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sirfun
Michael Peterson status
Reged: 04/26/08
Posts: 1883
Loc: U.S.A.
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Re: (damn)
11/14/10 06:48 PM
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copied and pasted from a deleted thread on a "no politics" forum
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What happened in 2008 can be traced back to the Depression...
1933: After the Crash of 1929, Congress investigates and the result is the passage of the Glass-Steagal Act, of which the most important provisions prohibited bank holding companies from owning other financial companies, and forced the separation of Wall Street investment banks and depository banks.
1999: A Republican Congress passes and a Democratic President (Clinton) signs into law "the Banking Modernization Act", REVERSING the provisions of the 1933 Glass-Steagal Act that had prevented a repeat of 1929... for 66 years....
1999 - 2008: As a result of banking deregulation, banks and mortgage institutions create mortgage vehicles and in collusion with credit scoring agencies lower lending standards. This allows them to greatly accelerate the mortgage origination business, and reap huge profits, preying on consumers "American Dreams", even though those individuals would have most likely not qualified for those homes had lending standards not been lowered.
2008 - As a result of toxic loans being repackaged and resold on Wall Street, confidence in those securities plummets and large investment banks are at risk due to their over leveraged condition... Lehman fails... As a result:
* Banks pull HALF of all available consumer credit lines...
* Lending grinds to a near halt and small business begin to fail
* 8 Million people are laid off as a result of the economic slowdown.
The real irony is that had Glass-Steagal been left in place.. most likely we would not have had the 2008 crash... and even MORE ironic is that after Lehmans failure a bipartisan effort was made by Congress to RE-INSTATE Glass-Steagal... but they couldn't get it done..
And even more ironic... the recently passed "Financial Regulatory Reform Act"... AS PASSED... would not have prevented Lehmans failure... and WILL NOT prevent another round of 2008 failures...
There are demographic and economic forces in play here that are "once in a lifetime" in nature... and only just now are we getting the "rude awakening"...
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We the People of the United States, in Order to form a more perfect Union .. 
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