Umm...weren't mortgage brokers regulated by the states?
Actually, no. States wanted to regulate a lot of what lead to the crisis, but they were pre-empted by federal law / agencies.
Cleo
Umm...weren't mortgage brokers regulated by the states?
To address the length of the bill (how laws are written is something I know about), it's written like a bill. Bills aren't written in prose like novels, they're all parts and sub-parts and numbered outlines, amending existing laws and adding new stuff. The more laws there are, the longer bills have to be (to amend all the relevant existing statutes). The length of a bill isn't indicative of anything really -- it's just the bureaucracy expanding to meet the needs of the expanding bureaucracy.
Regarding the substance of the bill, I have absolutely no faith in our political system to address anything meaningful anymore. As Whomp pointed out, regulators totally failed, so the answer they come up with: let's make more regulatory agencies! And I'll bet dollars to donuts that the new agencies will be filled with the same type of people that were "regulating" before.* In fact, I'll bet that they'll be filled with a non-trivial number of the exact same people. In 2010 America, if you reach a certain level of influence, there is simply no penalty for failure. Edit: additionally, there is no reward for competence.
Cleo
*As goes the story from the pre-crisis era: if a regulator came into a bank and could actually figure out the financial alchemy they were attempting to perform, they would simply offer him a job.
'Bureaucracy expanding to meet the needs of the expanding bureaucracy'.
As soon as they pass a bill and set up a federal agency to do the job.Ok, when are we going to get cracking on making business start hiring people!?
*ding!* You have discovered Civil Service.
Actually, your article confirms my point Cleo. Bank mortgage lenders were the responsibility of numerous federal agencies but not mortgage brokers. In fact, one piece I read pre-crisis said there were more federal regulators at Wells Fargo Bank in San Francisco than California had for state regulators for the whole of the mortgage broker industry.Actually, no. States wanted to regulate a lot of what lead to the crisis, but they were pre-empted by federal law / agencies.
Cleo
Hawke blames much of the mess on mortgage brokers and originators who, he says, were the responsibility of states. "I can understand why state AGs would try to offload some responsibility here," he adds. "It's important to remember when people are trying to assign blame here that the courts uniformly upheld our position."
His arguments have some merit. The federal judiciary has bolstered preemption in the name of uniform national rules, not just for banks but also for manufacturers of drugs and consumer products. And state oversight alone is no panacea, as the chaotic state-regulated insurance market illustrates. Inadequate supervision of mortgage companies in some states contributed to the subprime explosion. But the hands-off signals sent from Washington only invited complacency. When some state officials fired warning flares, the Administration doused them.
Economic news today was pretty bleak. Consumer confidence and a deflationary CPI number.Are the markets down over 2% today as a result of this, or is it just coincedence?
Oh. I thought that states could impose regulations -up to a point- without having to bend to federal agencies. I mean, the Congress or the Supreme Court? Sure, they're supposed to be the core of government and be able to override anyone else, but mere agencies? Really.
How to best enact discipline? I'd say the family unit. But how do you get families to enact discipline? Some parents just honestly don't give a crap about teaching their kids the right ideas.
I agree with that completely. But then again, this is getting off topic...
Actually, your article confirms my point Cleo. Bank mortgage lenders were the responsibility of numerous federal agencies but not mortgage brokers. In fact, one piece I read pre-crisis said there were more federal regulators at Wells Fargo Bank in San Francisco than California had for state regulators for the whole of the mortgage broker industry.
Arghhhh, I hate arguing with conservatives, i.e. my father.
I tell him of the new regulations, and he goes on about how the government has no right to tell the banks what to do as the banks have paid their money back. Also how that "trust busting" - as I'll jokingly call it - clause is apparently the cause of dark times.
I even said that the banks are responsible for the recession and so need to be more tightly regulated, and he goes, "No, housing caused the recession." Now, if my understanding is correct:
1. Bunch of people decide "Ah want a big house! "
2. Bunch of people go to banks and said banks approve all these risky loans.
3. Many of the bunch default on their loans, causing an economic shock.
4. Other speculative investments by the banks caused bubbles which inevitably broke, creating more economic shock.
Isn't that how the recession started, or am I missing something? So, while we COULD blame the recession on the bunch of people, the real cause would be the banks for approving such risky loans to begin with; if they had never given them out, there never would have been default. Just a bunch of people forced to live within their means. And there'd be no need for more attempts at regulation to try and restrain the banks.
Is that correct? When discussing these regulations, I need an analysis of it all so as to liberally smack the debate partner around.