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Originally Posted by loquitur
I'm blaming a bunch of people. But basically, my memory of what happened with the S&Ls was that the govt had a soft spot for local banks that lent people money to buy homes with. That's what S&Ls were. [What you should be thinking now is "There is nothing new under the sun."]
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Yes and no. The recent problem was the responsibility of the lenders and the lend-ees. The government didn't really facilitate the sub-prime thing. The government does bear some responsibility for the S&L, though.
I did get that "when will people learn" feeling though, so I get what you're saying. Ultimately the investor does have to take responsibility for his or her investment.
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Originally Posted by loquitur
IIRC (and this is public record, so if you really want to check you can - I don't have the patience for it right now) the accounting rules were changed to permit purchasers of S&Ls to treat goodwill as an asset for purposes of calculating capital for regulatory purposes, which of course purchasers did. Then the govt decided, well, maybe that wasn't such a good idea after all, and it changed the rules again, which suddenly left a bunch of S&Ls undercapitalized due to accounting changes. All of a sudden there is a crisis. At the same time you got some slick operators who understood that you can do some nifty things with goodwill and creative accounting. So in effect the S&L crisis was a massive case of governmental bungling, with a bit of Enron thrown in for good measure.
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I'd call it equal measures of governmental mismanagement and sheyters taking advantage of people who probably shouldn't have been investing in the first place, but ultimately it's not really a big deal. We both agree on the fundamental causes, which is all that matters.
I still believe my point still stands regarding the change in economic policy under Bush1. Saying that removing supply-side policies didn't work during the 1991 recession is a refusal of looking at the big picture, something you claimed to have a particularly better handle on due to your age and involvement in all this. In all honesty, you probably do know more about it than I do, but I suspect that your normal biases (biases that we all have in one way or another) are coloring your memories a tiny bit. We clearly both come from different schools of thought on the subject.
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Originally Posted by loquitur
The case I worked on had to do with what happens if the govt seizes a bank that it had no legal right to seize - does the old owner get the bank back? a claim for damages? both? up the creek with no paddle? Stuff like that happened, and Congress never considered what might happen if the bureaucrats it was empowering abused their power - which is pretty typical of how government operates; it can't think of everything and usually doesn't. It did keep lawyers occupied, though.  |
I can imagine.