremendously – it really feels as if the system is set up to reward people who don’t have any sort of view of the greater consequences of THEIR actions – even before this happened, it seemed that the entire financial system(stock market et al.) no longer worked on any sort of logical basis – the whole concept of looking for good companies with good management to invest in completely went out the window – there seem to be too many people in too many areas of the system gaming the entire thing, leaving the rest of us at the mercy of people’s short term actions to benefit themselves..

Does that mean the FDIC has to approve them too?

CTBob,
Maybe, but politically it’s a real mess. There was almost no oversight on TARP initially because Paulson and Bush fought it tooth and nail, holding the sword of imminent economic meltdown over Congress’ head last year. (Sound familiar?)About half the GOP voted for Thursday’s bill, including Eric Cantor. So they’re really struggling on how to embarass just the Democrats with this. Constructive, no?

Citizens CTBob and Rep. Jim Hines:

I want to stretch Brother CT’s question from “Do you forsee any potential problems getting the Republicans in Congress to approve the Pay for Performance Act” to “Why do we need Republican ‘approval’ or any consideration in language for the opposition party on this?”

It seems to me that on every piece of legislation especially on issues that enjoy widespread citizen support, deference is given to the “opposition” party and the Blue Dogs…where does the “New Democrat Coalition” stand in relationship to the “old” DemocratIC (adj) coalition, and how does this new “coalition” differ from the good old corporate Republican coalition especially in matters like this one driven by populist sentiment?

One thing that’s very hard to understand is the argument that the “best and the brightest” need to be retained. The industry is shedding jobs; where are people unhappy at their compensation going to find other employment? This is baffling, as are the cries that contracts are sacrosanct, unless you’re an auto worker.

Jim, what about the possibility of a relatively simple fix, increasing the number of brackets? For example, we could have a $500K, a $1mm, a $10mm, and maybe a $100mm bracket. We could do the same with capital gains.

It seems like this would do some good towards limiting compensation.

Were it just that simple. Look, I used to work there. There are unbelievably smart, good people there. Not just bankers. Thousands of jobs. Some real naked greed. A culture that has allowed it to rise above some of the uglier scandals over the years. One of the challenges for public officials like me has been to try to parse the issues in a more constructive way than simple good guy-bad guy analysis. Which isn’t to say that there aren’t some bad guys out there, just that we need to change the system.

Welcome Rep Himes.

“Performance-based” is a rather ambiguous term.
At one employer, my 401(k) contribution was matched with company stock. The company’s reasoning is that the company’s performance depended on the employees. Therefore the stock price would improve because of great employee productivity, etc.
My salary was based on my performance, but the value of my 401(k) depended on the company’s performance which was the result of many variables.
The letter in the NYTimes was enlightening because that man expected to receive a large bonus, even though AIG as a whole is practically bankrupt.

I think there is a lack of urgency about this that I have to admit I find troubling. The public is told that the world will come to an end if TARP funds aren’t approved immediately, but plugging the holes that led to the problem in the first place must suffer the drip, drip, drip of bureaucratic shuffling.

It wouldn’t be so disconcerting were it not for the fact that the same system of executive compensation and potential for abuse are still there, we’re just shoveling trillions of dollars into it this time.

I don’t mean to make you personally answerable to that criticism, you’ve certainly done more than most. I just wonder if you think there’s any reason we should be fixing the system with the same zeal we displayed 5 months ago when TARP first passed.

I’m not sure what you’re saying here — do you think that Paulson and Bush were lying and exaggerating the urgency of the situation?

Toby,
One thing is for certain. The system rewarded a small group beyond the dreams of avarice, but when it fell apart, each and every one of us got to pitch in on the fix. You can be a socialist or a hardened capitalist and know that that’s not right. The other side of this, though, is American optimism. I thought a lot about the tech bubble over the years. Billions of dollars pouring instantly into google, and ebay, but also into webvan and pets.com Lot’s of people hurt, some amazing new companies . . .

Yes, FDIC and OCC.

What about bonuses previously awarded? In the housing bubble, the whole process was riddled with fraud from the mortgage writers, to the banks, ratings agencies, investment banks, and downstream purchasers like hedge and pension funds. Yet massive bonuses were awarded on the upside of the bubble. Why is so little being done to claw these back?

Citizen masaccio:

Jesus Citizen masaccio, what about NO FUCKIN’ BONUSES for firms gettin ANY taxpayer money??!! It seems to me that we have lost the entire forest of this historic swindle for the little trees of individual bonuses…it’s simple, no bonuses for ANYone in ANY firm gettin’ federal money from any source.

Representative Himes (it’s SO nice to type that!), welcome back to FDL. Great to have you here again.

What can we do to help you, Alan Grayson and others in the House and Senate push through reforms?

And, more importantly, what re-regulation such as reinstatement of Glass-Steagall or repeal of Gramm-Leach-Bliley or other potential regs on CDSs and other problematic issues can we hope to see in the near future?

On contracts, that’s right, and the UAW led the way on renegotitation, and police, fire and teachers around this country are being asked to reopen their contracts for givebacks. So yes, sacrosanct is not the word. There is an important constitutional and legal question, though as to whether Congress can force the invalidation of a previously existing legal contract. I’m not a lawyer, but I’m listening to lots of them argue about it down here.

Hi Jim!
Sue (Lorenzo Sunflowers handler) here. I mentioned that I was a teacher – and this may not be in your baliwick. Gov. Rell is proposing Bill 939 for teachers and administrators.
Bill 939 will change the requirement for earning a professional certificate to include 30 graduate credits and 90 CEU hours. This professional development will be determined by the state board – taking this decision our of our hands. Nothing like a ‘one size fits all’ PD.

Than, after July 1, 2014 the State can increase the number of CEU’s from 90 to 150, with districts only required to offer 90 hours. Where will teachers get the money for this training? It usually involves travel time, expensive registration fees, and don’t forget cost of substitutes.

T his bill exempts those with an administrative certificate. We’re still waiting for that unfunded mandate for in-school suspension.

What is she thinking? Who can we contact to fight this?
Sue

Jim – one of the things I am especially disturbed about is the whole selling of 401Ks to people to ’save’ for retirement or college. Laws were passed to encourage people to plunge retirement and college savings dollars into these things, based on investments in the stock market – which we know now has a lot of problems in terms of manipulation, gaming and so on. Those dollars are gone forever. The entire system has no credibility – businesses can’t get money they need to operate; Americans are now having to pony up multiple times to bail out the system (and we are not even talking about all the money lost in 401Ks, 529s, etc.), and we still have a situation where people who are in the position to manipulate the system for their own benefit at bonus time will still be in the same position at the after end. I just think that keeping people on straight salary – even if it’s a much bigger salary(after all, it seems everyone who gets these huge bonuses is living to the limit of them anyway), would be a better system. Less incentive to game the system for short term benefits; more incentive to build for the long term. my two cents.

