The Monster That Ate Wall Street

this article is great, but leaves me with one very large question. the article state that "federal law" required JPMorgan to keep "huge amounts of capital in reserve in case any of them went bad". so, did our government make some kind of actual ruling that allowed JPMorgan to substitute , on its books, the CDS's for the cash? and if so, when? The article never says but implies yes. If so, once again we can all point the direct finger at Washington DC for this mess, not a bunch of partiers who invented CDS's back in 1994. When will we clearly expose the political, governmental mistakes that were made that allowed this all to happen?

Cheryl

n a few weeks we will make a choice that will decide our future.
I follow an economist named Bob Proctor. He has called the top and bottom of every market crash since the 70s correctly.
Also, he perfectly predicted the current real estate market meltdown and the picture he paints about what will happen in the next couple years
is terrifying.He thinks it will be worse then the great depression.
The banks in the U.S. are going under one after the other. Countrywide the largest morgage bank in the world,Bear Stearns, Lehman Brothers and Merrill Lynch which are 3 out of the top 5 wall street firms. Also, Fanny and Freddy Mae which hold 50 percent of the home loans in the United States.
The government took them over because they are essentially bankrupt.If they didn't the entire financially system would virtually shut down, the stock market would crash and we would suffer beyond what any of us have seen before.

McCain just like Bush " doesn't understand the economy".
That not just my opinion its his own words. Not only does he not understand how to fix it but he does not understand exactly what is broken.
It is no surprise that he doesn't. The people that make up these securities use complex mathematical models very few people understand.
Bush and McCain both can take the credit for this mess since they helped deregulate the laws that were protecting us.

Bush's economic advisor Phil Graham wrote the deregulation bill that allowed banks to take huge risks with all of our future.
Now, Phil Graham is the head of McCain's economic policy.He is also McCain's choice for the next secretary of the treasury.
No one in this country can afford for that to happen. The last time Bush met with his economic advisors was in March. He either didn't care or didn't realize that anything was wrong. Phil Graham had the guts to say that we are in a mental recession after he helped create the worst economy meltdown in our lifetime.
It will take the best and brightest minds in the world to get us out of this nightmare. As bad as Bush has done, McCain would be
even more destructive because things are in much worse shape. The next president will not inherit a surplus like Bush did but a tanking economy and a 11,600,000,000,000 (trillion) dollars deficit. Most of it Bush created and it will take decades to pay it back.
If you do what you have always done then you will get what you have always got.
When it comes to policy Bush and McCain are the same 90 percent of the time.
So why are the polls even close then ?





The chairman of McCains campaign recently said that people don't vote on issues they vote on a personality composite. Which means he is trying to sell you personality instead of results.




He believes people will vote against their own interests.

Hold them accountable NOW!
Elect Obama Biden 2008




Check out this video of sarah palins interview it will blow you away


http://www.youtube.com/watch?v=r36Xc0GG4iQ

Every politician should read this article before voting on the bailout. They should let the FBI investigate, along with the IRS to see what they find out about what actually took place in those over 100 banks that they are investigating. They shouldn't let the Treasury Department hamstring the new president.. So they should turn everything that they find out over to the GAO from the information of the FBI and IRS over to our new president-elect. A quick bailout would only hamstring our candidates running for the job. Let them talk about what they would do to solve the problem. Such as TAXING THE HEDGE FUND DEALERS, particularly the ones headquartered offshore. The federal government desperately needs the income. Second--reinstate the GLASS-STEAGALL ACT, separating the commercial banks from the investment banks. There's not enough money to bail out the commercial banks and the investment banks which should be considered part of the Wall Street gang which has no guarantees. the market goes up. The market goes down. It's your gamble. If the problem has become as serious as the Wall Street gang are claiming, then you would wonder why they would wait and let the state of New York be the first to implement regulations starting in January. At that rate, we'd never get anything done and at that point, we would become a laughing stock to the rest of the world.
Yours truly, Disgusted Middleclass Taxpayer, LaVern Isely

The root is the housing bubble which had to bust. This bubble was feed by banks who were making huge profits and by executives who were making huge compensations based on their success in exploiting the nonstop ballooning of prices. They saw no end to rising prices. The problem of over priced houses has not gone it has been complicated by banks sitting on these prices because anticipation of their bailout funds allowing them to

A man of great wisdom:
http://www.atlah.org/broadcast/manningreport.html

What is 700 Billion divided by 305,309,711 [ the current U.S. population] ?

