Comments on: Let’s Support the Cantwell-McCain Bill http://www.nextgengop.com/2010/01/06/let%e2%80%99s-support-the-cantwell-mccain-bill/ Political Commentary and Analysis from the GOP's Future Leaders and Visionaries Mon, 24 Oct 2011 08:04:48 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: Ducker http://www.nextgengop.com/2010/01/06/let%e2%80%99s-support-the-cantwell-mccain-bill/comment-page-1/#comment-29317 Ducker Thu, 21 Jan 2010 19:11:27 +0000 http://www.nextgengop.com/?p=2276#comment-29317 Abel, Why isn't there more support for the Cantwell-McCain bill? This is something that really deserves grass roots support. Sal, You need to get the facts on the housing collapse and the Community Reinvestment Act (CRA). The CRA applied only to deposit taking institutions. Of the subprime and alt-A mortgages that feed the housing bubble and then caused the collapse far and away most were written by non-bank financial institutions that did not take deposits, and therefore were not subject to the CRA. Then Wall Street investment banks bought up those mortgages, sliced and diced 'em, and sold 'em as mortgage back securities (MBS). They wildly mispriced the risk on those MBS and were overleveraged. Bringing back Glass-Steagal would reign in Wall Street by reducing their ability to leverage up to the rediculous extent that they were. Glass-Steagal would have prevented the housing market collapse from becoming a credit crisis. Abel,

Why isn’t there more support for the Cantwell-McCain bill?
This is something that really deserves grass roots support.

Sal,

You need to get the facts on the housing collapse and the Community Reinvestment Act (CRA). The CRA applied only to deposit taking institutions. Of the subprime and alt-A mortgages that feed the housing bubble and then caused the collapse far and away most were written by non-bank financial institutions that did not take deposits, and therefore were not subject to the CRA. Then Wall Street investment banks bought up those mortgages, sliced and diced ‘em, and sold ‘em as mortgage back securities (MBS). They wildly mispriced the risk on those MBS and were overleveraged. Bringing back Glass-Steagal would reign in Wall Street by reducing their ability to leverage up to the rediculous extent that they were. Glass-Steagal would have prevented the housing market collapse from becoming a credit crisis.

]]> By: Sal http://www.nextgengop.com/2010/01/06/let%e2%80%99s-support-the-cantwell-mccain-bill/comment-page-1/#comment-28253 Sal Wed, 06 Jan 2010 13:07:35 +0000 http://www.nextgengop.com/?p=2276#comment-28253 Glass-Stegal was NOT the cause of the financial crisis of 2008. Nothing good comes from huge government regulation, and in a free and open market, legislation such as this should be met with skeptesism because of unintended consequences. Rather, the real reason for the collapse was excessive <b><i>regulation</i></b> in regards to the inflation of the housing bubble and mortgage-backed securities. The big culprit here was the Community Reinvestment Act, not the repeal of Glass-Stegal. Even with the repeal of Glass-Stegal, the companies were not too big to fail, they were only touted as that so that Paulson and Bernake could give their Wall-street friends big government handouts. If those banks had failed, we would have still had a financial crisis (due to the housing bubble) but other institutions would have gobbled them up - as capitalism is supposed to do. Glass-Stegal was NOT the cause of the financial crisis of 2008. Nothing good comes from huge government regulation, and in a free and open market, legislation such as this should be met with skeptesism because of unintended consequences. Rather, the real reason for the collapse was excessive regulation in regards to the inflation of the housing bubble and mortgage-backed securities. The big culprit here was the Community Reinvestment Act, not the repeal of Glass-Stegal. Even with the repeal of Glass-Stegal, the companies were not too big to fail, they were only touted as that so that Paulson and Bernake could give their Wall-street friends big government handouts. If those banks had failed, we would have still had a financial crisis (due to the housing bubble) but other institutions would have gobbled them up – as capitalism is supposed to do.

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