Welcome Congressman — an alternative way to revise compensation schemes in banks is to take over those that are insolvent, fire the senior management, and deal with the assets in such a way that a healthier bank can emerge. That healthier bank can have, as a condition for its release, whatever long-term performance criteria FDIC and other regulators specify. Yet the current Administration has adamantly opposed the bank seizure approach and instead continues to insist on retaining present management and giving them whatever capitalization they need to keep going. So there’s no penalty for past performance, let alone running your bank into the ground and taking the economy with you. Why shouldn’t we conclude that Congress is looking at the wrong mechanism?

masaccio,
You mean tax brackets?

We have a guest and, this probably goes without saying for the folks who have been here for a while, but I’m going to say it again just in case some folks didn’t get the message: be polite, stay on-topic and take any off-topic conversations to the prior thread.

Manners — they aren’t just for grandma’s dining room on holidays. Capice?

Yesterday the amendment had a $500,000 cap, today $1m. Those might be too high, too low, right for some institutions and not for others, etc. I don’t know, because I have no basis on which to judge.

How about this. The President of the United States is paid $400,000 a year with a $50,000 expense account. Just tell us how much more important than the President of the United States you think these Wall Street executives are and pay them accordingly.

Hi Congressman Himes,
As a former GS employee might you explain why the tax payer is getting the short end of the stick on the current bail out proposal for the banks? The public sector as a whole (Treasury plus FDIC) is at risk for $78 out of a total investment of $84. The public sector has the same upside as the private sector (through its $6 worth of equity). However, the private sector gets this upside by putting only $6 at risk, against the public sector’s $84 at risk. Small wonder the stock markets loved this. If there were a stock market for taxpayer equity, it would have tanked by a commensurate amount.

I’m going to also quote Bill Black

The bill has no claw back provisions should the bonuses paid prove to be the result of accounting fraud. The bill does not deal with any of the multitude of evasions that are common in industry (e.g., resetting option prices). There is an extensive literature on how to do this correctly. Treasury should be required to follow best practices, not common (abusive) industry practices.

Where are the clawbacks? What can be done to put those ins AND deal with the multiple evasion methods?

Christy,
Ah, the big question. And candidly, before the world blew up into AIG-induced rage last week, I was spending about 75% of my time thinking through how we put in place smart regulations that keep this mess from ever developing again. I’m working closely with Melissa Bean of IL and Chairman Frank on thinking through a systemic regulator. Most importantly, we’re trying to figure out ways to keep risk living with the people who take it. That means compensation, and it means complex securities. What I mean by that, is: feel free to cook up something god-awfully complex, but you’re going to retain exposure to it, so that you get to eat your own cooking.

Short version: TARP=Goldman Sachs enrichment vehicle.

Oh, and Goldman Sachs also gets the long straw in the public private partnerships. Why don’t we just change the name of the country to the United States of Goldman Sachs?

Is there any discussion on Capitol Hill that the framework of the financial system and its regulatory mishmash are what got us in this trouble in the first place? Will we ever get back to institutions that are “small enough to succeed” without allowing them to become “too big to fail?”

It just seems that there’s entirely too much time, money, and effort being devoted to a system and its constituent parts that don’t serve our national interest. Is anyone you work with looking farther down the road to restyling our economy to no longer be so dependent upon financial casinos?

Thanks again.

Scarecrow,
Great question. Geithner’s plan obviously rejects the Swedish, dare I say, nationalization, approach. Personally, I think it’s not either/or, and I wish the Treasury Secretary would talk about it that way. Meaning, certain banks simply don’t need to be taken over–they’re relatively healthy. Others probably do, and may yet need to be. We’ll see. Krugman has been uncannily right in the last year, so I take his warnings very seriously.

Yet the current Administration has adamantly opposed the bank seizure

Yes, why is the current Administration violating the law by not engaging in Prompt Corrective Action (PCA)? The whole upper tier of banks are candidates for this. Instead we see goofy plans from Geithner to funnel trillions into them. It is not that these banks should be taken over. The law requires it.

May I suggest a couple of conversations for you all? Bill Black, who worked the S&L crisis and any number of others in his days as a regulator. And some of the FBI old hands from SDNY who have worked fraud cases in NYC for years. Not necessarily the ones now, but the ones who really did the work back in the days when the SDNY was prosecuting those cases religiously.

Get to the people who have had to deal with the nitty gritty back in the days when we had real regulatory enforcement ongoing. Better yet, talk to them publicly in hearings so the country gets a feel for how decimated oversight and accountability have become — and deliberately so.

The FBI had over 1000 agents working the S&L crisis. They have far, far fewer than that working mortgage fraud cases which have ballooned in the last year and a half, and they have less than nothing left to work securities fraud and financial fraud cases. Law enforcement can’t run on fumes. And I say this as a former prosecutor who used to work 16 hour days because we were so understaffed and underbudgeted.

Yes, for ordinary income, capital gains, and for those deferred deals that hedge fund guys get.

Toby:
Two things. Straight salary would take the performance aspect out of it, which would make me uncomfortable. The problem was that compensation was a one way bet, ie. performance was not part of the deal in any really meaningful way. In terms of 401ks, yes people have been obliterated. It’s awful. But people also need to remember two really important things: 1) it’s not all gone, the market fluctuates, and 2)if you can’t take that fluctation, you shouldn’t be invested in equities.

Rep Hines

Why are our Reps acting so surprised about the executive compensation? It would have seemed appropriate to close all the loop holes for this compensation last fall when the bailout money was being handed over. Why are they acting so surprised?

As someone said “more difficult to walk this cat backwards”

Also what part did Former Secretary of the Treasury have in making sure that the efforts to block this compenstation would not “hold water” (reported on a Bill Moyers program)

Do you envision a systemic risk regulator being part of the Fed?

Hugh,
Somewhat tongue in cheek: would you factor in the house, limo and helicopter? What about the value of future earnings attributed to having been President?

What I mean by that, is: feel free to cook up something god-awfully complex, but you’re going to retain exposure to it, so that you get to eat your own cooking.

