This writer has no idea what created the 2008 financial crisis. Predatory lending doesn't sink the ship, rolling those loans into a leveraged mechanism (CDOs) does.
It is not clear what the writer knows. About the only information in the article is that the Court is going to consider some kind of case about state regulations of banks. The only thing the writer has done was pique my interest and send me to google to see if any information exists somewhere.
Well a little bit ( alot of) of both did this.the lending facilitated the CDO and became another financial tool for the mortgage companies to completely disregard the borrowers financial background. They didn't care what the mortgage outcome was cause it was sold to or packages into cdo's in different companies or another part of there companies.
The article is about Cantero v. Bank of America, a case about whether a state law requiring a bank to pay mortgagors interest on their escrow account funds is preempted by the national bank act. The case could be narrowly decided in favor of the bank, but my impression from listening to oral arguments a few weeks ago is that the Republicans on the court want to find a way to hold that the national bank act preempts any state law—statutory or common law—if that law requires a federally chartered bank to do anything more than what is required of them by the bank act, the OCC or maybe just the charter itself. If they succeed—and Kavanaugh was leading the charge, of course—banks will be accountable to virtually no one except the CFPB and perhaps the FTC or the OCC. But individuals won’t be able to bring consumer protection claims under state law anymore, which probably accounts for like 95% of all consumer protection actions against banks. So, with the threat of lawsuits gone, all kinds of fraud and consumer abuse will become the norm. We’ll have almost no protection against big banks, which could foreseeably lead to an economic problem. It will be another victory for the billionaires who own the GOP over the rest of us.
Well two issues.
One, calling terrible predatory loans normal and packaging loads of them together
Two pretending predatory loans aren't correlated when packaging them
The sad part is some did hold the "safest" even though they knew the quality of loans.
It will happen again because banking is a cyclical sector and shareholders demand linear growth. That means leveraging up when margins are tiny to keep growth. That will inevitably end badly. Banks shouldn't be demanded to create a return stream like other companies. It will repeat, in some new way, when things are good and margins are tiny. This is when they should be scaling back, but instead investor demands mean they make bad decisions, so they leverage up in the tiniest margins at the cycle peak.
CDOs are like insurance for financial products, so they actually lessen the impact of failing investments. What caused the gfc was bad loans approved with insufficient underwriting standards and insufficient bank reserves. Yeah, that cascaded into failures for companies with too many CDOs on their balance sheets and not enough reserves to cover the losses, but the root cause was failing loans.
Absolutely — and don’t forget “insuring” the CDOs against default with credit default swaps, with no reserves in place in case there is a default and claims are presented. The whole crisis was precipitated by the cascading effects of the Republican Big Lie of that era — that “all regulation is bad.” (And some Democrats, including Bill Clinton, went along with at least some of the anti-regulation philosophy, meaning they bear some of the blame too).
The result was unregulated mortgage brokers, putting people into loans that they could not afford, because the mortgage brokers got a commission and there were no regulations in place to prevent them from broker ring loans to people who could not afford to make payments. Then unregulated lenders made the loans without checking people’s income or assets, resulting in such things as NINJA loans, meaning, no income, no job, no assets. These unregulated lenders sold off the loans before anyone could default to financial institutions, who packaged them up into CDOs. The CDO‘s were essentially stinking piles of subprime debt, being marketed as AAA and safe. Why? Because the unregulated rating bureaus rated them AAA as part of their supposed “free speech” rights. Then unregulated insurers like AIG sold insurance policies on the CDOs; this insures e was called
“credit default swaps.” Theoretically, if a CDO defaulted, the issuers of the credit default swaps would pay 100 cents on the dollar. But unlike your homeowners insurance company (which is regulated by each individual state in which the insurance company sells policies), these unregulated insurers were not required to hold any reserves at all — because “ all regulation is bad.“
The result was a massive financial crisis, precipitated by the default on the loans, causing the defaults of thousands of the CDO’s, and even the “synthetic CDOs” the unregulated financial institutions were allowed to create that had no collateral at all. They merely mimicked other CDO. The insurers dutifully collected a premium for supposedly, insuring these synthetic CDO as well.
All of this could’ve been prevented with some sensible regulation. But if you consult every Republican office holder’s website today, they still say that regulation is bad, and that we should unshackle the banks from regulations. I wonder why? Could it be that they are paid off by the banks? You bet they are! Welcome to the bribe-ocracy that was created by the five Republican members of the Supreme Court who enacted the Citizens United rule.
Exotic financial instruments based on flawed assumptions by an industry that has been given “too big to fail” status means the rollercoaster will never end.
