Run on money market funds held for foreign investors in hedge funds caused the entire debacl, which in turn revealed the lack of supervision of banks' capital rules.  Voluntary supervision - bunk - not when it comes to money!!  And now our elected officials are rewarding the impudence of these individuals.   Now, now, honey, we must not do this again - I will let you play "congressman" a while longer.  

Credit Crisis? The bank upped my credit card limit in the middle of all this mess. I think it must be a problem for all the people who don't pay them back. I know one person who got sued by the bank for his $30,000 credit card dept. The bank did not show up in court and he got off scott free. I know another who was 2 months out of bankrupt and bought a $400,000 house,3 new cars,two new motorcycles, 2 off road dune buggies, a trailer to pull them, land in Alabama, many plane trips to Florida,lots of new clothes, and a trip to Hawaii. This person worked for me and I asked him how he paid for all that. Make payments everyother month.

There are four criminals responsible for this mess. Wall St., Washington, the Banker, and the Consumer.  Each at his own level in society has breached the ethics required to hold our society together.   "The undisciplined society breeds... heaping horrors upon horrors."  

As for revolution... There will be no revolution until the cable, the computer and the refrigerator lose their power.

HonestLee,  Thank you for the complement.  I don't consider myself an insider.  I am an ex mid level community banker.  I worked twenty years as teller, facility manager, Auditor, Loan Review Officer (Credit Analysis) and then Consumer and Mortgage Loan Officer.  We were a solid well capitilized Community Bank.

We made loans with proper down payments, proper collateral margins (Ususlly 20% down) on vehicles or property that did not have inflated appraisals.  I lived through being purchased by our main regional correspondent bank, then they sold out for big bucks to US Bank.  I was downsized - then rehired into the Commercial & Ag Lending side.  

US Bank and all the majors banks use the computer model that relies on the "FICO" score for credit decisions.  FICO is a calculation of your credit history and the probability that you will or will not pay your credit obligations.  It involves the credit histories reported to the three credit reporting companies, Equifax, Experian, and TransUnion.  I do not know their formulas to determine FICO scores.  

The main point is that the Government loosened things up and allowed easy credit that was not margined or properly collateralized.  They allowed the Big Banks to eat up the smaller banks, become so big they could influence the government regulations.  Once a lot of consumer, credit card, morgage loan, decisions became systimzed - creative people paid on commission - a lot of "gamed" loans were booked.  The Originators are not stupid.  They learned how to fool the computer models into granting approvals.  

I worked two years for a Mortgage Loan Servicing company that was owned by Lehman Bros.  I was there for 2 years and left in 2000.   WOW!  The sub-prime crap they brought through there was scary.  Their game was to buy out worst for less than 100% of book value - say 50 cents on the dollar.  (I was never involved in the dollar side - just the service and getting them ready for re-sale.)  They would set these loans up on repayment plans etc. declare them good and sell them on to some other buyer.  They made money buying them under book and then selling them off.  So if they bought it at 50 cents and sold it 6 months later for 75 cents on the dollar - they had a big return.  

I do not claim to understand all the workings of Wall Street and Finance in general - but the part I understand and some logical application of what may happen after a loan is sold to the secondary market - is scary.  Welcome to 2008 USA.

There are Independent Banks out there owned by people more wealthy than I who understand this far better than I.  It is these types - who have some POWER aka MONEY that can influence our future policies.  Bottom line is - get proper margins into lending and you will have a SAFE financial system.  

If government wants to help lower income persons get into housing - it is better to provide some down payment to margin the loan so the local bank will fund it and minimize their exposure to loss.  I was also on a local non profit Board that did this type of subsidies.  

I don't think the Government should buy all the bad loans.  Buying them at 100% on the dollar is foolish.  Margin them - take an equity position behind the current loan holder, provide a fair rate under 10% and hopefully the loan pays way down over the next 10 years so that when the loan or home is sold - the government can get part of our $700 Billion back.

I've been out this for several years.  But 2 plus 2 still equals 4.  I have not heard any of the media discussing anything about the plan.  They just want us to "Trust Them!"  WOW.

Ron

There are many parts in the cascade of events that led to this travesty we find ourselves facing.  Yes, changing the Glass-Stegall act in 1999 was part of it, reducing income requirements for Freddy & Fanny, et al, were a part of it too.  But so was lax enforcement of the laws we have, and so was the rule change in 2004 that allowed leverage to go from 12 to 1 to 40 to 1 - sheer stupidity.  There is no doubt that this last administration put foxes in charge of all the major henhouses, but they have had plenty of help from the Democrats, too.  So far, virtually everone I read and listen to is still missing the point and can't seem to see the really big picture.  The problem is the way we have allowed BIG MONEY to corrupt everything, right down to the foundation of our government.  Our fearless leaders in Washington have gamed the system in their favor to keep power and position.  So, how do we stop this?  Here is a solution, and it is simple.  We need to start a movement to take back our government by forcing Congress to pass a law requiring the ability to cast a vote in an election before a contribution can be made to a candidate.  IF YOU CAN'T VOTE, YOU CAN'T CONTRIBUTE!!!!  With the stroke of a pen, all Corporate assistance goes away, and so does all the money and aid from Unions, 501 shadow entities, and everything else.  Only real live voters should be allowed to contribute - period - and their contributions should continue to be limited as they are now, with every dime accounted for on the Internet within 3 business days of receipt.  Poof!  There go the attack ads.  No one could aford to run them.  Politicians would have to spend more time AT HOMEwith their constituents if they wanted to raise money, and there would be a lot less of it spread around.  Soon, we would begin to see a different class of candidate.  If the cost of running for a Congressional seat, for example, suddenly went from $5,000,000 down to $50,000, how many great business people, educators, and other public servants would step up to serve their country?  We would truly have those from Main Street going to Washington with the interest of the "greater good" at heart, instead of the interest of whichever industry or union was bankrolling them.

