Book Reviews

Is Another Financial Crisis On the Way?

We didn't learn the lessons of the last crisis. Does that mean we're doomed to repeat it?

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Hidden in Plain Sight: What Really Caused the World's Worst Financial Crisis and Why It Could Happen Again, by Peter J. Wallison, Encounter Books, 356 pages, $27.99

Eight years after the nation's financial system began its rapid slide into calamity, we all know why. Greedy Wall Street operators, aided by the repeal of the 1933 Glass-Steagall Act and only feebly regulated by the Bush administration, ran wild in the pursuit of greater profits for the rich. Eventually many big banks failed and were bailed out by taxpayers. But in 2010, President Barack Obama and the Democratic Congress took bold action to create powerful new government regulatory machinery. Still, much more regulation is needed to forestall future damage.

This narrative of the economic debacle is heavily promoted in the mainstream media and by regulators. But in Hidden in Plain Sight, financial scholar Peter Wallison argues that the story is laughably false. Worse yet, he says, the true causes of the debacle have not been dealt with, and there is every reason to believe that the same thing can happen all over again.

Wallison, a co-director of financial policy studies at the American Enterprise Institute, is one of the nation's top historians and analysts of financial structure and regulation. During the early Reagan years he was general counsel of the Treasury Department, where he learned a lot about markets and regulation. Happily he was not a participant in any part of the 1997-2009 financial disaster that is the subject of this book. He was, however, a member of the largely misguided Financial Crisis Inquiry Commission of 2009-2010, and he dissented from that body's final report.

Wallison's story of the run-up to the 2007 collapse begins with the Democratic Congress of 1992 and the 1993 arrival of the Clinton administration. The same years saw the rise of onetime Clinton roommate and political operator James A. Johnson to the chairmanship of the Federal National Mortgage Association (Fannie Mae). Wallison pays little attention to Johnson's career, but Johnson worked energetically and successfully to prevent Congress from privatizing Fannie Mae after the Republicans took control in 1995. He mobilized support on the left by buying millions of mortgages that increasingly departed downward from Fannie's historic underwriting standards. This subprime mortgage purchase binge is central to Wallison's story.

Here's the quick version. In 1992 Congress set "affordable housing" goals for Fannie Mae and its savings-and-loan counterpart, Freddie Mac (together known as the Government-Sponsored Enterprises, or GSEs). That year a manageable 30 percent of Fannie's portfolio qualified as "affordable housing." In 1997 the Department of Housing and Urban Development (HUD), as authorized by Congress, increased the required fraction to 42 percent. In 2001, under President George W. Bush, HUD increased the goal to 50 percent. In 2008 it upped the goal to 56 percent.

To find enough "nontraditional mortgages" to meet these increasing requirements, Fannie and Freddie bought increasingly lower-quality mortgage paper. Mortgages with three percent down payments sufficed for a while, but by 2000 the two GSEs were buying mortgages with zero down payments, credit rating scores below 660, and debt-to-income ratios as high as 38 percent. By 2008, half of the nation's home mortgages-32 million of them-were subprime, and 76 percent of those were owned by the GSEs.

As the two GSEs defined substandard lending ever downward and marketed pools of such mortgage paper to Wall Street investors, financial firms came to adopt the same lax standards for their Private Mortgage Backed Securities (PMBS). Investors bought billions of dollars' worth of those privately issued securities, believing they were backed by quality collateral. Market players also believed that GSE issues were backed by implicit federal government guarantees.

"With all these new buyers entering the market because of the affordable housing goals, together with the loosened underwriting standards the goals produced, housing prices began to rise," Wallison writes. "By 2000, the developing bubble was already larger than any bubble in U.S. history, and it kept rising until 2007…when it finally topped out, and housing prices began to fall."

With housing prices falling, financial regulation came into play. Regulators required "mark to market" valuation of housing assets-that is, institutions had to value them at their current market price. But suddenly there was no rational market to take a price from. Frightened investors dumped housing paper. Financial credit regulators, who had previously considered GSE paper almost risk-free, started requiring banks to have more capital. But the financial firms that held or stood behind $2 trillion in PMBS could hardly float new stock issues when much of their assets were rapidly shrinking in value.