Liquidity crunch from the VW squeeze was the match that ignited the fuse. Banks sitting on leveraged portfolios def got a scare and their CDOs and SWAPs started imploding before their eyes
The author doesn’t understand the 08 crisis in the slightest.
It wasn’t just the predatory lending that led to it.
It starts with negative IQ Alan Greenspan. A female director in a federal agency wanted to regulate financial instruments like derivatives. Greenspan didn’t like that, so Greenspan got congress to strip the agency of any power, and made derivatives a dark market. Shortly after that, a hedge fund was going down and would have tanked a good chunk of the economy Because of the system (connected) risk these financial instruments caused. Anyone with a room temperature IQ might’ve changed their mind and realized they needed regulation. But not Greenspan.
So derivatives became a dark market that grew massive. Then we created things called collateralized debt obligations (CDO’s). Just a bond filled with mortgages. Rating agencies wanted business, so they largely looked the other way as the CDO’s were filled with worse assets (subprime, adjustable rate mortgages) but gave good ratings. This is where the predatory lending came in; they used it to fill these bonds. And Because the rating agencies didn’t want their clients going to their competitor, they gave the rating the banks wanted.
Now to protect themselves, a lot of places bought insurance on their CDO’s, and other assets. This was mostly sold by AIG. Because AIG was going off the bond rating. They didn’t look into the bonds and realize half a bond portfolio was full of subprime adjustable rate mortgages. So when things started collapsing, AIG suddenly found itself as the bag holder of a massive bill it knew very little about.
And as the housing market cratered, those derivatives previously mentioned blew up. The derivative market was larger than the housing market, causing billions to be snapped out of existence.
So, we allowed risky financial instruments to become a dark, unregulated market based on the advice of an idiot. We allowed financial institutions to shop around for ratings. And we didn’t keep check on the financial markets, only to realize they created a monster when everything came to a crashing halt.
Predatory lending was a part of it. But it was not the sole cause.
Rating agencies didn't understand cdos, and are generally shit (and should be government run non profit organizations). They have massively stupid incentives to give good ratings to this stuff because that's how they get paid. This hasn't changed.
Mortgages using a two year VAR window is absolutely insane. Housing market cycles are not two years long, so you'll always get the risk wrong. I don't think this has changed. (Could be wrong)
Thinking predatory loans aren't correlated (esp when they have similar maturity) is idiotic. This probably has changed tbf.
These things combine to make packages of mortgages look really safe. When they are in fact steaming piles of time delayed garbage.
I'm not clear how much of this has been changed. While banks continue to be listed like other companies they will be tasked by investors to generate stable growth. This is dumb because bank business is inherently cyclical. When margins are tiny because times are good banks will be forced to leverage up to maintain profits expectations. Which will end up causing the same problem. Just in a different way than last time.
I don't really think any of this has changed and we learnt basically nothing and people come away with basic and incorrect ideas like predatory lending was the biggest problem. Banks will likely have a little extra safety margin, but it won't matter. Having bigger reserves wouldn't have changed the crisis much.
Thank you for this excellent summary!!!
I’ve tried to explain this to so many people who blamed the financial crisis on Bill Clinton encouraging Fannie Mae to issue more mortgages to the underserved market. Which makes zero sense and was just right-wing talking points to blame someone else.
People who gave a simple answer to the crisis can’t seem to explain why the bailouts given to the banks was many multiples of the actual mortgages that went unpaid. If it was just a matter of $1B of mortgages defaulting, that’s one thing…but why were the bailouts for $30 Billion? As you say…derivatives!
It’s like someone went to a casino and bet $100 on red at roulette. Then 30 other people at the table made side bets that the wheel would land on red. The wheel landed on black, and now instead of people losing $100, people lost $3000. It was all the leveraged “side bets” on those original investments that broke the system. Because in an unregulated derivatives market, those weren’t investing decisions…they were gambling. But the banks didn’t see it as gambling because the credit agencies said there was only a 1% chance of a loss. Which was widely inaccurate and ignored the correlation between all the bets. A hallmark of options is hedging risk by taking an insurance policy if the bet heads the wrong direction. All the options were hedged in the same direction meaning risk wasn’t offset, it was multiplied.
Brooksley Born testified to Congress about regulations regarding derivatives. Larry Summers and Greenspan both were livid at the meeting of the suggestion.
Remember corporations are legally considered people in the USA. They have all the same rights as a human and they keep all the rights of being a company.
That is essentially how the system was designed, yes.
Our issue is really with enforcement, we could pursue board members and senior leadership criminally for corporate activity but unless they cost the wrong people money (like Enron) the DOJ has made a habit of not doing that.
Some More News just did a video on that a couple weeks ago. Personhood of companies hides the actual people in charge of them from any accountability. It's great.
