Adam Smith Institute

Missing Options:

Put bankers in jail,then asset strip the bankers personal balance sheets and remaining funds can come from the government to perform the bail out.

Just one more thing:

Anti-redlining laws needs to be abolished.

did not force lenders to lend to those who did not qualify, only to qualified buyers who were shut out by skin color previously. DEREGULATION let lenders make loans without standards, collect points&commissions&bonuses, sell the batch to some other group which resold them, and that group resold them and on and on and on till the small bad loan has been amplified a hundredfold. Unregulated free-market capitalism corrupts.

And "the risk this exposed them too" should be "exposed them to".

We humans tend to forget the basics - always.
First why did the (then) US govt pass the anti-rediining law which sounds non sense anyway. Why lend to someone who we know is unable to repay.
Now again US govt / economy and people are paying for its wrong doings 30 years ago.
Buying back assets in exchange of equity shares in these bankrupt companies means govt. holdings into private companies.
So where is capitalism going ? Is USA turning into USSA ?

Mr. Whynder - You don't know what you're talking about. Armondo Falcon of the Office of Federal Housing Enterprise Oversight testified before a Congressional hearing in 2004 that Fannie and Freddie posed a danger to the U.S. financial system. A *regulator* blew the whistle on Franklin Raines four years ago. And what happened? Click on the website link and see for yourself...

Nonsense. Anti-redlining laws forced lenders (under penalty of law) to adjust their 'qualification' standards to accept members of specific racial groups regardless of whether they would have met reasonable creditworthiness standards.

The CSPAN video of virtually the whole Congressional Black Caucus tearing apart the OFHEO regulators for attempting to get some control over egregious FNMA/FHMLC behavior is hysterical.

The sad thing is that it went on for so long, watched and commented upon by so many experts and politicians, facilitated by greedy financial executives and politicians from top to bottom, and no one did a thing to stop it. This was nothing more than another social program, instigated by the government, that ran amiss and no one knows nothing. And again, I ask myself a simple question. How could anyone buy anything, for millions upon millions of dollars, and then wake up one morning and not have a clue what was included? The key lesson learned here is beware of anyone who tells you that we need smart people to get in a room to fix a problem, because that usually means they're undoing some scam created by the very same smart people.

Poliical Correctness brought this whole affair around by lowering the standards for loans under pressure of legal action..

Obama one of the recipients in 3 years of thelargest donations from Fannie Mae and Freddie mac. I wonder why ?

Frank, mrkwong, and River - all too true; mrtwong - it would be hysterical if it wasn't so sickening.
I just cannot believe that so many Republicans didn't do even more to blow the lid on all of this and, especially now during this election, to let the public know exactly what caused this mess and who specifically is responsible. I know the elite media won't but the Republicans need to do more to inform the people. McCain better step up and speak directly to the American people about how this all went down and how the dems and Obama are up to their eyeballs in it. Obama might be ahead for now but I think it is up to McCain to lose this election if he doesn't step up and fight like he is capable of doing.
May God help us all.

How would this sites namesake Adam Smith view today’s financial crisis ? Lay blame for the crisis on one group or another ? Or look to see what we can learn. This crisis is now global. Look how interconnected and interdependent the worlds finances are. We have come a long way since the industrial revolution.
Sometimes if you are too close to the details nothing makes sense. We need to take a step back and see the bigger picture. I have been reading Michael Laitman’s news page which offers some insight and solutions :-
“So in the economic system, just as with any social system, interdependency is the name of the game. The problem is that the foundation of human behavior, driving all economic and social systems, is the ego, which always prefers the narrow personal interests of investors and stockholders over the common good of the public. The pursuit of wealth, honor and control at the expense of others is the top priority for company owners.”
http://www.kabtoday.com/epaper_eng/content/view/epaper/8061/(page)/1/(article)/8063

Pertaining to economic issues that really bother us, the news about bank failure is truly controversial. I was shocked to find out that the largest bank failure in U.S. history went down on Thursday, September 25, when Washington Mutual voluntarily filed for Chapter 11 bankruptcy protection. The Federal Deposit Insurance Corporation seized the struggling savings and loan’s assets and the company went into receivership. This could have been a catastrophic turn of events for America’s economy. "Consumer watchdogs" who hound payday cash advance lenders would slink off with their tails between their legs. J. P. Morgan Chase came in to buy them out at zero hour, staying the worst of the carnage, but the ominous warning signs remain. Will more banks fail? What would have happened if J. P. Morgan Chase hadn’t bought WaMu and the FDIC had had to pay customers back? That would have meant up to $100,000 per individual and $200,000 per joint account, as well as $250,000 for IRAs and so on. Many economists fear that such a bailout would have drained at least half of the FDIC’s reserves, which would certainly not bode well if more banks fail. Much of this has happened because too many banks have delved too greedily and too deep into the depths of the subprime home lending market. While some fear we'll go even deeper into the quagmire, others think the problem will fix itself. In times like these, payday loans can be a small, good thing for consumers in search of short-term relief that banks can't give.

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