"Keith Nuttle" wrote in message
...
thunder wrote:
On Fri, 20 Mar 2009 15:21:18 -0800, Calif Bill wrote:


It started a lot further back than Bush, or Clinton, or Bush 1.

Bush Basher that I am, I can't blame this on Bush. I believe the
government gets too much blame, *and* too much credit, for the economy.
The government might have developed the framework that allowed this to
happen, but they didn't cause it to happen. No one put a gun to the head
of Wall Street's Masters of the Universe and forced them to make
incredibly risky decisions. No one told Lehman Brothers they had to
leverage themselves 33 to 1. Greed and stupidity did that. This is a
free market, after all.

Except the Clinton administration in forcing banks to make loans to
unqualified individuals because it was everyone's right to own a home.

Clinton and Congress just elaborated on previous policies. Worst was
Clinton and Rubin and removing Glass-Steagall act of 1933. Allowed these
banks to become insurance companies, brokerage houses, etc. Set us up for a
real economic disaster as there was no checks and balances between the
different factions. Bank sells bad loans through their brokerage arm. The
loans are insured by their inhouse insurance company. As long as the
conglomerate made immense profits on the loan, who cares if none of what
they sold had any value? Unfortunately all that profit from the excess cost
to insure a bad loan, and the selling of the bad loan all went back in the
same pot. Now the loans tank, and the insurance company has no money to pay
the loss, as they have invested it with the same company brokerage house,
and paid a huge premium to the brokerage arm making all look like they made
lots of money. But the underlying securities that the insurance company
bought were overvalued by the brokerage arm. No checks and balances and
nothing to write out the loss check against.