We should also tell the radio and TV stations what their advertising rates will be for campaign ads (low), and how much time could be allotted.  If they don't like it, suggest they turn in their broadcast license.  Eager buyers would snap them up, and the country would be better for the increased diversity.  Long ago, I was taught that all failures are ultimately failures of management, and our management is our elected officials.  I was also taught that if you want to build something, you better get the foundation right.  If you don't the bigger the structure, the more problems there will be, and eventually the structure will collapse under it's on "crookedness".  We have been failed by management, and our system is collapsing.  There is no catalyst visible on the horizon to turn this tide.  I have been active politically since the Goldwater campaign in 1964, but voted Democrat 95% of the time.  Although I do not like Ralph Nadar personally, I am thinking seriously about casting my vote for him in protest.  Neither Mcain nor Obama is the right person for the job, and the tought of Obama-Reid-Pelosi having total control of legislation scares me more thant the thought of McCain in the White House as a safety valve.  Divided government is not such a bad thing.  Too bad we have not had it for the past 8 years.

I posted and responded to HonestLee at about 1:30 EST (not my zone) but it did not post.  Either I was electornically challenged (possible) or MSN has censorship?

In short - Dragonfly has some good points on the leverage problem.  The big banks were pushing 125% Loan to value a few years ago.  Loan Originators became salespersons) and not good bankers.  Credit Analysis was left to gaming the FICO scores and credit models all the big banks use.

Don't use the $700 Billion to buy the bad stuff.  Help banks margin them - make the banks and borrowers work to pay some of these down to workable assets and values.  The money will goi 5 times as far and keep the pressure on those instititions and borrowers who got upside down.

I shortened it down - maybe they will let this one post!

Ron

Mike Moore has it correct in SICKO. They are more American than we. Their governments are afraid of them. We are afraid of our government. (tho lo and behold Europe is in the same mess as us.) If you want to revolt-- go at it like the French-- They bring in the framers' tractors or the truckers 18 wheelers and clog the highways or the capitol. They have 600,000 marchers in a peace demonstration that scare the bajeebies out of elected officials. They're not en masee, snackin on the couch yellin Gerry, Gerry at their TVs.

The F@cking sellouts sold us all down the river yesterday.

The few house members ( representatives right? ) that stuck with the people for the 1st rejection quickly changed their minds when baited by fat handouts that were added to the bill ( by who? )

What kind of BS is this?

Im so mad I could join the NRA !

As a matter of fact, I WILL join the NRA.

They support the citezenry owing guns that could be used usefully in situations such as this.

Yea, Im talking guns that can hold their own against oppressive elements such as theives, crooks, and others who come into our homes and lives to steal, loot, plunder and generally try to end life for our families.

Secondly who gives a rats ass about politicians who sell out the very people who depend on them?

Oh who gives a rats ass about bans on certain weapons?.. its easy to make the parts to go fully automatic. very easy.

No F@cking wonder lying theiving politicians want a disarmed public.

They should be very afraid.

This WILL NOT sit very well with the majority of people who actually work for a living. (unlike congress)

we also need to take a close look at ourselves as we point fingers .

How much debt did we get into to buy a bigger house that we did not need or a fancy car so we could look like one of the big boys .

Stop electing pretty boys & girls & get it right .

Anybody that does't understand how the system got this bad needs to look a little closer .

Make people accountable & they will do a better job .

CEO's, Board members ,Stock holders  ,Lenders ,Politicians Judges  You , ME .

Reward peole for good work  not good looks & lines

Style over Substance needs to hit the road .

I got sucked into the mess with my 401 k

I thought  there were smart people running them .

They are "BY Golly" No smarter than I am  .

We let our leaders ruin this economy because we helped .

We did not pay attention .

We did not say enough is enough .

We saw it rear its ugly head about 10 years ago during Enron  & did nothing except send a few guys to Prison .

Fix the stock market ' Fix the corporations Fix our selves .

& may God have pity on the poor people who win the next elections .

I too am extremely angry with this entire situation.  I believe we all must come together and go to battle to over throw the government and take back our country. Just as our forfathers did. What happened to Government; By  the People, for the People.  This government is only out for themselves. We all need to STOP paying taxes altogether until we have a SAY in how, what, where OUR MONEY is being spent. I propose we adopt a nation wide flat tax. We each pay 5% across the board for our purchases except food...We all can sit here and share our opinions and insight all day long forever!!! We need to take ACTION.... We know that we have the numbers there are far more of us then them..... But, until we do, we will continue down this very long depressing path to NO WHERE!!!

We are losing our great country, our government has and continues to sell us out for their own "personal" gains. That was not the intention for the Constitution......

STOP illegal immigrants from abusing our healthcare and socail security..