Both parties and the Financial Industry are Guilty as Deregulation of the Financial Industries, Fannie Mae's qualifying of Unqualified Loans, and Wall streets creation and selling of "Credit Default Swaps" and ??? Collateral Debt Obligations (CDO) equally threaten to Ruin the world economy. BUY the actual MORTGAGES and not these Wall Street paper ???Black Holes???.

Phil Graham, President Bush, VP Cheney and their Republican Allies, including McCain (Mr. Deregulation), gutted the Glass-Seagal Act in favor of the Gramm-Leach-Bliley Act, which was written by the Wall Street lobbyists. It allowed commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Seagal). The purpose of Glass-Seagal was to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

These Investment banks then supported massive building of McMansions and then sell of them to unqualified buyers. Luring families into Million dollar homes for a couple thousand a month with Adjustable Rate mortgages. When these mortgages then went to 6~10k a month the banks would not refinance them so people had to lose these homes.

Shortly after George W. Bush was elected president, Congress was trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: COMMODITY FUTURES MODERNIZATION ACT. The essence of the act was the deregulation of DERIVATIVES TRADING (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). This act enabled AIG to get into the riskiest of all CREDIT DEFAULT SWAP BUSINESS. Insuring potential default of all sorts of bonds, which is 70 Trillion dollars business!

If you make stealing legal, which this bill pretty much did, then who is to blame: the Thief or the one who gave him License to Steal with Impunity? Bush ??? Cheney ??? McCain (Mr. Deregulation) need to own up to their actions. The Truth will set you free.

BTY, McCain stuck the American Taxpayers with $125 Billion in Debt in 1989 as an original member of the Keating 5. See http://en.wikipedia.org/wiki/Keating_Five

Thank you. These credit default swaps need to be fully and completely exposed. All the talk of the bailout by DC and TV avoid this topic completely. I suspect they do because those on the end of the transaction that have to cough up money when a given debt fails are the ones that are really seeking bailout and everyone seems very shy about mentioning these instruments and naming names..

Wow, this is a clear presentation of a fundamental issue..
Push this story further Mattew Phelps and you deserve a Pulitzer!

> "We made it possible for banks to get their credit risk off their books and into nonfinancial institutions like insurance companies and pension funds," says Duhon, who now heads her own derivatives consulting business in London.

Yep. then comes the massive amount of risky loans.
In order to reduce risk, should the bank better evaluate the borrowers in the first place? But they ended up simply peeling the risk off their own books using some math, engineering equations (or tricks).

A Proposal to Resolve the Fannie Mae and Freddie Mac Financial Fiasco

In order to solve what has been termed the financial crisis, it is necessary to identify the cause of Fannie Mae???s and Freddie Mac???s catastrophic failure.

The cause of their downfall is the partisan democrat pressure put on those companies to grant sub prime mortgages to persons who would be unable to repay those loans.

The democrat senators and representatives, who mandated that financial background checks be considered unnecessary and unwarranted, facilitated that irresponsible granting of mortgages to those unable to repay. The motive of the democrat members of Congress was strictly and blatantly partisan - to buy votes, and to maintain years of party support.

In 2005, John McCain co-authored a bill to investigate and regulate the faulty business practices of Fannie Mae and Freddie Mac, but that was opposed and defeated by the democrats in Congress.

On many occasions, President George W. Bush introduced proposals to regulate the mortgage lending companies, but those calls for regulation were opposed, obstructed, and defeated by democrats who were obsessed with the continuance of faulty lending practices.

In order to reform the financial sector, it is necessary that the sleazy politicians and top administration of those 2 mortgage companies who perpetrated fraudulent activity be publicly identified, investigated, and severely punished for their undermining the national economy.