Wallison notes some other factors in the crash, but this is the heart of his story. Between 1995 and 2008, Wallison writes, the government and investors following federal incentives "spread Non-Traditional Mortgages throughout the financial system, degraded underwriting standards, built an enormous and unprecedented housing bubble, and ultimately precipitated a massive mortgage meltdown. The result was a financial crisis."

How Washington and the mainstream media responded to that financial crisis occupies a large portion of the book. Wallison shows that the response was founded on two large ideas. The first was the belief that without large capital inflows from the Treasury and the Fed, the whole "interconnected" financial system would have fallen apart and the world as we know it would have come to an end. The second was that lax financial regulation allowed this crisis to happen, and therefore the financial sector should be subject to more muscular controls.

Wallison's views on three issues are worth exploring in detail. A major argument on the left, recently advanced on behalf of Sen. Elizabeth Warren's proposed 2014 financial legislation, is that the 1999 "repeal" of the 1933 Glass-Steagall Act removed the restrictions that kept investment banks from using commercial bank deposits to speculate in an unregulated marketplace. Wallison authoritatively refutes this contention. He points out that while the 1999 act allowed affiliates of commercial banks to engage in investment banking (and other financial activities), the 1933 Glass-Steagall firewall protecting insured deposits against speculative investing is still in full effect.

The second issue is the March 2008 forced merger of the investment firm Bear Stearns with JP­MorganChase, greased by $29 billion in Fed-supplied capital. Wallison shows that there was never any need to bail out Bear Stearns in the first place. But he also argues that the Treasury and the Fed's refusal to bail out Lehman Brothers in September 2008, after giving the financial world the impression that the government would bail out "interconnected" firms of that size, "changed the perceptions and ultimately the actions of all major financial players," leaving them "weaker and less prepared to deal with the enormous financial panic that occurred when Lehman was allowed to fail." Wallison accuses Bush-era Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke of, essentially, bungling the management of events in that crucial year.

Finally, Wallison sharply attacks the "false narrative" of the financial crisis offered by activists, politicians, and regulators with a direct interest in sweeping new regulation. We would have done much better, he writes, "if the narrative about the financial crisis had properly located the problems in the reduction of mortgage underwriting standards brought on by the government's housing policies and implemented largely through the affordable housing goals." Continuing belief in this false narrative, evidenced by the Dodd-Frank Act, the Financial Crisis Inquiry Commission's myopic 2010 report, and proposed legislation in the most recent Congress, makes it likely that there will be another financial crisis in the future.

Wallison's book is well-informed, detailed, clear, and sharply focused -though readers unfamiliar with finance will find it thick going in some places. The author's independent point of view makes the book far more reliable than the self-protective accounts published by such actors as Paulson and his Obama-appointed successor, Timothy Geithner. Wallison makes it a point to consider alternative explanations for the crisis, and he convincingly presents the contrary evidence.

Perhaps most useful, Hidden in Plain Sight makes it clear that the next crisis will likely be caused by people peddling-or at least believing-a false narrative about the last one. This book would make a very good text for a business school course titled "Financial Crises: How They're Caused, How They're Made Worse, and How They Can Be Prevented."

Contributing Editor John McClaughry (john@ethanallen.org) is the now-retired founder of Vermont's free market Ethan Allen Institute.

NEXT: A Libertarian Theory of Property Rights

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  1. “By 2000, the developing bubble was already larger than any bubble in U.S. history, and it kept rising until 2007…when it finally topped out, and housing prices began to fall.”

    How do you expect to be accepted by implicating both teams? CLINTOOOOSH! doesn’t roll off the tongue.

    1. Oh yeah, one happy expat cheesehead here!

      1. As long as the light’s already lit, I’ll chime in with this:

        Still, much more regulation is needed to forestall future damage.

