Supposn
06-05-2013, 10:39 PM
Government or self- regulations?</SPAN>
Financial industries’ self regulation?
Am I the only member of this group old enough to remember a drug that was being used worldwide prior to the completion of USA drug regulations that would permit it to be generally prescribed within the USA? Due to the drug, additional births of permanently deformed infants were occurring world-wide. The only USA babies so born were due to their parents or physicians circumventing USA’s regulations and using the drug for pregnant women.</SPAN>
USA’s real-estate bubble burst and drastically affected economies even beyond our borders. Republicans try to blame this upon Democratic bank regulatory policies but no bank was ever forced to make a poorly collateralized loan. They did so because their greed exceeded their prudence.</SPAN>
During Johnson’s administration private investors were permitted to participate within the government sponsored entities, (GSEs). These are the entities that were enabled to increase the pools of funds available for federally insured mortgages by selling bundles of mortgages to investors such as financial institutions; that worked out fine.</SPAN>
Later a Democratic majority congress which included significant numbers of agreeing Republicans passed an act enabling GSEs to handle non-federally insured mortgages. That in my opinion was the most economically harmful decision with regard to GSEs. President Nixon signed that bill and thus he, (more than any other individual) permitted that bill to become federal law.</SPAN>
[In this case I’m not accusing anyone of duplicity. It’s always easier to believe that what’s to our own best advantage is equally to the nation’s best advantage]. Leaders of our greatest financial institutions believed this was a win-win for both private investors and the nation’s economy. The bill was problematic. The axiom of “no free lunch” wasn’t fully recognized in this act or because profits were perceived and the axiom’s application within this act wasn’t fully appreciated].</SPAN>
The prospectuses presented to investors state no legal requirement for federal financial backing of GSE’s, but influential persons at the highest levels of USA’s federal government and commercial entities winked and assured the entire world this undeclared support was actually the case. They explained that government support is evidenced by favorable tax treatment for profits derived from GSE investments. (That was the ourt government’s method of sponsoring the GSE’s. These persons creditability and influence was confirmed when the federal government did indeed put federal credit at risk to cover losses due to mortgage defaults. The federal government put itself on the hook for non-federally guaranteed loans.</SPAN>
The government did not direct financial institutions to make insufficiently collateralized loans. Banks better rewarded mortgage brokers who brought them higher interest loans for property of over stated value sold to purchasers with insufficient incomes. It became the accepted policy of no need for diligent government regulation because it was to private entities’ best interests to conduct their businesses in financially sound manners. From the financial institutions’ view point they were doing exactly that. The qualities of mortgages were of no consequences to the lenders if they could immediately sell them to the GSEs.</SPAN>
I’m less mistrustful of explicitly drafted government laws and regulations created and enacted in the sunshine and publicly viewed. I greatly dread any (government or non-government) bureaucratic discretion of policy that directly or indirectly affect me and mine and create or perpetuate inequities that evolve from the exercising of such discretion.</SPAN>
Respectfully, Supposn</SPAN>
Financial industries’ self regulation?
Am I the only member of this group old enough to remember a drug that was being used worldwide prior to the completion of USA drug regulations that would permit it to be generally prescribed within the USA? Due to the drug, additional births of permanently deformed infants were occurring world-wide. The only USA babies so born were due to their parents or physicians circumventing USA’s regulations and using the drug for pregnant women.</SPAN>
USA’s real-estate bubble burst and drastically affected economies even beyond our borders. Republicans try to blame this upon Democratic bank regulatory policies but no bank was ever forced to make a poorly collateralized loan. They did so because their greed exceeded their prudence.</SPAN>
During Johnson’s administration private investors were permitted to participate within the government sponsored entities, (GSEs). These are the entities that were enabled to increase the pools of funds available for federally insured mortgages by selling bundles of mortgages to investors such as financial institutions; that worked out fine.</SPAN>
Later a Democratic majority congress which included significant numbers of agreeing Republicans passed an act enabling GSEs to handle non-federally insured mortgages. That in my opinion was the most economically harmful decision with regard to GSEs. President Nixon signed that bill and thus he, (more than any other individual) permitted that bill to become federal law.</SPAN>
[In this case I’m not accusing anyone of duplicity. It’s always easier to believe that what’s to our own best advantage is equally to the nation’s best advantage]. Leaders of our greatest financial institutions believed this was a win-win for both private investors and the nation’s economy. The bill was problematic. The axiom of “no free lunch” wasn’t fully recognized in this act or because profits were perceived and the axiom’s application within this act wasn’t fully appreciated].</SPAN>
The prospectuses presented to investors state no legal requirement for federal financial backing of GSE’s, but influential persons at the highest levels of USA’s federal government and commercial entities winked and assured the entire world this undeclared support was actually the case. They explained that government support is evidenced by favorable tax treatment for profits derived from GSE investments. (That was the ourt government’s method of sponsoring the GSE’s. These persons creditability and influence was confirmed when the federal government did indeed put federal credit at risk to cover losses due to mortgage defaults. The federal government put itself on the hook for non-federally guaranteed loans.</SPAN>
The government did not direct financial institutions to make insufficiently collateralized loans. Banks better rewarded mortgage brokers who brought them higher interest loans for property of over stated value sold to purchasers with insufficient incomes. It became the accepted policy of no need for diligent government regulation because it was to private entities’ best interests to conduct their businesses in financially sound manners. From the financial institutions’ view point they were doing exactly that. The qualities of mortgages were of no consequences to the lenders if they could immediately sell them to the GSEs.</SPAN>
I’m less mistrustful of explicitly drafted government laws and regulations created and enacted in the sunshine and publicly viewed. I greatly dread any (government or non-government) bureaucratic discretion of policy that directly or indirectly affect me and mine and create or perpetuate inequities that evolve from the exercising of such discretion.</SPAN>
Respectfully, Supposn</SPAN>