Corporations exist to make money for their owners. They are bound by the law. That's it. Not maximizing their profit means they are doing a disservice to their owners.
I'm glad you find it ok for the Treasury to order BoA to buy Countrywide then turn around and sue BoA for all the things Countrywide did (before they bought them). Nah, you have no agenda here. Just looking out for the little guy
The rape analogy is so stupid I feel it's just an easy moral exit strategy for people who have no rational response to what's in the OP. Corporations exist to make money for their owners. They are bound by the law. That's it. Not maximizing their profit means they are doing a disservice to their owners.
It is the government's responsibility to bring about sensible laws for everyone, not crap that'll keep politicians in office. This is exactly what happened with those in power. They passed stupid laws that skewed the supply and demand of the housing market and acted surprised when havoc ensued, only to blame bankers (but not themselves or those trying to buy mansions on a janitor's salary).
I'm glad you find it ok for the Treasury to order BoA to buy Countrywide then turn around and sue BoA for all the things Countrywide did (before they bought them). Nah, you have no agenda here. Just looking out for the little guy
They 'maximized' their profit in a way that led them to the brink of bankruptcy. Doesn't sound like maximizing profit to me. The banks are responsible for their own poor choices.
What laws are you talking about? Please be specific.
Nobody made BoA sign that contract.
The other narrative is that government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to distort the housing credit system-- underlies the current crisis.
That's old Milton Friedman BS. SCOTUS and corporatists themselves just told us corporations are people who have morals and religions. So they should be held them to the same standards as the people who own them. Simply saying they are just maximizing profit within the legal framework that they themselves paid for with lobbying and PACs is no longer an excuse.
The algorithm was still being developed. There were critical mistakes but those who should've known either did nothing or said nothing.
As far as laws are concerned, those that give out tax breaks, exemptions, and all sorts of other stimulus to help those who should be renting into homes. Again, This problem is institutional. As I said before, it goes to the heart of what it is to be American. The deregulation of the 1980s paled in comparison to what Bill Clinton did in the 1990s to put americans into homes.
http://spectator.org/articles/42211/true-origins-financial-crisis
There needs to be a fundamental, down-to-earth rethink of the American dream. Not everybody needs a damn home. It's an anachronistic belief that's centuries too old.
http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/
Look at that graph and see how it is an inversion of the weakest and strongest nations in the OECD.
Finally to respond to your final point, the Treasury really did force BoA's hand in the marriage with Countrywide. In fact, during the crisis there were a lot of shotgun marriages facilitated by the Treasury and New York Feds in order to fix the mess made by the American people.
What law existed on the books in the run-up to 2008 that allowed:
1. Robo-signing of mortgage docs?
2. No-doc loans? i.e. no employment, credit or VOD due diligence?
3. Interest-only loans for anyone who would take it?
4. Spreading toxic CDO's without verifying senior tranches as high-quality?
5. Ignoring Fannie underwriting standards generally?
What statue said this was ok? Did HUD ever explicitly say this was OK?
Government did indeed fail, just not in the way you think, apparently. They failed by letting these banking turds have a multi-year (some would say multi-decade) run of unrestricted freedom in their activities, without concluding that perhaps because banks and many other private businesses that are out for themselves (as they should be) don't care (or can't possibly do anything about) their impact on the public, and that these corp's unrestricted freedoms lacked public policy forethought. Because public policy forethought is supposed to be the duty of governments/regulators, especially in an industry as critical and far reaching as financial services!
The rape analogy is so stupid I feel it's just an easy moral exit strategy for people who have no rational response to what's in the OP. Corporations exist to make money for their owners. They are bound by the law. That's it. Not maximizing their profit means they are doing a disservice to their owners. It is the government's responsibility to bring about sensible laws for everyone, not crap that'll keep politicians in office. This is exactly what happened with those in power. They passed stupid laws that skewed the supply and demand of the housing market and acted surprised when havoc ensued, only to blame bankers (but not themselves or those trying to buy mansions on a janitor's salary).
I'm glad you find it ok for the Treasury to order BoA to buy Countrywide then turn around and sue BoA for all the things Countrywide did (before they bought them). Nah, you have no agenda here. Just looking out for the little guy
I believe you know this to be incorrect, yet you persist. Why?
The corporations that are allowed treatment as individual for certain 1st amendment rights are closely held corporations.
No corporation mentioned here is closely held, thus they are not allowed treatment as individuals.
Your ranting on this point is entirely irrelevant.
Fern
Entities created solely for maximizing shareholder profits do not have religious rights. So obviously you are mistaken or out of sync with the times somewhere. I will go with the SCOTUS judgement until it's overturned, that corporations are not just profit maximizing entities, but conduits for morals and beliefs of their owners. So just as people are to blame when they do something immoral to maximize personal profit, corporations are to blame when they do something immoral to maximize their personal profit.
Justice Alito's Hobby Lobby holding applies only to 'closely held' corporations,
Honest question(s) for you or others in the banking industry:
Did the fed regulator relax lending standards to permit no doc loans etc?
Did Fanny/Freddy guarantee those loans thus removing risk from banks?
Or did the advent of CDO's/MBS's enable the boom of such mortgage loans?