Except this is exactly what happened this time and in fact it is not the creators of these instruments who hold the risk for them but the government and the American people. The best way to avoid the consequences of convoluted financial instruments is to outlaw most of them. Financial innovation is vastly over-rated, and I would ask you what it has contributed to the real economy other than the current financial calamity?

Welcome Congressman Himes!
digg is open.

If these executive compensations were extracted from the American Taxpayers funds and future funds why is it so objectionable for the taxpayers to have their names?

With all due respect Rep. Himes – you are right about the risk involved in investing in equities..but for most Americans, the concept of a retirement has changed dramatically – companies have gotten rid of their pensions and have gone to 401Ks. The average American is not experienced enough with risk to be able to put together a retirement plan based in a 401K.

Lonn,
Not surprised, shocked. Shocked to learn that there’s gambling going on. The reality is that the original TARP bill was sorely lacking in controls and oversight. Then when the recovery bill tried to tighten it up, the argument advanced, but not far enough. I need to point out though, that because this is true doesn’t mean that the TARP was wrong or unnecessary. Hideous in the fact that it was needed, but I do think that it was needed.

Jane,
Yes. The Fed I think has the people best equipped to think about and monitor systemic risk.

I was spending about 75% of my time thinking through how we put in place smart regulations that keep this mess from ever developing again

I think you are under the misapprehension that we are rubes here. It is dead easy to re-regulate the financial sector. You basically reverse engineer the deregulation of the last 10 years or so.

Financial innovation is vastly over-rated, and I would ask you what it has contributed to the real economy other than the current financial calamity?

Agree. Simple, rigid financial structure did not prevent good growth in the 1950s and 1960s. No need for financial innovation at all.

Hugh,
I disagree with you on that point. The very technology we’re using right now would never have been funded had we stopped financial innovation in 1934. And the problem was that the financial engineers could cook up securities that no one understood, or a negligent mortgage broker could write a terrible mortgage and pass them down the line to the greater fool. If those two were forced to retain exposure to the products they generated, they’d be more careful about them.

Citizen Jim Himes and the Firepup Freedom Fighters:

I am about ready to tear my hair out over our elected political establishment’s absolutely rediculous and confused responses to this economic crisis. And this entire discussion of “to bonus or not do bonus” is a perfect example of why our political system is not capable of fixing the problem. This is an economic emergency created by the accumulation and concentration of capital at such speed as to render the majority of PEOPLE in the process penniless… as a majority of common people in the country begin to loose jobs, retirement and income and more and more people are left hungry and homeless, the elected political establishment of the country is seen chasing each others tails tryin ta figure out how to distribute “bonuses” from funds stolen from the people to insure that these same larcenous slimeballs don’t steal the rest of what isn’t there!

STOP FDLers and please Representative Himes, let’s get down to it, this isn’t nuclear physics this is a ponzi scheme that must be stopped before there is no wealth generating capability left in the country. Until the “players” and their bosses in the American financial oligarchy begin to suffer, until there are bankruptcies, suicides, criminal trials and investment gamblers disgorging their “bonuses”, there will not be an end to this madness.

What I am saying is, Representative Himes get off yer ass and work with every fiber in your being to save the people of this country and NOT the God damned bankers!!!

KEEP THE FAITH AND PASS THE AMMUNITION AND SAVE US FROM LIBERAL SOLUTIONS!!

[Mod Note; perhaps you missed Christy’s earlier comment. Thanks.]

A guest here a couple of days ago would seriously disagree with you. Sez because the classy thing at the FRB is to make monetary policy, everyone who doesn’t do that is a second class citizen and thus the FRB can’t attract or keep good people for that job.

Besides, mixing unsupervised monetary policy with unsupervised regulation is a recipe for disaster, as we’ve seen. The FRB should conduct monetary policy. Period. All financial regulation should be done elsewhere.

The Fed I think has the people best equipped to think about and monitor systemic risk.

The Fed has little to no interest in regulating anything, especially systemic risk. Can you give even a shred of evidence that it has or ever had such an emphasis?

Krugman has been uncannily right in the last year, so I take his warnings very seriously.

Thank you so much for this.

We at FDL are very concerned about Wrongway Geithner’s obsession with the “paper economy.”

It’s sucking ALL the investment out of real economic projects that produce TANGILBE economic value. A good example imho, is an HVDC backbone for the electronic grid. That allows many more power generators to come online. That produces jobs and sustainable wealth creation, just as it increases redundancy, which increases security and over the long-term drives DOWN real energy costs. By not investing in such a grid, we also continue to transfer wealth off-shore via $600 billion/year in payments for foreign oil.

Lonn,
Here I differ with some of my colleagues in CT. Even with respect to AIG, which was a horrendous situation, there is zero evidence that the recipients of bonuses did anything illegal. Remember that the people who created the AIG mess are long gone. The AIG retention bonuses were inadvisedly paid to a bunch of people who agreed to stay around to clean up the mess. Look, we own AIG right now. Someday, we want to sell it and get our $180 billion back. I don’t see the benefit of terrorizing the people who are trying to keep it alive so that we can do so.

Completely disagree. Do you think non-financial innovation starter in Silicon Valley? BTW, all those were financed without today’s fancy dancy stuff that Wall St. comes up with.

Besides, it’s not really financial innovation that they’ve been doing; it’s basically increasing leverage, which is an addictive drug when the markets are rising, but which destroys capital in an eyeblink when the markets turn down.

Toby,
Very fair point. And even if each and every American household really understood asset allocation, greed gets in the way of smart thinking.

Jon Stewart pointed out that there are two markets, the one normal people use to prepare for retirement, and the one where impossibly rich people play games with each other. I know that is true from my own experience as a regulator.

It doesn’t matter what rules you put in place for working people, the rich will game the system at the expense of the workers every time.

That’s why the tax structure I described is a better bet. At least we can raise the price of speculation.

Well, not to invoke Bill Black one too many times but he disagrees:

I have intense concerns with the Fed as regulator.