        OK, let’s start by auditing the Fed.

        1. Let’s start by discussing this “maintain stable inflation” goal. We can segue right into what the law of exponents does to 2% over 50 years’ time, and what any of this has to do with “stability”.

          1. Look at this chart of inflation, 1800-2005. Notice how steady it was except for the bumps around wars. Then, post WW I, prices did not subside to their previous levels, and it’s not a coincidence that both the income tax and Fed began in 1913, just before WW I. I wonder if we would have even entered WW I without the monetary backing of the income tax and Fed money manipulation.

            Statists are really good at finding problems which don’t exist and implementing solutions which don’t fix them.

            1. We would have entered into WWI though I agree we should have stayed out. The U-Boat offensive and German actions with Mexico would have pulled us in. Add to that the general pro-UK/France sympathies of the governing class and it was inevitable.

            2. We would have entered into WWI though I agree we should have stayed out. The U-Boat offensive and German actions with Mexico would have pulled us in. Add to that the general pro-UK/France sympathies of the governing class and it was inevitable.

            3. We would have entered into WWI though I agree we should have stayed out. The U-Boat offensive and German actions with Mexico would have pulled us in. Add to that the general pro-UK/France sympathies of the governing class and it was inevitable.

          2. worse, the mandate is actually for “stable prices”. that the Fed has mutated that clause to mean 2-3% annual inflation instead of 0% (or near-zero) inflation is one of their greatest crimes.

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  2. They’ll never admit any fault in any financial crisis.

    When anything bad happens, it’s always the market players’ fault, and the people and things beyond their control, due to their unforeseen behavior.

    When anything bad happens, it’s always because of their wise stewardship and direction.

      1. No, no, you were right the first time as long as the Irony Drive was fully engaged.

    1. Here’s an example from 85 years ago: http://www.cato.org/publicatio…..r-new-deal

      Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation?all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt’s advisers knew that Hoover had started the New Deal. One of them wrote, “When we all burst into Washington ? we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself.”

      Hoover’s big-spending, interventionist policies prolonged the Great Depression, and similar policies today could do similar damage. Dismantling the mythical presentation of Hoover as a “do-nothing” president is crucial if we wish to have a proper understanding of what did and did not work in the Great Depression so that we do not repeat Hoover’s mistakes today.

  3. sounds like a must-read.

  4. I tell you what, there’s plenty of real estate pros who managed to survive the last crash. They remember it very well, and now they are cashing in.

    Although I would like to see the price comparisons of existing structures vs new construction costs. They seemed to have just reached par recently.

    Ok enough real estate yapping. You mammals better watch out cuz I’m almost over this stomach bug.

    1. Bears can make money, bulls can make money, but pigs get slaughtered.

  5. Perhaps most useful, Hidden in Plain Sight makes it clear that the next crisis will likely be caused by people peddling-or at least believing-a false narrative about the last one

    Well, the 2008 crisis was caused by the people peddling the false narrative about the one before it.

    1. It’s false narratives all the way down!

      1. You know who else relied upon The People parroting a false narrative?

        1. The Village People’s record label?

        2. Crackers?

        3. Milli Vanilli?

        4. Lance Armstrong

          1. Sabrina Erdely?

  6. Market players also believed that GSE issues were backed by implicit federal government guarantees.

    This part of the story bothers me because it removes guilt from the ‘market’ players entirely. I mean, they were just duped in this narrative instead of just exploiting a windfall based on the circumstances. And, hey, when you’ve bought everyone off and know you aren’t going to be allowed to fail, why the hell not engage in shady shit?

    Screw all of them. They all worked together in harmony to create that mess.

    1. I think the people who talk about “implicit government guarantees” really mean “assumed the government was selling a solid product”, which is a lot more reasonable and likely true. The people at financial institutions who decide to e.g. buy MBSs don’t just guess at whether there’s a guarantee, but at least until 2008 they also wouldn’t (because who would) make their call based on a left-field hunch that the GSEs might be hustling them in order to dump worthless subprime loans they were forced to underwrite for political reasons.