TIA
Fern
+1Corporations are people, my friend. If banks are doing something immoral to make money, they should be held to same standard as people who are doing something immoral to make money, not excused from responsibility by shifting the blame to the government. So I am glad the government sued them, and I am glad the government took billions of dollars from them and put those dollars into the treasury.
Greenspan, Oct. 23, 2008, during Congressional hearings on the housing/financial collapse.Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief.
Again, this only applies to closely held corporations and none of the corporations mentioned here are closely held.
http://www.huffingtonpost.com/terry-connelly/the-hobby-lobby-ruling-ho_b_5549597.html
Fern
The American Spectator is a right wing news commentary magazine. It is not a reputable source of objective analysis on the causes of the financial crisis.
Of particular note is its attempt to implicate the CRA and the GSEs as underlying causes here. In particular, the CRA has been the subject of extensive analysis as to this possible role. To this date the vast majority of all objective analysis points to no.
Biggest reasons are:
1. The CRA had been around for decades without such a thing happening.
2. Most CRA loans weren't subprime and weren't packaged in such securities.
3. The default rate on CRA loans was not higher than average.
While I would agree that not everyone needs to own a home, that chart is not really an inversion of the weakest and strongest OECD nations.
I did a quick pull of GDP growth rate from OECD from 2007-2013 and then compared it to the % of home ownership from your chart. The corresponding ratio of GDP growth to home ownership is really all over the place. True the 3 with the highest ownership (Spain, Ireland, Greece) have all fared poorly, but high ownership places such as Mexico, Canada, and the US have average growth rates since 2007 that have outperformed the low ownership countries, Germany included.
I would say that it would be quite difficult to draw strong conclusions from that data if economic growth is your factor.
They really didn't. Nothing forced BoA to sign that contract. They found out later that terms were not to their liking and were unable to back out. Nobody made them agree to such terms.
It is disingenuous of you to dismiss a scholary article/magazine because of it's slant. I have never in my life met a politically neutral economist dismissing the piece because of how the paper leans is unfair. Therefore, your counterargument should suffer the same fate.
As far as the GSEs are concerned, the underlying changes in the 1990s did great damage, as mentioned in the article. Furthermore, government turned a blind eye to the packaging of contracts and the relevant algorithms because it complemented their home-ownership policy. This allowed banks to spread the risk and Uncle Sam cheered them on. All the regulatory bodies looked at these contracts and gave them a thumbs up.
Finally, as to your second point. Mexico is a 3rd world country and coming from a lower base. Canada's growth is 1-dimensional. Also, those two countries did not have an explicit home ownership policy. Finally, Germany's biggest market, the Eurozone, was roiling in deep recession during that time just as Germany was getting its groove back. So that specific time-frame is bias and, therefore, inadmissible.
Finally, as to your last point, I disagree. I remember back in Feb or March 2008 when that happened. Some people from the NY Fed came to talk to us. Seeing that BoA was amongst the healthiest and largest bank, and with Countrywide imploding, Feds and Treasury officials talked the people at BoA into doing their patriotic duties by staving off panic with a purchase of that company. But, at this stage, it was simply of whack-a-mole. When one issue was brought under control another popped up. Unfortunately for BoA, when the good people of the Bush Administration left Obama came in and blamed them for everything, which was unfair.
I've been in the private sector working in banking for a couple of years now. When the financial crisis hit I was finishing up grad school. What a difference a couple of years make. I now see that the cause of the financial crisis was not bankers but government. For decades they made it easy for people to buy homes they could not afford (buying a house is one of the main tenets of the American Dream). They also made it easy for regulators and bankers to facilitate this policy. Then when the crisis hit the banking community was made the scapegoat. Then, in order to save the financial system, government forced (yes, they actually told the companies) to merge or buy each other out. Of course, you could say no but then you'd have much bigger problems. One example of this was Bank of America buying Countrywide and, later, Merrill Lynch. It never made sense then but it was forced on them by the Treasury. Fast forward a couple of years later and another arm of the government, the DoJ, sues Bank of America for all the toxic and "questionable" loans Countrywide made. BoA had to settle. Where did that money go? The Treasury, of course. There are countless other examples related to the financial crisis. So, it's easy to blame bankers and use them as the fall guy but they did not create the financial crisis. People often ask why no bankers have gone to jail because of the financial crisis. This is your answer. Uncle Sam was 100% at fault.
A more recent, and pedestrian example, is the new type of cab companies trying to enter the taxi business. Why is it so tough? At least, in NYC, the barrier to entry is high because of government. They sell medallions that cost millions of dollars in order to get into the business. It's an artificial barrier that does not need to exist. But it exists and, hence, 2 families dominate this business. So the government is fighting startups in order to maintain a corrupt status quo that never should've existed in the first place. But when you look at the arguments, it's usually between the small fries against the startups while the government acts as judge, jury, and executioner (with a heavy bias, as previously mentioned).
Where would BofA be if the government didn't bail out the financial sector and the US went into a second Great Depression? Where would it be without implicit too big to fail government guarantee? Bankrupt, most likely. But you keep believing your Bush "good," Obama "unfair", BofA is the victim of government fairy tale.