*
Regulators are deeply inferior within the institution. “Real men” at the Fed are economists and they do monetary policy. They dine with top bankers on fine china. They play squash on the Fed squash courts. Fed regulators have no power within the institution and the institution is inherently hostile to vigorous regulatory action against the big banks.
*
Economists in general, and Fed economists in particular, are a major cause of the financial crisis. Their philosophies and theories shaped deregulation and desupervision. They promised that “private market discipline” and “efficient markets” would produce growth and safety. The Fed’s economists’ research during the run-up to the crisis (A) ignored everything important, e.g., it denied the existence of a bubble, (B) praised the worst possible practices, e.g., Greenspan’s praise of subprime lending and financial derivatives and his article lauding “equity stripping”, (C) was full of undeserved self-praise, e.g., re “the Great moderation” that Fed policies (and neo-classical economics) had purportedly created, and (D) proved no practical assistance to Fed examiners/supervisors to deal with the crisis. Its mono-methodological reliance on econometrics produced the inevitable results — econometric studies, during the inflation phase of an epidemic of accounting control fraud must find that the worst possible practices (e.g., (A) exploding rate ARMs originated with no verification, no meaningful underwriting, no internal controls, and perverse executive compensation systems, (B) sold to others for pooling into CDOs, (C) extreme leverage, and (D) extreme growth are positively correlated with the increased “profit” and share prices. It is only after the bubble collapses that the true sign of the relationship will reverse. Economic theory teaches that regulation must fail. It creates a self-fulfilling prophecy.
*
The Fed’s regional offices (the FRBs) have strong conflicts due to the pervasive role of the industry in running the FRBs. Many of the FRB presidents were picked because of their ideological opposition to regulation.
*
The FRB has consistently failed as a regulator.
*
The FRB continues to fail to understand and respond effectively to the crisis two years after the nonprime market collapsed.
*

I do note that having a systemic risk regulator at the Fed makes the bank lobbyists very happy though. Edward Yingling, CEO of the American Bankers Association and Steve Bartlett, CEO of the Financial Services Roundtable think it’s a great idea.

Why is the white collar crime guy saying it’s inadequate, while the bank lobbyists are thrilled?

“Save us from liberal solutions!”?

Say wha?

*giving you a V8 juice bonk to the forehead*

Right wing solutions are always failures if you haven’t noticed!

Hugh,
Ok. So AIG still gets to write billions in CDSs as they did ten years ago? The auction rate securities market gets to grow as it did? Credit card companies get to start securitizing the way they did? I don’t think anyone is a rube. But I know that financial regulation is anything but simple.

Jim,

What do you want most?

Re-election?

Truth served to the American people?

Thanks.

eCAHNomics,
Great to hear from you! Yes, very fair points on the FRB. I’m just not sure that a systemic regulator should reside anywhere else. I’m sure open to suggestions, though.

ART45,
Do I need to choose? Have we become that cynical?

Thanks for pulling it out, Jane. That’s exactly what I was referring to in my 61. And you added some great Qs.

This is exactly the problem.

Cenk Uygur from the Young Turks

Alan Greenspan says he is in a “state of shocked disbelief” that the concept of self-interest did not protect the banks from taking excessive risks and destroying themselves. But he, along with Tim Geithner and Larry Summers and many others, are missing the fundamental flaw in the system. The bankers don’t care about the banks; they care about the bankers.

The enlightened self-interest of the bank executives has been separated from the interests of the banks they work for. In the 1970’s, the banks were still privately owned. So, the guy up at the top wanted to protect his company, his interest and his money. If his executives took unwarranted risks with the boss’s money, they were goners. But these days the people at the top of these companies don’t own the companies. It’s not their money.

This goes for your former employers also

Are the Fed people really the best group to think about systemic risk? What is the evidence. Some might argue that the greatest systemic risk we’ve had in a generation was Alan Greenspan.

The Fed’s job is primarily regulating monetary policy. That sexy positions there are all involved in studying money supply/price/ratios, etc. I understood they have only a small crew focused on financial regulation, part of the deregulatory legacy. I think we need a stronger argument for placing major new regulatory powers at the Fed. Maybe it makes sense, but i don’t think the case has been made.

Hi Congressman Himes,
As a former GS employee might you explain why the tax payer is getting the short end of the stick on the current bail out proposal for the banks? The public sector as a whole (Treasury plus FDIC) is at risk for $78 out of a total investment of $84. The public sector has the same upside as the private sector (through its $6 worth of equity). However, the private sector gets this upside by putting only $6 at risk, against the public sector’s $84 at risk. Small wonder the stock markets loved this. If there were a stock market for taxpayer equity, it would have tanked by a commensurate amount.

eCAHNomics,
I don’t think it’s either/or. I think we might all agree that the creation of collateralized mortgage obligations put millions of families into homes they own. However, the oversight was poor, and the incentives were screwed up.

And yet depression era regulation like Glass-Steagall or the uptick rule would have done much to prevent the excesses we have seen. I don’t see how you can defend financial innovation for its own sake. Other than destroying the financial system it was great.

And again you can say that those who create such instruments must bear the consequences of them but we are seeing every day that they do not. You can write as many laws as you want saying they must but the truth is when you get a financial meltdown as we have now the government intervenes. It is doing so now. It will do so in the future.

Congressman Himes,

My concern about the financial engineers is that they like to play with our money.

Geithner’s Public-Private Plan for Toxic Assets – Private Investors can Lose at Most 3%, Taxpayers 97%

We want Congress to fence off from them, bank deposits, tax payer dollars, money already set aside for Social Security and Medicare, and makes them play with their own money.

I think our tax laws and the absence of any anti-trust action strongly encourage “casino capitalism,” where the super rich have zero incentive to invest in anything that produces real long term value. That’s left to the government, which is broke. The super rich can leverage their massive capital and make money with almost zero risk. It’s not fair.

If you simplify the financial system, you don’t need a systemic risk regulator. Besides, having worked on Wall St for all those years, I assure you that even the folks who are doing the innovation don’t understand it (and won’t hire anyone who does, otherwise they’d lose their jobs). So how can a regulator have any clue?

Agree,and as I mentioned, am very open to suggestions.

Congressman Himes, the last time you were here, I very much appreciated your openness to the idea of vertical (indoor) farming.

It’s slightly off topic, but if you’d like to comment on ways Connecticut is trying to leverage it’s Atlantic coastline for wind power or tidal energy, I’m sure we’d all be interested.

Friends,
I’m past my one hour, and need to push on. Sorry to cut this short. I will be delighted to come back, and really appreciate your thoughts and input. Let me thank Jane again for hosting. Please keep the thoughts and ideas coming. You can get me in DC at 225-5541 or via email.

Thanks again all!
Jim

Congressman Himes, just fyi, one of the inside running jokes here at FDL is that “responsibility is for the little people.”

Jim, thanks. It’s been great having you here for this lively discussion! See you around!