    2. Market players also believed that GSE issues were backed by implicit federal government guarantees.

      Classic moral hazard stuff.

      And, if there were implicit federal guarantees (or at least a realistic chance of them), then the market players are pretty much obligated to take that into account, otherwise they are doing their clients a dis-service.

      “Here we have two options that offer similar returns. However, option A is safer because there is a good chance that the feds will step in of this market sector really crashes.” To not act on that second sentence is to commit financial malpractice.

      1. and the top 20 banks were certainly correct to do so. the reason Lehman caused a shitstorm was because everyone was shocked the Fed let it fail. everyone was using a leveraged, daisy chained strategy of mutually assured destruction – the Fed had to rescue all of them or none of them, and the Fed certainly wasn’t going to let the entire financial system collapse.

        we’re actually in worse shape now. but the same MAD strategy is in play with derivatives.

        1. So, I should forgive the banks and pretend they’re good guys because they followed incentives…even though they were aware (in my view, they WERE aware) of the consequences of what were doing? Sorry, but fuck that. You want me to cross the line from (rightly) pointing fingers at the government and top men whose planning failed to making excuses for the sleeze balls who gamed the system to their advantage. Not that they’re the only ones who are guilty, but they knew full fucking well what was going to happen.

          They did what they did because they know full well there aren’t consequences for them. They know they ultimately own the regulators, and that they can’t fail.

          I’d rather see a libertarian argument that calls for an actual free market instead of allowing corrupt fucks put their fingers on the scale.

          1. To clarify the last point, just blaming the government isn’t enough. The pragmatic argument libertarians often make on regulations is that the corporations and businesses often own the regulators, and you end up with a relatively useless cycle that never accomplishes the (nominal) goals of the regulations.

            Both sides are guilty in that scenario. I refuse to only complain about the government bogeyman.

    3. The real estate bubble could not have happened without 2 things . The first is a relaxations of loan standards, indeed a replacement by requirements, to make make essentially unsecured loans to individuals who were not credit worthy and 2) a certain market, a buyer of last resort for such loans. Once the federal government provided both of these, the first by Fed banking regulations and the second by Fannie and Freddie buying the crap loans, then everyone rushed to supply the houses to write loans on , and the loans to buy them . These loans got sold to the federal agencies for a sure fee or bundled , “insured” , sliced /diced , and sold to investors for even more money (although with some risk). It is a bit disingenuous to blame the market for supplying what the feds were both buying and mandating.

      1. “The real estate bubble could not have happened without 2 things . The first is a relaxations of loan standards, indeed a replacement by requirements, to make make essentially unsecured loans to individuals who were not credit worthy and 2) a certain market, a buyer of last resort for such loans. Once the federal government provided both of these, […]”

        Right here is one answer to the question: “How much can you distort a market until that market distortion causes great harm?”
        The RE market had been pushed to a run behind in the bottom of the 9th, with two strikes and two outs; swing and a miss. Hey, it was the fault of the market!!!!

  7. This is an excellent article that’s going to fall on deaf ears.

    1. At this point, it’s like gumption. If you already got it, you don’t need it explained. If you don’t get it, you never will and it would probably be futile to try.

      1. Krugman, paging Krugman…

  8. “Between 1995 and 2008, Wallison writes, the GOVERNMENT and investors following FEDERAL incentives”, I think the fault can be found in those two simple words that I’ve capitalized.

    Want to screw shit up? Get the gubmint involved. Works every time.

  9. I have seen numerous leftists go into fits of rage over Wallison. The standard leftist response to him is pretty well encapsulated by this NYT piece: http://www.nytimes.com/2011/12…..g-lie.html

    Basically, the argument is that nothing the GCEs did before about 2004 was bad. It was entirely the private banks that, in no way due to government intervention, started buying up risky mortgage backed securities, and that the GSEs only followed their lead in order to maintain their market share.