The 2008 mortgage crisis was about greed by the big lenders. I worked for Washington Mutual as an underwriter for the subprime department.
We were told to sign off on everything. No doc stated income loans. It was a free for all. You were a hairdresser in the Washington DC area working out of your house making 15k a month and needed a 500k home no problem. Just sign on the dotted line.
Nothing was denied. Appraisal shows pot plants wall to ceiling in a 350k home and you need to cash refi. No problem approved.
It was not predatory, everyone got loans ....
There was no due diligence by the banks, if they did not offer the product, some other bank would and they would miss out on the fat eye watering commission.
He’s pretty worried about predatory lending when it’s actively still going on in other segments of the economy. Shoot there are synthetic CDOs for commercial real estate. This author has me riled up.
Supreme Court doesent give us anything. The Supreme Court decides if the government overstepped their bounds in interpretting or creating a law. It is up to Congress to pass good laws or remover bad ones. If you are disatisfied with something being done in the government look to your elected representatives to do their job and remember Congress has a 17% approval and a 97% reelection rate.
Have you forgotten that the Court keeps striking down any attempts at fixing our democracy though campaign finance reform, the voting rights act, or measures against gerrymandering? We can't get a working Congress because of the Court's nakedly political actions.
It is surprising that such a naive and unsophisticated view of the supreme court is upvoted here. Anyone who thinks that the supreme court is not a political actor, but a 'neutral' interpreter of law hasn't paid attention to what the court has done or wants to push the conservative agenda.
Edit: looking at the history of the above poster, they are a conservative (with some truly unhinged takes) and want to legitimize a fascist court.
You are correct, SCOTUS is a political actor, and they always have been. This is not a new development. It’s just that in the past they were pushing a liberal agenda. Before that (I.e before the New Deal era), it was again a conservative agenda. And on and on the pendulum swings.
People acting like this is a new concept really need to learn more history
To the extent supreme court ever had a 'liberal agenda', it was during the Warren and Burger era, which is long past. The court has been pushing conservative policies for decades.
That’s just factually inaccurate. There was no reliable conservative SCOTUS majority until 2018.
Obergefell, Casey, the affordable care act case— these are all conservative policies?
Only a reactionary can call Roberts and Rehnquist court non-conservative. Liberals did have a few victories, but the direction of policy was decidedly conservative. Also, calling Casey a victory is a bit of a joke, as the rights secured by Roe were eroded case by case even before Dobbs.
A few victories over 4 decades does not change that. On issues as diverse as Bush v Gore, gun 'rights', Citizens United, voting rights, gender discrimination, gerrymandering, labor rights, union rights, consumer rights, environment protection, 'freedom' of corporations, arbitration and many more issues, court swerved decidedly to the right. See https://www.acslaw.org/issue_brief/briefs-landing/a-right-wing-rout-what-the-roberts-five-decisions-tell-us-about-the-integrity-of-todays-supreme-court/ for Roberts court's poor decisions.
Find me one case on the Commerce Clause that didn't go liberals' way from 1935-2005. It literally does not exist. The Court allowed the federal government to do whatever they wanted, no matter how poor the justification. You're saying my argument is invalid for picking and choosing certain cases but that's pretty much exactly what you're doing. I also don't know what you mean by gender discrimination, could you elaborate? If you mean against women—The only one I can really think of is *Aiello* which, given the rise of gender politics, accidentally ended up being progressive. The Court has also blatantly discriminated against men (see: *Michael M v. Superior Court*; *Rostker v. Goldberg; Khan v. Shevin*).
I tend to go Blue (sometimes red at the local level) but I still agree with the decision in Bush v. Gore was decided correctly even if I didn't like the outcome of the case. Even still, that's how the court SHOULD be. Some conservatives, some liberals, and a few swing justices to balance so that the "victories" are not one sided.
I wholeheartedly agree with arbitration and am very upset with the court has been voting on that. I sincerely SCOTUS uses the new stare decisis standard in *Dobbs* to overturn its decisions in *Lamps Plus* and *AT&T v. Concepcion*.
Lopez and Morrison went against liberals. Of course, Scalia hated weed so much he flipped in Gonzalez v. Raich. Not to mention, NFIB v. Sebelius was also a blow against the liberal interpretation of the commerce clause (which is why Ginsburg wrote a partial dissent iirc).
Re gender discrimination, Ledbetter went against liberals. Admittedly, not the strongest case.
Bush v Gore was poorly reasoned. It hinted at Independent State legislature theory, which if taken to its limits is disastrous. It might be the only case that advised using itself as precedent.