THANK YOU SO MUCH FOR BEING HERE.

Thanks so much for making the time for discussion, Jim — so many elected folks don’t and we always appreciate those who do. Great to have you here, as always.

Who said anything about “terrorizing”. When did it actually happen that holding people accountable started to be defined as “terrorizing”

When our Reps start to turn the public’s desire to witness these individuals held accountable . Many on Wall Street and some of our Reps quickly move to calling accountability “terrorizing”

That type of response is absurd and irresponsible. Just like our Reps not closing those loopholes last fall.

This type of response is designed to shut down the righteous demand for accountability

creation of collateralized mortgage obligations put millions of families into homes they own

Data don’t support that. Homeownership hovered around 64% for decades, rose to 67% in the 1990s’ propersity, and then to 69% in the bubble. It has now roundtripped to 67% and headed lower. And that 2 percentage points, had it even lasted, has come, as we now know, at the expense of the economy as a whole.

Citizen KayInMaine:

Look out that V-8 can is comin back atcha…but I drank the stuff before I tossed it back. And as for this ol’ scarred-up forehead…well it’ll take more’n a can a V-8 ta even put a dent in it.

I meant to put quotes around “LIBERAL” because please notice that the cures bein’ offered by the like of Gaithner, Obama et al threaten to worsen the disease…”liberals” have been doin this to us since the corporations took back the government in 1946.

Let’s stop this socratic dialoging about how many imnvestment bankers can get paid from one single piece of bailout legislation…for Christ’s sake, Sister Kay, before the system can be fixed we hafta get the fuckin’ criminals outta the vault and shut the syndicates down!

Someday, we want to sell it and get our $180 billion back.

Do you seriously think we will get our $180 billion back? It is not just AIGFP that is bust. There are a lot of problems with AIG’s insurance divisions an in-house re-insurance. On top of that, just today, we are hearing that one of its airplane leasing businesses is going to need a bailout. Where precisely do you see us making back this money? Especially I should add because Liddy (playing with the numbers) says it is only around $80 billion. And btw can’t we claw back Liddy’s salary for non-performance (and yes, I know how much he is being paid).

Thank you for your participation. As you can see, most of us are pretty worked up over the entire system, not just the bonus problem. We appreciate your interest in the bigger picture, and wish you the best.

And btw can’t we claw back Liddy’s salary for non-performance (and yes, I know how much he is being paid).

I’ll pay for the frame for the dollar.

Greed does get in the way and that is a universal attribute of all people, the restraint of that greed varies greatly. I see a lot through the posts saying in effect that people are not intelligent enough to handle things on their own and this should not be the attitude. The educational mediums need to be more accessible for people to make sound investment and retirement planning decisions. To take away options through regulation will limit growth potential as well as encourage people to blame others for not taking personal responsibility for choices. We are a great country and our people are more than capable to make their own decisions. To limit options and give more power to the government so they can ” take care of all our needs” comes at the great sacrifice of our freedom which is something every American should cherish and endlessly fight for during good times and bad.

You do realize that if we took all the criminals out there would be nothing left but crickets chirping, a tumbleweed blowing around, and a huge echo, right? *recycling the V8 can you tossed back* ;-)

Thanks so much for being here today, Jim. We really appreciate it. And good luck with the bill — we’d be happy to whip support for it if you need a few co-sponsors.

Firepups, those comments were amazing !

Passing around Margaritas and Martinis …

Seconded.

“I don’t see the benefit of terrorizing the people who are trying to keep it alive so that we can do so.”

I’m with Lonn (#89) on this point. Holding people accountable is not even remotely the same thing as terrorizing them. Further, your position would seem to suggest that the people pulling the levers at AIG right now are the only ones qualified to do so. That assertion is patently false. If they’re held accountable and they fail that test, then they should be replaced. I’m saying this from a business perspective as well as from the point of view of an 80% stakeholder.

They really were.

*running behind you collecting cans and bottles for recycling cash*

So AIG still gets to write billions in CDSs as they did ten years ago?

So take it back to the early 1990s. Yes, CDSs came into existence in 1997 but they were deregulated in the 2000 CFMA. But I don’t know what your point is. CDSs were an innovation that has proved spectacularly bad. So has most of the securitization schemes we have seen. But what this is really saying is that most derivatives have proven to be bad ideas. These examples would argue in favor of my point.

Easy with that arm, Bro ! *g*

Well, thanks for playing, sir.

I am more discouraged than ever before, because we all know Jim Himes is one of the good guys. And I don’t see much evidence that even he is thinking far enough outside of the box that this mess came in.

Oh well.

O/T … Steele claims that Limbaugh gaffe was done, like, totally on purpose, dude !

I think Mr. Himes is dead on on this one. People do not need to know the names of those getting bonuses. 1. Whether they deserved the bonus or not it was a contract, backed up in the stimulus package, but more importantly the government should not get involved in changing legal contracts between its citizens because it sets terrifying precedent. 2. Those receiving bonus’ would be at risk of physical and verbal harm from “angry” people just like those people who donated against some people’s views on Prop 8 in California.

Well, he certainly got an earful here today. Wonder if that’ll make him rethink anything.

Another O/T:

Those of you who might be hoping for a bit of comedy respite should be overjoyed to learn that Rep. Michele Bachmann (R-MN) will be a guest on Washington Journal tomorrow morning.

So get out your tinfoil hats…

To take away options through regulation will limit growth potential as well as encourage people to blame others for not taking personal responsibility for choices. We are a great country and our people are more than capable to make their own decisions. To limit options and give more power to the government so they can ” take care of all our needs” comes at the great sacrifice of our freedom

Hysterically funny. So the con artists who visited this disaster on us only did so to teach us about personal responsibility and we should protect our freedom to be conned because this is the American way, yeah right.

So it’s OK for govt to change auto workers’ contracts after the fact, but not the financial exec ones? Besides, if the govt had done what it should have, put these cos into receivorship, bonuses would wait in line like all other creditors.

If he is from the New Democratic Coalition (Taucher’s group) he is not thinking as we are.

I don’t care about the names of those who got bonuses. That’s nickel and dime stuff. What I do care about is holding accountable those individuals who created this catastrophe in the first place. If they’re still working, then we (as 80% owners) have a right to know exactly what they’re doing. And if they’re not up to the task, they’re gone. Period.

Re shifting compensation from bonuses to salary, you wrote:

Straight salary would take the performance aspect out of it, which would make me uncomfortable.