    I’ve yet to see anyone reconcile that narrative with the massive increase in GSE loans given to low income (and necessarily higher risk) borrowers in the 90s, thereby artificially inflating demand for loans, which normally would be determined by the probability of the loans being repaid. I believe the leftist claim is that the low income loans from the GSEs were mostly ‘prime,’ which seems irrelevant to me; risk is a continuous variable, and not all prime loans are equal, so it doesn’t mean they weren’t still inflating the value of loans and therefore driving down the cost of risk in the short run. Also don’t see how anyone can buy the “GSEs were on;y following the private sector” argument, as though GSEs have no impact on the price of securities they purchase. Someone needs to explain to these people what a positive feedback loop is.

    1. from the POV of a mortgage, all roads lead to Fanny and Freddie.

      quoting from the below piece by the same author of this book

      “‘Of the 19.2 million subprime and low quality loans that were on the books of government agencies in 2008, 12 million (about 62%) were held or guaranteed by Fannie and Freddie. No one who has grasped the significance of these numbers–and there is much more data in my dissent–could believe that Fannie and Freddie were “not a major factor.””

      The “market” for mortgages is basically designed around the GSEs…the ‘buyer of last resort’ which enables all of the risk-taking further down the chain. Everyone else – the originators, the regional banks, the investment banks that bought loans and packaged them into MBS to sell to larger banks to create greater liquidity…. everyone eventually relies on the fact that Fannie and Freddie were given a mandate to spend endlessly on whatever shit anyone threw at them.

      A friend worked for Bear in the 1990s, and he would go around the country and buy up loans to *trailer park operators*… read: an empty field with electricity/water hookups. Its a “real estate” investment with zero underlying asset value.

      If it were fully utilized,in theory it would throw of 10%+ yield. But what happens when you run out of rednecks to populate them?… Freddy doesn’t care. More, please. So they found more. And people took out more loans to buy more empty fields. Wash, rinse, repeat.

      1. from the POV of a mortgage, all roads lead to Fanny and Freddie.

        If I could hang one person for it:

        Barney Frank.

    2. Why are these wealthy “investors” allowed to make such complicated, and therefore, chaotic investment vehicles which necessarily allows cheating?

      Wouldn’t loans to “poor” people be safe if there wasn’t so much pressure to gain wealth by cutting wages through capital ownership leveraged positions?

      Why does poverty exist or need to exist?

      Why are corporate profits higher than ever?

  10. “the story is laughably false.”

    There’s nothing funny about a finger-pointing litany of lies that deceives people to embrace a more authoritarian state.

    1. I think we were going more for your “bitter” laughter, Cato.

  11. Social engineering in the free market does not work. That is why there has to be no private property.

  12. “Greedy Wall Street operators, aided by the repeal of the 1933 Glass-Steagall Act and only feebly regulated by the Bush administration, ran wild in the pursuit of greater profits for the rich”

    Ahh, yes. Because ‘the Rich’ want nothing more than to risk all their capital on loans to under-qualified home-buyers.

    Or was it “greedy banks”…. who greedily eschewed the (negative-real-return) “safety” of treasuries…to pile into mortgage-backed investments, completely of their own volition, and not because of the federally-engineered expansion of that asset class through subprime-loan mandates, and subsidy/incentive programs, and consequently reduced underwriting standards…?

    sigh.

    I just glanced over some old bookmarks i had of stories about the “financial crisis”, and one in particular which i’d noted “Gets it right”….which turns out to be by the same author of this book. shocker.

    Sadly, there’s a large percentage of the population that simply refuses to grasp the concept of “incentives”. Or that “Mandate and Subsidize” policies invariably produce skyrocketing prices and tons of middle-men sneaking in to milk the system for all they can. All they want to do is blame their chosen “bad actors” (EVUL PROFIT!!) and move on to replicate the next crisis ASAP. Because the political incentive to offer “free shit” will never die.

    1. It’s crass wholesale revisionist history, that is. Everyone ran wild in pursuit of greater profits. There were whole herds of people who thought they were rich now, and acted and spent accordingly, because “housing only goes up!”