It is only reasonable to expose the corrupt financial practices and their facilitators, and to remove them from any further activity, before any effort can be made to resurrect the American economy.
Otherwise, any attempt to do so will be useless, because the problems and perpetrators would still be present to frustrate and obstruct any meaningful remedial action.

Continued - A Proposal to Resolve the Fannie Mae and Freddie Mac Financial Fiasco

The first step toward economic recovery would be to isolate all sub prime mortgages from the assets of Fanny Mae and Freddie Mac, and to group the remaining viable ones into several stock options to be offered for sale to the public, and also as a bailout measure.

That would result in an immediate infusion of cash into the banking sector, thereby ensuring that credit could be granted to qualifying loan applicants.

Individuals or organizations who choose to buy those stock options should benefit additionally from any profits later realized by their investments.

Also, any profits resulting from the bailout option should be refunded to the INCOME TAX PAYERS only, since they would be the ones who would have financed the bailout.

Likewise, but separately, the various questionable sub prime mortgages should be bundled together into other stock options which would be structured to contain a mixture of both somewhat and less redeemable loans.

Those sub prime mortgage packages should be offered first to democrats, especially wealthy ones, who might be attracted to them by their being valued at a price of 80 cents on the dollar, based on the face value of the mortgages.
.
That would afford them the option to support what democrats viewed to be a noble cause (home ownership for the unemployed), and besides, it might enable the stock option buyers to profit by 20 percent if all of the sub prime mortgages would be somehow repaid by the homeowners.

Thus democrats, especially the likes of George Soros, Barack Obama, Ted Kennedy, Chris Dodd, Nancy Pelosi, Harry Reid, and Charlie Schumer (who supported the granting of sub prime mortgages irrespective of demonstrated ability to repay) would be able to ???put their money where their mouths are???!

Lastly, there should be a guarantee that no further sub prime mortgages be granted.
Home ownership is a GOAL for many financially responsible Americans - it is not a government sponsored RIGHT for all persons living legally and illegally in the US!

Oh yeah, you've all read Kathleen Parker's article in the uber conservative National Review calling for Palin to step down for being a total embarassment to the party right? http://article.nationalreview.com/?q=MDZiMDhjYTU1NmI5Y2MwZjg2MWNiMWMyYTUxZDkwNTE=
All you guys had to do was elect Ron Paul and none of this would be happening. Instead you get the bumbling failed soldier who graduated fifth from the bottom of his class of 299 in the Naval Academy and Caribou Barbie who is TERRIFIED of Katy Couric. Let me repeat that. TERRIFIED OF KATY COURIC.

It is a good thing that the FBI is investigating the current financial crisis. Perhaps they should consider starting with Barney Frank. For an interesting article purporting to detail Barney Franks long history with Fannie Mae, See http://www.businessandmedia.org/printer/2008/20080924145932.aspx

How did it happen????
Go here:
www.youtube.com/user/TheMouthPeace
Play the following videos:

"Burning Down The House: What Caused Our Economic Crisis? V2 "

and

"Covering Your Fannie, Who Really Caused Our Economic Crisis?"

These videos speak to for themselves.

The democrates are guilty in starting this sub-prime mortgage mess.


WHY DOESN'T NEWSWEEK REPORT THIS?????????????????????


McCain tried to stop it and was blocked by the Democrats.


TBH

How can the average citizen understand all this financial stuff? And why should the taxpayers bail out Wall Street? From my limited grasp of this situation, it seems as if the buying up of the bad loans from the banks by the government is not such a bad idea if it indeed will free up the credit markets.

But my provincial brain can't understand why the banks should not pay back the government for the differential between the $700B and what the government gets for selling the asets it bought up in a better economic environment. Also, the interest on the $700B should also be recovered.

I would suggest that the government should require pay back from the companies from the time they recover to 30 years out, a mortgage on Wall Street if you will. There would be a special tax of 3% on profits for the 30 years. Even if this will not recoup the entire differential plus interest on the entiren $700B, it will recoup a significant portion and change the spendthrift culture on Wall Street to bring it more in line with Main Street.