Then that bank goes out of business due to being poorly run, and all the shareholders lose there money for letting it happen.

I don't see where the problem is.

But wasn't the point of your reply to akuma587 that banks did their job? That's what I was countering.

My point is banks did what they did to try and fulfill there mission statement. To make money within the confines of the law for there shareholders.

Wether they did a good job of that or not is irrelevant. If the government makes it more profitable for a bank to give a loan to someone who has no business having one, it's the responsibility of the bank to give it. They answer to the shareholders, not the person who comes to them to get a loan.

For example, at the banks shareholders meeting this conversion would be ok:

Of the 40% of loans we turned down, 3% of them the government incentivized, and while we turned down 20 million in profits this year, we feel it's better for our long term profitability.

This conversion, would not be ok:

Of the 40% of loans we turned down, 3% of them the government incentivized, and while we turned down 20 million in profits this year, we feel it was the right thing to do, because they really shouldn't buy a house they can't afford.

Not only would that second conversation get you fired, at the time it was probably against the law somehow.

TheRealMafoo: Before you were saying that the government caused the problem by interfering in the housing market:

People keep forgetting that if government had stayed out of the housing market in 1992, we would not be here today.

Now you're saying it's lack of government regulation over the banks that caused the problem. I'm not really understanding your overall point here.

In my perfect world, Government would be involved in your life, and play there role. I am not for no government. I am just for government that does what they are supposed to do.

What the government did in the housing market, was to manipulate the free market in the attempt to raise home ownership from 60%, to 66%. Clinton felt the best way to generate wealth, was home ownership, and he put legislation in to try and increase this number. 

This is not what government should do. There is a good reason why banks won't loan 40% of the country money to buy a house. Trying to manipulate the number because you think it's a good thing to do, is not what a government should be doing. Clinton said this is what he was doing in an interview, and now says in hind sight that it was a bad idea.

What government should be doing, is protecting. An extreme example, would be if a bank sent someone to break your legs if you failed to pay, the government should protect you from such an act. This is the role of government.

Protection, not providing. Some people can't see a difference, I see it as clear as day.

But that isn't what caused the problems with the banks mafoo, it was the banks own reckless behavior that cause their problems. You're trying to blame the government for the stupidity of the banks. Clinton wasn't even in office when the banks started doing things like handing out Ninja loans.

I am not blaming Clinton, I am blaming government. Clinton got the ball rolling, but every congress over the last 10 years is to blame as much. With more blame over the last 5-6 years, because they were warned this was going to happen.

And there was no "Ninja loans". Every loan was legal, and incentivized by the government.

Banks didn't fail because they gave bad loans. They failed because they were told that these loans would be guaranteed by the government, and giving them carried no risk. The government then could not make good on that promise, so expected revenue didn't come in.

The solution all along was simple. Stop give banks breaks for sub prime lending, and they would stop giving out loans that were bad investments. The problem is, doing so would be viewed as not being sympathetic to the poor.

In the long run, it didn't seem to do the poor any favors, did it?

Again you're blaming government for the stupidity of the bank during the last few years banks were giving loans to people with no income and no collateral, no jobs whatsoever, this was their own stupdity in action.  You don't give someone a 300K loan when they have no income or collateral or anythign to cover the loan, its just common sense.

I mean when I bought my car, I needed 5 grand in a loan, and the credit union I went to made sure I was making enough money, had collaterl and a cosigner before I got the loan, and it was only five grand.  That's how a bank should act when loaning out money.

The Bank that gave that loan is not the bank that's in trouble. They most likely sold that loan the next week to Fannie Mae or Freddie Mac and made a profit.

Fannie and Freddie should have never offered to buy the loan in the first place. if the government had not made it posable for the bank to sell the loan, they never would have given it.

The banks that are in trouble, are then ones that purchased a massive block of loans that these government run companies bought, packaged, gave a high ratings to, and said were the safest posable place to invest.

That's the problem.

I don't even really see how the first part is relevant.  Like I said before, if you honestly think that if Republicans were in power that they would just leave the economy alone, you are fooling yourself.  And Dems had a one person majority in the Senate.  I don't think that automatically equates to "running the economy."  And last time I checked, the market ran the economy, not the government.  The government is more like a full time referee.

And you are wrong about banks.  A bank's job is to remain financially solvent so that it can operate.  Maximizing profits is secondary.  I mean maximizing is profits is pretty damn hard to do when you have to close your doors because you run out of money.

Once again, you unfairly blame the government for every single thing that happens.  I honestly can't even remember a large scale problem that has happened in this country where you blamed someone besides the government.