      I remember a brief window when people actually began judging the character of renters. Anyone could get a loan. Anyone. So if you were renting, how bad a person, exactly, must that make you?

      It was sheer insanity. There are very few who have any legitimate claim to being above the fray.

      1. Only if one is doesn’t understand markets and free enterprise. If you were to offer to buy hula hoops for $50 each I guess you would be shocked when someone opened a hula hoop factory and started delivering said hoops to you.

        1. Look at him, using words like “markets” and “free enterprise” with a straight face.

          You’re precious. I’d like to pinch your adorable little cheeks.

  13. “In 2001, under President George W. Bush, HUD increased the goal to 50 percent. In 2008 it upped the goal to 56 percent.”

    These goals were already set by statute, Bush did not increase them.

  14. So I’ve looked up Peter J. Wallison on Wikipedia. There’s a line in the entry under his name:

    Economist Paul Krugman has also accused Wallison of deception,[12] criticizing him for ? among other things ? attacking Fannie and Freddie in a magazine article just a year before the subprime mortgage collapse for not doing a “better job of providing affordable home financing to a neglected portion of the mortgage market.”

    Reference 12 is a link to this Krugman piece:

    Fannie Freddie Forked Tongue

    In that piece, Krugman has a now-dead link to a piece co-written by Wallison, and quotes this (and only this!):

    There are many lenders aggressively competing to make the higher-amount loans, and the GSEs are not doing the job they should for low-income homebuyers.

    Fannie and Freddie should do a much better job of providing affordable home financing to a neglected portion of the mortgage market.

    then proceeds to call Republicans hypocrites.

    (to be continued)

    1. But I’ve searched for the full article, and that has this in it:

      So, one must ask: Why should the GSEs be allowed to underwrite mortgages of up to $625,500 for homes costing about $800,000? There are many lenders aggressively competing to make the higher-amount loans, and the GSEs are not doing the job they should for low-income homebuyers.

      Fannie and Freddie should do a much better job of providing affordable home financing to a neglected portion of the mortgage market. And this certainly doesn’t include someone applying for a $625,500 loan.

      So what Krugman did was he stripped two sentences out of their context: Wallison and his co-author were pointing out that by Congress raising GSEs limits of how much they can lend, they would subsidize the upper end of the mortgage market, and thus draw monies away from the lower-amount loans. Wallison and his co-author were not advocating for lowering the underwriting standards for lower-amount loans.

      1. The more I read of what Paul Krugman has done and said in the past ten years, the more I think he should be stripped of his Nobel prize. Of all the revered leftist academics, he is one who has truly gone of the deep end, and will apparently tell any lie to help the team. A shame, because he used to be worth reading, a long long time ago.

        Another thing: I’ve seen it claimed that Wallison’s numbers on the proportion of Freddy and Fanny underwritten loans that were subprime or low quality are erroneous. Not sure if Krugman mentions this one at all. I don’t the patience to investigate write now though.

        1. So why don’t you have the authority to do so if your opinion on the matter is so valid?

          Is it because its a giant liberal conspiracy to keep you from granting those Nobel Prizes as you “should be?”

      2. OK, so the links don’t work. Let’s try again

        Fannie Freddie Forked Tongue

        full article

  15. I have for YEARS listened to assorted dolts angrily demanding to kniw why “the government” hasn’t had “an investigation” into the crash. And of course the answer is that if “they” ask what who,caused the crash, somebody is likely to TELL THEM.

  16. I just want to say that I feel a lot more informed after reading this. I will read it again a few times to fully understand it. I was one of those people that thought the crisis was caused by the repeal of Glass Steagall, mind you I am a cook, not an economist.
    To process what I understand so far from the article more succinctly.
    “The government created a perverse demand that some actors in the financial industry took advantage of.”
    Just like the War on Drugs. I am going to call it a “Black Market Correction”.
    Again thank you, and I will have to read the article a few more times.
    10/10 will read again.

