Is the entire derivatives market a PONZI scheme? If not, then please explain how. If not, then why are these thieves not being prosecuted for crimes, and the most epic theft in the history of the world.

The Chamber’s opposition to FCPA is big bank driven and underscores why we need such an agency. The existing financial regulatory did’t and won’t regulate to protect consumers because often the interests of consumers could adversely affect the profitability (read “safety and soundness”) of the banks. That is why we need a separate consumer advocate in Washington.

Consumers need to be protected from far more than predatory mortgage practices, so let’s get beyond the arguments of whether the mortgage mess was the result of borrower or lender misconduct. We all know that both contributed and we can agree to disagree about the which was the worst. Beyond mortgages, banks abuse us with fees that they can (and do) unilaterally impose and increase at will. The fees extend from ATMs (remember when they were free and banks were telling us that they were firing tellers to save us money?) to checking accounts (they get to use our money for free so why should we pay them additional fees?) to overcharge fees (paid in connection with automatic overdraft protection or insufficient funds rejection) to cash advance fees, etc. We don’t have the right or power to negotiate these fees and given their universality, we have little practical ability to avoid them. I hope a FCPA can help consumers with respect to these practices by insisting that monthly bank statements fully and clearly disclose all the fees paid by the account holder each month. That should result in some pressure on regulators. Similarly, to the extent that fees represent pure income to banks with little or no off-setting costs, the FCPA should, at a minimum, seek to limit or prohibit them. In the mortgage area, it should require full, easy to understand disclosure of costs and risks associated with various mortgage products so we can avoid a future debate about whether the borrow or the lender overreached.

As Simon notes, small business will benefit as much or more as individual consumers from such regulatory efforts. Small business has little reason to oppose a FCPA. Small business has many reasons to oppose the activities U.S. Chamber of Commerce. Democrats should ensure that the voices of progressive small business owners are heard and that the lies of big business, posing as small business advocates, are exposed.

As for the CFPA (or whatever you call it), I am surprised the financial industry opposes it because it will not make any difference. The US consumer no longer has any borrowing power or equity in his home either. The game these days is lending to hedge funds speculating in currencies, commodities, interest rates.

The real end game comes with the collapse of the dollar as a reserve currency. One more exploded bubble ought to do it. When it happens the US government will no longer get to borrow at 4% for thirty years. The only question is whether the world will then return to 1946 or 1932.

Once the market was dominated by the subprime lenders and their mortgage backed securities as it was just a few years ago, competition for profits forced many other banks to participate in the subprime market. Remember the subprime con was very lucrative while the con held, and supposedly as many thought it was all guaranteed by the government. The market naturally followed to where these big and guaranteed profits were. Before 1998 and before the CRA coercion, subprime was a tiny fraction of the market and it grew to be this monster that ate our financial net worth, devouring everything in it’s path.

Wrong. The bulk of the problem is people who are unable to make their new payments, and DIDN’T know from the start they would never be able to make the new payments, because the information that the payments were going to triple after 2 years was buried on page 1,073 of their pile of mortgage paperwork which the friendly mortgage salesman told them not to worry about, it’s just a formality, sign here and here and then let’s pick out the pattern for your countertops.

You’re blaming the person who stepped on the land mine rather than the person who built and buried it.

“Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency’s core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls “a group of examiners specially trained and certified in community development” (otherwise called community activists). The administration says, in its literature about the reforms, that “rigorous application of the Community Reinvestment should be a core function of the CFPA.”

http://arroyosecohomes.org/2009/10/06/the-hits-just-keep-on-coming/

So the CFPA has finally been exposed. Real Reform. Not!
Absolutely Not! More Marxist thuggery and unwise lending practices is all this is.

Sorry Paul but this is irrelevant. Re-read Paul’s sentence: “Actually, studies have shown that the majority of sub-prime loans were made by institutions that were not covered by the CRA.”

To put it simply

Ssubprime =/= CRA.

So even if the subprime market was the cause of the crisis (it was not, this was the initial assessment of the financial “experts” who assured everyone that the crisis was contained a couple of years ago) you still wouldn’t be able to blame it on the CRA (unless you worked for CATO of course and your paycheck depended on it.)

This has been shown by several studies but Yakkis is right (as usual): you can’t kill the meme now, it’s already grown roots.

BTW, a similar thing is still happening. The vast majority of the mortgages being written right now are FHA in the lower end of the market, where a borrower need only put up 3 1/2% of the purchase price including closing costs and need only have a 500 FICO score. But if you want a jumbo loan, particularly in you are self employed, a down payment far in excess of 20% and your first born are the rule. The two sets of lending standards; one for the poor, and one for everyone else, combined with government guarantees on the trillions in loans in the lower end of the market are what brought us to this horrible situation we are now facing. .

One of the reasons the economy is failing right now, and it is failing rapidly, is that the self employed have been cut out of the lending market. Their collateral has been deemed by our government controlled financiers nearly worthless. Lending to business over the last three months is down 28% on an annual basis. Small business is evaporating as we speak ( actually as we write our little diatribes here at the Baseline). Just what Soros and Obama wanted; no more of those pesky capitalists. No amount of phony stimulus and pump priming will prevent the collapse if small business goes away. And it is going away.

but with sentences like this

Short selling, by definition, reduces liquidity in a market.

you are way above my abilities to understand anything

my question related to one individual actor and his action i.e. what the one individual actor does with the cash that he gets from selling the borrowed stock while he waits for the stock to go down

the conundrum you find yourself in is in my view that if you do not create class solidarity you have no chance whatsoever to get at the big ones. In my experience it is an either or, either you bite into the sour apple or forget about getting at the real perpetrators

another thought is if there are too many “eligible” for eviction in a neighbourhood those who bought within their means and have not lost their jobs will see their houses losing value disproportionately because nobody who has a choice wants to buy/move into a neighbourhood where too many houses look deserted. One saying I learnt about property buying was that the three most important things to judge a property by are
first the location
second the location
third the location
and since watching what happens to the market where I live I have seen nothing suggesting that that isn’t sound advice. So I gather how and how much to help buyers who can’t make it is a program that has to be well balanced so not too much of the burden will have to be born by the responsible ones in any given neighbourhood

Dragged into the CRA coercion, certain banks once in bed with the guvmint, found a funny way to profit from the situation. Gee, who did that nice Robert Rubin fellow once work for? None other than Goldman, the archvillain of the Wall Street Banks.