Rep. Himes, you’re a member of Congress, working on straight salary. Do you work any less hard because of that?

I’m a pastor with a degree in economics, and my parishioners are a mix of blue-collar workers and mid-level white collar folks, plus retirees from those jobs. Almost all of them are (or were) working straight salary, and this doesn’t take accountability out of their jobs.

You may be right about how best to compensate wall street executives, but I urge you to rethink how you express that. This comment came off to me as exceedingly condescending toward those who work for a salary and not a six or seven-figure bonus.

no it’s not ok for the government to change any contract, same as bankruptcy judges changing mortgage terms

If any of those bonuses came out of the taxpayers money then the American taxpayers have the absolute right to know.

And speaking of including in the President’s compensation his housing and helicopters, that MOTU in London still lives in the AIG-provided apartment, if I’m not mistaken — the fellow who got a million a month in consulting fees after he was “let go”

If I had to guess, I’d say that his visit just confirmed his preconceived notions about “The Great Unwashed”.

Perhaps I’m being uncharitable. The fact is that he did (deign to) show up. However, I do think it relevant to bear in mind that these people live in a bubble, a very elite club. Under such circumstances, it takes a very special sort of person to be “in it, but not of it.”

Yes, I wish we could have gotten into more of the specifics of regulatory reform: Glass-Steagall, the uptick rule, the net capital rule, nullification and prohibition of naked CDSs, eliminating CDSs in general by treating them as insurance and regulating them accordingly, limits on securitization, reform of the ratings agencies, warrants for mortgage writers, more transparency in banks and hedge, pension, private equity, money market funds, a Swedish style executive liability rule, and many more.

Intellectually dishonest, another “sad” version of “trust us” and the always popular “responsibility is for the little people.”

Local, state, and federal compensation are public record. Sports/entertainment compensation is public record. Compensation of executives at publicly traded companies is public record.

I agree with you but I let that one slip.

Wall St pays so much comp in bonuses so they don’t put the big numbers into the salary category, which has the connotation of permanence. Bonuses vary according to the profitability of the firm, for those who don’t have any direct revenue generating function. For some, their bonuses also depend on how the group they are in did in a particular year.

The facts are that Wall St is sinfully profitable in the deregulating environment and they have to distribute a lot of their profits to the workers.

If you simplified the financial system then it wouldn’t be so profitable and employee comp would come down.

Darn straight. Why are there different rules for the fat cats

Sure to an extent, we NEED to learn from our mistakes. We NEED to understand history to prevent ourselves from making the same mistakes. We NEED to actually give a shit about this stuff again and have a desire to learn and understand what we should and should not be doing.

Bailing these corporations out and bailing out regular people (also crap because corporations got the abundance of the “help”) only enforced the idea that there is no such thing as too much risk. In fact it said the more risk the better because not enough you’ll just suffer, too much and the government will swoop in and save your ass!!

What? You mean the contracts that exist inside that company of which we have an 80% controlling interest? That company?

Bingo.

All those other things not being covered is why the SHINY bonuses exist.

fyi -
Congressman Himes is not a member of the New Democrat Coalition

Agreed but we should also do that for our government officials that fueled the recession….. I think Franks would be a poster boy

Yeah.

Big Congrats to Jane for at least getting Himes here.

It’s a process. We had less than zero traction back in 2005 when Jane, Christy, and Marcy were leading the lonely fight to defend Fitz. As you know Teddy, back then, even the “moon bat liberals” at the WaPo and NYT’s were writing that Fitz was an overzealous prosecutor.

We soldier on.

Tempted to say it’s a marathon, not a sprint. But then, a couple of days ago I thought it was more like a Sisyphus.

That comment was intellectually dishonest, even if it was cast as tongue-in-cheek.

Former Presidents do not make off with $160 Million Golden Parachutes, as Stanley O’Neal did, after being fired by Merrill Lynch.

So should we know the names of all people on welfare. Would this create a large effort by the American people to help these deserving people in their time of need or would it discourage people from utilizing this helpful tool out of fear or shame.

Surely you aren’t talking about Barney Frank who, until two years ago, was a member of the much-maligned Congressional minority for twelve years? The Barney Frank who couldn’t even introduce legislation in the Financial Services Committee as a member of the minority?

You think he had something to do with this recession? Really?

As Barney has said over and over, if he had the power in Congress he is now attributed with, he would have stopped the Iraq War from ever happening, shut Gitmo, and prohibited tax breaks for companies that ship jobs overseas.

Barney Frank, poster boy for the recession? George W Who?

I think Franks would be a poster boy

Yeah, it was the Democrats who deregulated over the strong objections of the Republicans.

Yeah it was the Democrats who force Bush to invade Afghanistan and Iraq, against his better judgement.

Please let’s use Social Security and Medicare to socialize the losses of the super rich, so they can privatize their profits.

Did you fall and hit your head today?

I love this.

You finally figured out that a lot of ex-Republicans are going to need food stanps and welfare to make it through the next ten years.

Glad to hear that. thanks

Musta been that low arch on the bridge …

Ice pack. That usually helps…

and the government will swoop in and save your ass!!

If there is a financial collapse, the government should intervene. In fact, if the government had been doing its job, it would have intervened long before so that this mess would never have arisen. It was because of nutcase economic libertarianism that it pushed instead for deregulation, and we see the results. Deregulated capitalism is nothing but a series of booms and busts. We have a couple of centuries’ experience with this. The deregulation craze was a form of insanity, i.e. doing the same thing over and over and expecting a different result.

In case anyone missed it, Premier Wingnut Michele Bachmann is going to be on WJ tomorrow morning. C-SPAN I. Should be some quality entertainment.

Seconded.

Not the poster boy for the recession just bad judgment on economic policy. Yes there is a plethora of causes but a big driver was the push (regulation) to force banks to make mortgages to people who would not ordinarily qualify because owning a home is the American dream and the government needs to step in and take control so this takes place, blah, blah blah. This created a huge sub-prime marketand lent very nicely to these ARMs because the banks in these didn’t have to worry about making money from the loans over the life of the loan, just making sure the asset backed by the mortgage would be able to sell for enough of a profit by the end of the teaser rate term of the ARM. This lead to the inflationary pressure in housing. Franks denied it didn’t do anything about it when the white house brought it to their attention, I think either he is incompetent or didn’t care.

Thanks I missed that response.

What about the value of future earnings attributed to having been President?