    1. I also want to give a shout out to the commenter’s. This one of the few boards where I actually learn something, from the commenter’s.

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  18. Of course peace is at stake, a peace which is no more than a vain word, moreover. Ask China, India, Brazil, Iran, etc., if the West still conveys any image of peace. As for democratic values, what we show serves more as a foil than a model? to the extent that the universal principle of democracy is relegated to the value of culturally relativized concepts and finishes by serving antidemocratic agendas of all ilks, in Europe and elsewhere. Yet it’s not the democratic principle that is the problem (quite the opposite is needed to reinvent ways to apply it, in partnership with the new emerging powers), but really the West’s inability to have known how to adapt its implementation to society’s new characteristics (the emergence of supranational political entities, the Internet which is transforming the social structure..)

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  21. This is spot on. RMBS, mostly subprime, are still undermining the economy. One spark that could re-ignite that tinderbox is the statute of limitations in foreclosure actions. Courts in a number of states, including Florida (one of the heavier foreclosure laden states), are set to decide whether or not to give teeth to the statute of limitations, essentially to nullify mortgages once it runs. This would knock the shaky foundation of subprime RMBS loose, causing a domino effect. An analysis of this potential risk can be found here: http://wadsofun.tumblr.com/pos…..e-actions.

    1. Right..Do you realize that the primary banks receive their resources directly from the Fed?

      That means this: The Fed prints the cash and gives it to its buddies banks for next to nothing..they then give it down the chain for a small mark up. At some point, that money gets to the poor people at much higher rates than the original banks.

      Why don’t the poor people get the money first and then the banks pay for permission to profit by lending it?

  22. I don’t see how this isn’t being caused by rich people

  23. Interesting theory. Pity it’s mostly wrong. Since 1893 the income tax and prohibitionist sumptuary legislation have driven every major crash and lengthy depression. Market investors hear the leper’s bell of the approaching looter, remove their money, and the liquidity crunch is simply the lonesome whistle of the coming train wreck. Look at the data Bradley Manning put on Wikileaks and you have a litany of US pressure to get EU governments to frogmarch the banking system into AML regulations like those that crippled the US economy in 1932, 1987 and 2008. On the bright side, it DID level the playing field in that there is hardly anywhere left to put money so that parasites do not swarm over it. Much as Adam Smith wrote: private industry does not bring national ruin, governments do. –libertariantranslator

  24. Yes, I think next crisis can really come in our country. I am businessman and for small business owners it’s extremely important to get help from the government and financial institutions. People who have small business literally help to boost the economy because they invest in it and create work places. It’s great when some people find money and invest it in their ideas and later it gives others an opportunity for earning cash. That’s why it’s important to develop programs intended to provide loans to small business owners. If government will not help us we had to check advance payday loans locations and it`s big risk because we can get into debt cycle. So, I hope that situation will change in nearly future and we will not have second crisis.

  25. Financial and economical situation is still quite unpredictable. For many people it is really difficult to plan their future according to their situation today. Many people feel themselves unprotected and can’t rely on financial assistance, so they try loans till payday Canada. Sometimes this can be considered as the last decision for emergency, however in all the other situations you should better avoid taking loans with such high interest rates. The other problem of today is the great student debt that is not covered by students and young adults, as they don’t have appropriate income with their jobs.

  26. My name is Kimberly. I’m here to testify about guaranteedhackers blank atm cards which can withdraw money from any atm machines around the world. I was very poor before and had no job. I saw so many testimony about how guaranteed hackers send them the ATM blank card and use it to collect money in any ATM miechine and become rich. I emailed them also and they sent me the blank card. I have use it to get 70000 dollars. withdraw the maximum of $5000 daily. they are giving out the card just to help the poor. Hack and take money directly from any ATM Machine Vault with the use of ATM Programmed Card which runs in automatic mode. email (guaranteedhackers@gmail.com) on how to get it. She will gives out the card to anybody. Visit http://guaranteedhackers.ml for more information

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