What was the Resolution Trust Corp?

[kentuck]

And why was it created? Were conditions similar to today? And did the "government" spend as much bailing out Bear Stearns as they spent on the tax rebate to taxpayers? When they say the "government" is bailing out the financial institutions, we should read that as "taxpayers" are bailing out the banks.

[AngryAmish]

1. ahem

<http://en.wikipedia.org/wiki/Resolution_Trust_Corporation>

[underpants]

2. *

http://en.wikipedia.org/wiki/Resolution_Trust_Corporation

[AngryAmish]

3. Just call me Firsty McFirst

[northzax]

4. technically, of course

the Government spent almost nothing 'bailing out' Bear Stearns, it just assumed a bunch of really bad paper, which will cost money over time.

[JDPriestly]

5. They claim this is "cyclical," and are trying to keep their

fingers in the dike until November.

The S&L crisis that led to creation of the RTC and this sub-prime mortgage crisis shared some of the following characteristics: deregulation of certain financial transactions or institutions; manipulation of interest rates with Fed and banking collusion; fraud (yet to be investigated in this crisis) on the parts of the high and mighty and the small investors, buyers or savers.

What is happening now and yet to come: shifting of the losses onto the middle and low level players; massive sales of lots of U.S. real estate to ever larger banking institutions many of which are controlled in fact by foreign nationals. In other words, this is a scheme to allow for the purchase of the United States by a very few extremely rich people, many of whom are shareholders in large financial institutions and an unknown number of whom are not American at all. This is how we become feudal serfs folks.

We have to get a strong Democrat into the White House.

The squabbling between Hillary and Obama has shown they are not ready for the White House. Draft John Edwards. He is the only candidate who is not beholden to the corporate interests that created this mess. He can be drafted, I feel certain. He studied mill management, the only one of the candidates with the slightest real understanding of how business works. There is still time. We need to save our country.

[nels25]

7. JD can you please help me understand what is going on

I took a basic econ class in college 15 years ago, but I have probably forgot most of it.

I do not completely understand what is going on and what it could mean, only that I have a sense that this is very bad or could be and no matter what the party (although I believe that the GOP would only make it worse, since I have the sense that they caused a large part of this to begin with) is in power fixing this mess will be (pardon my lingo) a bitch.

Look I really would appreciate some simple explanation of this mess and where it could lead.

Thank you.:dunce:
:hi:

[JDPriestly]

8. No one really knows what is going on for sure yet.

I never took a formal economics course, so you are, to some extent way ahead of me. I read a number of books on the 1929 crash many years ago. I'm not sure what you want to know, but here is how I see things.

The 1929 crash resulted from unregulated and sometimes even fraudulent practices in financial transactions, especially in the purchase, sale and marketing of stocks and also, unchecked development of Ponzi schemes.

After the 1929 crash, economists, the Roosevelt administration and Americans in general decided to regulate the sale of stock in public corporations, banks, and other aspects of business. For many, may years, our economy flourished under a system of regulation which I associate with the name of Galbraith that attempted at least to insure that investors could obtain honest information about the assets and debts and value of companies, and that banks would maintain certain fiduciary and financial standards in handling other people's money as well as their own.

Business did not like that. And the bigger businesses have become, the less they have liked it. Gradually, the conservative economic philosophy of Milton Friedman and the Hayek school of economics came to dominate the thought of scholars, conservative and even fairly liberal politicians. Beginning with the Reagan administration and to some extent during the Carter administration, the mantra of governing less is governing better became popular. The idea of free markets meaning markets with minimal regulation began to be viewed as the ideal.

Many areas of business have been deregulated since the Reagan administration. Changes were made regarding the regulations for S&Ls, many of which were small, local financial institutions that had for many years specialized in serving the needs of communities they understood and of which they were a part, especially with regard to providing mortgages. To stay competitive for the money of the local population they served during the period of high interest rates of the Reagan era, the S&Ls needed to offer interest rates that were high generate enough revenue to cover the interest that they had to pay to keep solvent.

As with the current sub-prime mortgage crisis, the S&Ls began to make loans on properties that were overvalued. S&L managers were overly optimistic about the kinds of projects that would be profitable in the communities they served. In addition, some S&L managers actually committed fraud such as selling properties to buyers who weren't really buying anything in order to be able to issue a new loan on the property at a higher valuation. The idea was to create the appearance that the S&L had good assets to back its debts. That was false. Anyway, due to a number of these factors, S&Ls began to fail or appeared to be approaching failure. My understanding is that the Resolution Trust Corporation was created as a vehicle for selling bundles of properties owned by failing S&Ls to investors with enough money and assets to qualify to buy the bundled properties.

The S&L crisis decreased the number of lending and saving institutions and promoted the emergence of mega-banks and consolidation in the banking industry. To "save" the economy, large amounts of real estate and mortgages were transferred from failing relatively small, local S&Ls to huge lending institutions and very, very wealthy buyers.

We are now seeing a very similar process which will end with mortgages and properties being sold in bundles to the mega-investment companies. The current crisis involves financial institutions all over the world. I suspect that one major result will be that foreign investors in the megabanks such as Dubai with Citibank will end up owning many of the mortgages and foreclosed properties in the U.S. So, we have moved from local S&Ls providing mortgages to their friends and neighbors between the 1930s and the 1980s and now, lenders in Holland and Dubai owning the banks that hold the mortgages on our homes and farms and commercial buildings. Who needs terrorists. This is really, really evil in my view.

[nels25]

9. Thank you very much for your explanation

makes sense to me. If foreign banks own much of our assets, would that not generate over time a backlash of some sort??

I mean would it not meant that access to capital/credit would diminish greatly since why would someone care in Dubai if a couple in Wisconsin was trying to obtain a mortgage?

Would they not have their numerical formula (which I understand is how it is done to a degree today) simply decide it for them?

Good number=mortgage, bad number=no mortgage, and since I am Dubai who cares?

Anyway it is sliced it is bad for this nation as whole.

DAMM THE GOP!!!:mad:

[slackmaster]

6. Taxpayers are bailing out banks, AND bailing out the depositors

And the banks' shareholders.

And the banks' middle- and working-class employees.

And the owners of the property that the banks occupy (often leased).