The housing market didn't cause the recession. But the banks involved in the inflation of the housing market did....You said Dow plunged when Lehman went under. Guess why Lehman went under?

This is exactly why the Credit Unions are 100% fine. They did not go after the poor people that couldn't afford a loan with predatory/subprime lending.

You can blame the banks entirely for the issue, but if that was the case, then why (like you said) didn't this happen 20 years ago? Simple answer: The securities didn't exist until banks took on higher-risk mortgages due to the changing of laws involved in the CRA. The government incentivized the securities by backing them through Fannie Mae and Freddy Mac, which are government owned.

Who traded around mortgages as securities? Fannie Mae. They owned or guaranteed 50% of the entire mortgage market in 2008. When you have a government entity that is doing that much work to assure you....Then why not go after the extra buck from high-risk homebuyers?

So haven't you guys just conceded that the market is about as dumb as a blind mule?

No, we are saying a free market only works when it's free.

In a free market, there is risk and reward. You can't keep the reward without the risk. When the government steps in and tries to remove the risk, bad things happen... every time.

In this case Clinton just wanted to help out the poor. His heart was in the right place, he just did it by trying to bend the market to accommodate them. In the end what he did hurt them more then it helped.

Right now, the car company that should be the most upset, is Ford. They did more right then the others, and they are losing revenue because the car companies who were not so good in there decision making are allowed to continue. Government is messing with the free market in a way that, while trying to help, in the end will just be worse then before.

In the 30's, Government instilled laws that said some publicly traded companies had to cap there executive salaries. The problem then became how do you get the best people, when they can just go work somewhere else for more money? The answer was benefits. You gave them things the government did not consider a salary, like healthcare. This concept of people getting healthcare as a part of employment grew out of the government messing with the free market. It's one of the major events you can look at that put us where we are today with the healthcare industry.

Government needs to stay out of the free market.

So what about people like Bernie Madoff. I don't think the market not having enough freedom was the problem there.

You are completely washing the financial institutions hands of all this. You act as if they had no role whatsoever when in reality they shoulder the majority of the blame. I have never said that the government doesn't share some responsibility as well, but many of the posters in this thread would blame the government for the sky being blue. I don't find any of you credible on this point because you blame the government for everything.

What did Madoff run off with, 50 billion? While that’s crazy, and I have no problem with regulation being in place to try and prevent that sort of thing, it had virtually no impact on our economy.

I guess the best way to put it, is the government can, and should regulate the market, just don’t try and manipulate it.

Those are very different things. Every time they try and manipulate it for whatever motives they have, very bad things happen.

And that might be the dumbest thing out of your mouth Akuma. We blame the government all the time, thus we must hate government, thus our complaints are meaningless. You’re smarter than that Akuma.

As I have said before, it is specious to blame the CRA-at least, blame it as a main catalyst for the crisis.

If you wish to implicate the government in the crisis, and I have no qualms with implicating the government, there are other actions that should be focused on in lieu of the CRA: the Federal Reserve's decision to keep interest rates astonishingly low for such a long period of time; the decision by the SEC in 2004 to change its leverage rules and allow the five largest investment banks (Merrill Lynch, Bear Stearns, Lehman Bros., Goldman Sachs, and Morgan Stanley) to increase their debt-to-capital ratio from 12 to 1 to as high as 50 to 1. I would also implicate the rating agencies which gave AAA status to some very questionable securities.

I agree, and that's what I mean.

They should stuck to the free market principle and let the banks collapse. When the price got low enough they would have bought each other out (since in the long term, their assets > their debts) and we would have a system about as stable as now - only without several trillion* dollars in bailout money having been paid out.

*I'm counting the extra money printed by the government. It may not be direct debt but it has the same effect.

I just came across this. He guys does a better job of explaining my views.

http://money.cnn.com/2009/04/01/news/international/breaking_views.breakingviews/index.htm?postversion=2009040110

He does not blame the CRA, but he does hold Government manipulation responsible for the bulk of our problems (and I agree with him).

"it is specious to blame the CRA-at least, blame it as a main catalyst for the crisis." Perhaps that was worded/constructed poorly, but I meant that it is specious to label the CRA as a main catalyst to the crisis. Is that what you agree with?