Republican Ideology Has Broken the Economy

[marmar]

from HuffPost:



Hale "Bonddad" Stewart
Republican Ideology Has Broken the Economy
Posted February 27, 2008 | 11:30 AM (EST)



There will always be a debate about the need and extent of regulation. This debate is healthy; it should prevent one side from pushing too far against the other.

However, as the financial system continues to experience a high amount of turmoil, it is clear that deregulation has exceeded the "too much of a burden on business" argument. Instead, too little regulation has broken the economy.

From the NY Times:

Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

That's right -- too much regulation will get in the way. We know how to manage risks now, so we don't need to stinkin rules.

In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of "best practices" and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.

Wow -- a code of practices. That sounds like a good idea, doesn't it? Nevermind.....

And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.

John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.

"He never gave us a good reason, but he didn't want to do it," Mr. Gnaizda said last week. "He just wasn't interested."

Lenders were lying to people. LYING. They were MISREPRESENTING THINGS to people. But, yawn, so what.

The end result?

An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry's excesses. Both the Fed and the Bush administration placed a higher priority on promoting "financial innovation" and what President Bush has called the "ownership society."

But wait -- there's more:

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
....

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Let's not even worry about predatory lending. That's not going to happen. .......(more)

The complete piece is at: http://www.huffingtonpost.com/hale-stewart/republican-ideology-has-b_b_88709.html

[cliss]

1. Thanks marmar

Because of the deregulation, we are now known as the scamsters of the world. Somewhere in northern Norway, an entire village is cursing the name of the United States. It seems that they invested in a big portfolio of subprime mortgages. The stuff was rated AAA, so they invested millions.
The portfolio is now worthless. The municipality appealed to the government in Oslo if they could reimburse them. Oslo said, "Sorry charlie you lose"
This story has been repeated all over the world, as gullible investors bought our Toxic Waste radioactive crap.
Believe me, they won't be doing that any time soon.

So ~ what do they have planned for an encore?

[opihimoimoi]

2. Soon there will be a political move to save the homeowners with public money

[Richard Steele]

5. Nope. There will be a move to save the CRIMINAL lenders with our public money.

In a hard-won concession, the actual victims of their schemes
will be permitted to go fuck themselves.

[Kitty Herder]

6. Unfortunately, I think you're right.

Socialism for the wealthy, dog-eat-dog capitalism for poor. That's the current M.O. in this country.

[vssmith]

8. Milton Friedman haunts us from the grave

[B Calm]

3. Well then lets hold them responsible for what they done to our economy!

We have heard right-wingers say things like, if you raise the minimum wage it will ruin the economy. We have raised the minimum wage several times and it hasn’t hurt the economy. If you have better schools it will hurt the economy. They talk about the E.P.A. and say if you have environmental protection, it’ll hurt the economy. If we have accessible health care, it’ll hurt the economy. That’s all you ever hear from these right-wingers is how we are going to hurt the economy.

The thing is, we don’t raise our kids in a economy. We all live in a society, get it? Who are the republicans to say to us anything on how to grow an economy? Who do you think knows more about growing a strong economy, promoting growth and raising income, Bill Clinton/Robert Rubin or George Bush/Paul O’Neal? Republicans don’t know jack about creating a good economy and they have it proven over and over again. They have been shamed and they are trying everything in the book to shirk personal responsibility.

The republicans also claim to be the party of personal responsibility. Well then lets hold them responsible for what they done to our economy! Lets hold them responsible for this monstrous budget deficit that’s dragging us down. Lets hold them responsible for the millions of jobs lost. Lets hold them responsible for the medicare cover up costs. The truth is, Republicans squeal like a bunch of pigs when you want them to accept personal responsibility.

[Kitty Herder]

7. Here, Here! nt

[Tandalayo_Scheisskopf]

4. Lord, gimme a candidate...

That has the guts to come right out and say stuff like this, in clear and exclamatory terms. No pussyfooting around the issue.

To fix a problem, the first thing you have to do is admit there is a problem. Then meet it head-on and with knees, elbows and headbutts.

[Lydia Leftcoast]

9. The breaking of the U.S. economy started in the early 1980s

when Reagan first began preaching the lie that the U.S. could have low taxes for the wealthy, outrageous military expenditures, no social safety net, and prosperity for everyone, all at the same time.

[B Calm]

10. Trickle down economics. . .

[stubtoe]

11. I predict a swing back towards more regulation.

So much for letting the all-powerful Market sort itself out. I guess Repubs needed to learn this lesson the hard way.