Let Wall Street CEOs write a book or hire out as speakers. I have no problem with that. And the President’s helicopters? Seriously, it is like he never heard of corporate jets.

Any Qs we should email in? I’m a complete dolt in devising Qs for people as out of touch with reality as she is. But if we can brainstorm some, I’d be happy to email one of them.

Rep. Bachmann, do you get the quantity pricing on your tinfoil?

That’s the first one I think of.

Don’t most CEOs of big corps get a lot more when they leave (like 10X or 100X) than what any U.S. prez has earned after he leaves office?

How about: Rep. Bachmann, why did you not try to kiss President Obama when he spoke before congress?

I blame lots of people. I guess I would like to see how Frank voted on Gramm-Leach-Bliley and the CFMA. But the housing bubble took off in 2004-2005 when Republicans were firmly in control of everything and Bush was pushing his ownership society.

I like it.

If I in my great wisdom were to max out credit cards to buy homes that I wanted to flip to make the big bucks quickly and fail, my credit is then shot and it will take me many years to recover and I should then learn more of what not to do and what to do instead. We had a lot of people big and small businesses and individuals do stupid things and to help them out doesn’t give them the time needed to learn from their mistakes and also lets them out into the world to do this mistake again.

Obama said his $4 trillion dollar budget is necessary to prevent our country from ever having a huge downturn like this ever again. At first I laughed then I realized he was right we can never have a bust again if we never get out of this and prosper again, then I got a lil sad

The idea that the government can’t determine compensation levels for executives in a bankrupt industry that is getting aid from it is just silly.

The Community Re-Investment Act, which started “the push” as you call it, was passed and implemented in the mid-1970s with sound regulation and underwriting behind it. Minorities and lending thereto didn’t destroy our economy; esoteric and exotic derivative instruments developed by Masters of the Universe on Wall Street did.

The inflationary pressure on housing was driven by the huge amount of capital available once leveraged into mortgage-backed securities and the concomitant lowering of underwriting standards in order to feed the beast. Nothing to do with Barney Frank AT ALL.

If by ex-republicans you mean never conservatives, surly. They won’t need them the government will run campaigns to find any person that is remotely eligible to get them and force you to take them, because they care for you and want what is best for you and ONLY the government can provide this for you and don’t even try to argue cause the government is always right…..

Come on

Just arrived — looks like it was a lively discussion this afternoon.

I would mention Keynes but either you have never heard of him or you think he is Lucifer’s right hand man.

Yes The Community Re-Investment Act, passed during the carter years and beefed up greatly during the clinton years. This wasn’t so bad because the economy was booming and weak spots were not noticeable but as is was ramped up even more into the bush years the cracks started to show and when the fiscal policy of lowering interest rates to cure all economic wounds the “dormant infection” that was this “push” took off and lead to this. Just like the effects of policy made during clintons years didn’t stop playing out when his terms ended and the policies of bush’s terms haven’t stopped playing out either.

“The Community Re-Investment Act, which started “the push” as you call it, was passed and implemented in the mid-1970s with sound regulation and underwriting behind it. Minorities and lending thereto didn’t destroy our economy; esoteric and exotic derivative instruments developed by Masters of the Universe on Wall Street did.”

The CRA meme is constantly pushed as the cause of this conflagration. And spurious though it obviously is, it does appear to have quite a bit of traction in the wingnut community. A very concise counter to this mindless crap needs to be devised and widely circulated. Little tiny bites is all these people seem to be able to digest.

I just amazed that a small group of poor black people were able to crash the global economy. Gosh, I never thought they had so much power.

I have read some articles by him on your advice actually. I only read for a little while but does he have a book. or is there a book of his ideology a manifesto so I can fully understand this train of thought.

Or even before they retire, like the $1.6 Billion given to William Mcguire

Do right wingers really read or do they just study the short talking points given to them by Glenn Beck and/or Rush Limbaugh?

Keynes

His major works are noted in the “Career” section.

That request would sound like you were “terrorizing” to Rep Hines or Archie Bunker to me….asking for names.

Yeah I guess your right exposing the names of execs who received these executive compensation packages might make them feel ashamed and not want to stand in line for the next compensation package skimmed off of taxpayers money

Rhetorical Q, right?

As long as we all agree that it’s Bill Clinton’s fault, there’s no need for further discussion.

This wasn’t for just minorites unless you are saying minorities are the only people in the country that qualify as low- and moderate-income families. In 1992 HUD required Fannie and Freddie to put 50% of its business into these types of loans. This has nothing to do with the recession?????

Yes. LOL Thanks for asking for a clarification. Sad4america was saying above at Comment #159 that she/he reads and I was just asking out loud if that was true.

Just ignore me, eCAHN. I’m the dumb one on the financial thread. ;-)

yes of course but the American people should not be allowed to have the opportunity to do unlawful things to these people

Yes, and the Jews and the poles in Europe forced Hitler to put them in concentration camps too.

/s

Wealthy people got second mortgages and bought too much house, because of the GOP and vichy Dems.

You got the sequencing wrong. Poor people got swindled out of the equity in their homes AFTER Wall Street figured out how lucrative CDO’s and CDS’s were to THEM.

Other poor people got sucked into buying homes they couldn’t afford AFTER Wall Street figured out how lucrative CDO’s and CDS’ were in the short term.

I know it works over at Powerline, but here you have to bring a link, or some facts, or a reasoned argument.

Hmmmm. 1992, 2007. Not much went on in the interval, apparently.

Don’t you think the word “study” in this context is a bit too strong?

All this talk of Wall Street bonuses is giving me major case of deja vu. I long for the days before Sarbanes-Oxley when deductibility of corporate stock options was the outrage du jour.

It is a sign of progress though that we got all the way to comment #165 before Bill Clinton was blamed for our current predicament.

Perfect.

I would not recommend the man so much as the thought. I have never seen anything particularly complicated in Keynesianism. Deflation is caused by a contraction in demand relative to supply. The thing to do is increase demand through spending. In a deflationary spiral the only effective entity that can increase demand this way because it can run and sustain deficits is the federal government.

So in a severe contraction or depression, deficits are not the problem they are the point.

Bullseye, thank you.

“unlawful things”? You mean like hijacking the federal treasury, for example?

http://www.rollingstone.com/po…..over/print

Heh. Heard someone a week or two ago say something to the effect that supply-side economics worked. We’ve got supply coming out the wazoo. (So they should declare victory and bring their troops home.)

Never could understand why people who allegedly believe in the “market” think that taxation should not pay attention to the market. IOW, why do they think that supply should be taxed at lower rates than demand? Tax policy should be neutral, and let the market determine the balance. And why is labor not included in supply?

Truuuuuue….the word “study” is a little strong when talking about the right wingers who most likely can’t concentrate long enough reading the backside of a cereal box. LOL

In 1999 the Congress enacted and President Clinton signed into law the Gramm-Leach-Bliley Act, also known as the “Financial Services Modernization Act,” which repealed the part of the Glass-Steagall Act, which prohibited a bank from offering a full range of investment, commercial banking, and insurance services. The bill was killed in 1998 because Senator Phil Gramm wanted the bill to expand the number of banks which no longer would be covered by the CRA. He also demanded full disclosure of any financial deals which community groups had with banks, accusing such groups of “extortion.” In 1999 Senators Christopher Dodd and Charles E. Schumer broke another deadlock by forcing a compromise between Gramm and the Clinton administration which wanted to prevent banks from expanding into insurance or securities unless they were compliant with the CRA. In the final compromise, the CRA would cover bank expansions into new lines of business, community groups would have to disclose certain kinds of financial deals with banks, and smaller banks would be reviewed less frequently for CRA compliance.[31][32][33] On signing the Gramm-Leach-Bliley Act, President Clinton said that it, “establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act”.[34]

This took away more regulation and forced even more loans to risky loanees.

Our country is lucky to still be a country of owners that has money to buy personal items and houses and land. I really don’t want to end up like European country’s, do any of you?

Not only do they appreciate fine literature (like on the back of a cereal box), but I’ve also heard they like art.

“Color in that #17. That’s the green crayon, ain’t it?”

Homeownership data on page 5 of pdf. The legislation in the late 1990s increased homeownership by 2 percentage points in the bubble, which have been mostly erased already, and are headed down more. As for Europe, dwellings seem pretty nice, whether rental or owned. And home ownership rates, it you think they’re so telling, are about 10 percentage points higher in the U.K. than in the U.S.

Ooops, forget link.

But the CRA simply doesn’t account for most of the loans that went bad. These were let out by mortgage writers who were outside the CRA.

I thought too you were against regulation but you seem to be saying that repeal of Glass-Steagall is where things started going wrong. I would agree that it was certainly one of the points.

Yes ideas are solid but men are flawed. Reagan raised deficits right? that is usually brought up when talking about his strategy to economic policy. His ideas stated that they indeed spent to much which people will blame cause the democrats had congress. In this thread though deficits were cause by letting the people have more money were government can afford to take the deficit in the mean time but also more jobs and economic activity will be created by less money being consumed by the government so then when taxes are raised to appropriate levels in the “normal” economy they can be less and still bring in the appropriate amount of money because more wealth was created in the interim.

I think some of that you will disagree with or not weight as important where I miss the ground up building that you emphasize. Like owning a house, sucking all the worth out of a house may do some good but with out maintaining the structure and efficiency it will soon be worthless for it will crumble. I think Obama is has the right idea but is going to fast. In that scenario he wants to put on new windows and add insullation and new roof and all new elctrical and plumbing not to mention fixture to make it nice to look at and fun for all. Yes this adds worth and value but the income can’t pay for all this work. Do the insullation and windows first, it saves money and protects, then when those savings are realized you can move on to the next step. Too much at once and all our money goes to debt and we can never get out

Oh, my – Europe. No, not that, never, how shocking. Health care for all, infant mortality at lowest-ever levels, supertrains, and legal pot? What a horrific prospect.

Appropriate regulation but more importantly stringent oversight and enforcement of standing laws. When the government interferes it changes the rules for all and affects the competition that drives the free markets. I see many well intentioned plans that don’t address the cause and effect ramifications that inevitably occur. It is extremely hard to see and do I understand but that is why I would say I’m more adverse to regulation.

I’d like to point out something about the people (including government and media members) who are decrying the harassment of financial sector employees and executives…

Nobody would be lifting a finger to harass these people if the government and media were doing their jobs’ to pursue investigations, prosecutions, and recourse!

People who have given up on law-enforcement, because it has proven impotent, are turning to vigilanteism. It’s not that complicated to diffuse it. Law-enforcement just has to start doing its job.

Response to Teddy,

I am more discouraged than ever before, because we all know Jim Himes is one of the good guys. And I don’t see much evidence that even he is thinking far enough outside of the box that this mess came in.>>

Yes this is a bitter sweet exchange. God I hope Jim reflects on what he heard here today. You can take a good guy out of wall street but can you take the wall street out of the good guy.

Thanks to all who schooled him politely and firmly. And thanks Jane and Christy.

Think I’ll email some of the exchanges to his office.

Health care that benefits from capitalist companies turning a profit to make the drugs and equiptment which can thrive here more than there. Lower birthrates that don’t sustain population. Supertrains because they have such little land and people don’t travel in cars as much as we do, not to mention the $10/gallon gasoline. Legal pot well can’t argue there, that would create a good revenue stream for the US more than it already has from in California. It would take away pot’s gateway status because the gas station clerk would push you cocaine.

Also, this question as phrased by Jane was excellent for weeding out when a politician is being a public servant, or just a politician.

Do you envision a systemic risk regulator being part of the Fed?

Sets up an idea of known dubious efficacy in a positive light, so the expectation in phrasing that he should agree with it if he doesn’t really know, and just wants to placate you.

I don’t know if it was intentional, but it worked, so bravo either way.

When in doubt insult!!! I find no logical reason to try to insult a person with foolishness when it is so much more sufficient to do it with intelligent conversation. For me this site is not about right and wrong, it is about gaining a greater understanding of the world around me. I won’t judge though I hope you enjoy the rewards of your quick wit :)

new post upstairs, fyi.

They are attempting hide behind these verbal threats from the taxpayers.

somewhat related thought: Republicans state that individuals know better than government how to spend “their own” money and that government taxation of salary (or in this case interference in setting a salary) is intrusive and anti-capitalist.

No harm no foul. What happens when the majority are made less well off in order to make a few better off?
Specifically what about the intrusiveness of well-paid (overpaid) Wall Streeters buying their Congressmen and Congresswomen’s votes (via well funded elections) and using those votes to make national laws benefiting the few at the expense of the unrepresented many?

Cram down mortgage legislation, anyone? Or not?

sad4america, after reading some of your later comments, it’s clear you share some values with this community, such as a yearning for honest, responsible government. Going forward, we need all the help we can get, to push for that.