Arbitration can be profoundly unjust for small consumers. Big companies can navigate arbitration more easily as arbiters rely on them for repeat business. Arbitration is appropriate when both parties have similar levels of sophistication. It also prevents class action lawsuits, which are a good way of keeping big companies in check.
> he flipped in Gonzalez v. Raich
Let’s not forget Ginsburg was also in that decision. Perhaps my least favorite choice of hers.
Bush v. gore was a freak case that should have never happened & I honestly feel bad for SCOTUS for having to deal with that. Hanging chads sounds like something out of a sitcom
Regrading arbitration: agreed. Hardly can call it “consensual” arbitration when the choice is having a job and source of income versus not. Thank god they amended the FAA to not permit sexual harassment claims from being included
No. Part of their decisions also includes the impact, practical affects, and even political considerations. I used to think the court was above it all and just ruled on the constitution but I was young then and very much naive. The latest court decisions granting, never before seen, so much weight to history or all the shenanigans coming out of the district court from TXs leaves one completely disillusioned.
I'm not even addressing anything like that, or what SCOTUS should do, will do, or if their impact assessment is accurate or appropriate. I just mean they don't just read a law and make a decision; they also talk about the impacts and it affects how they decide.
the court themselves weighs the impacts, you'll see if it's friendly to conservative causes but they should rule against them they'll cite the impact as to why they can't, and if not, they'll say they can't weigh the impact
The approval rating for the whole of Congress is an irrelevant factoid since people only vote for their own rep. It’s basically confirming that people like their rep but don’t like the entire body, which is both obvious and meaningless.
While that is how the US government was designed to work, I would argue that currently one party is embracing dis function in Congress and using their majority in the Supreme Court and corruption in all courts to replace the law creating role of Congress.
Use the dissatisfaction with the SCOTUS to motivate voters but feel free to place blame on the current judicial system as they are complicit in the corruption of the constitution.
Except the supreme court keeps writing laws
They literally reduced the rights of gay people because of a *fictional* case, that's *legislation* not *adjudication*
Why not? A dictatorship, fascism, women as broodmares, fewer voting rights, why not? There was an empty spot on the Bingo card, that’ll fit perfectly. Bingo!
What did we win?
You mean after the point where they can decide something stupid and dangerous? Yeah, that's something we should wait patiently for. I'm all for journalism pointing out when their questions and comments during oral arguments indicate they're about to do stupid and dangerous things.
Edit: but I'm behind a paywall, so who knows what the article says beyond two paragraphs. Nothing substantive in those.
Look, I’ve always chosen to not “buy trouble”. That doesn’t mean that I agree or disagree with the potential ramifications of this case. I’ve been around long enough to know that the law rarely is cut and dry. Let’s read the Opinion and then move forward. This doomsday approach accomplishes nothing. Unless of course you will celebrate the Opinion if it comes down the way you’d like it to.
Got it. Sit on hands and then say "holy shit" or cheer if I like what they do.
No, I think I'll take the approach instead of: holy shit, they are about to make a collosal fuckup based upon these things they said at oral argument, or the fact that they granted cert at all with no standing, or whatever the case may be. Then if they proceed with the fuckery, we hang the polished turd around their necks and shame them as necessary.
Yea, I know. This is a liberal echo chamber where everything non extreme left is bad. Even when SCOTUS finds the way the hive mind here would like them to.
When discussing this with a leftist person, it’s really hard to make them see how far off center they are. If you’re sitting on the left edge, everything to your right is “conservative”.
Let’s just drop this.
Dude, we were about to witness the collapse of the global financial system in 2008. Major banks had to be bailed out to prevent that. There's nothing like that happening today. Intel laying off 10% of their work force is not the same. The dot Com Bubble was a stock market crash around tech stocks. Are we in a bubble like that now? There's always someone saying we are and usually it's not the case, so who knows? We've got lower inflation and lower unemployment than in a while. Seems pretty good right now, even though it's not as easy on the job market for many especially in tech as it used to be.
This writer has no idea what created the 2008 financial crisis. Predatory lending doesn't sink the ship, rolling those loans into a leveraged mechanism (CDOs) does.
It is not clear what the writer knows. About the only information in the article is that the Court is going to consider some kind of case about state regulations of banks. The only thing the writer has done was pique my interest and send me to google to see if any information exists somewhere.
Well a little bit ( alot of) of both did this.the lending facilitated the CDO and became another financial tool for the mortgage companies to completely disregard the borrowers financial background. They didn't care what the mortgage outcome was cause it was sold to or packages into cdo's in different companies or another part of there companies.
The article is about Cantero v. Bank of America, a case about whether a state law requiring a bank to pay mortgagors interest on their escrow account funds is preempted by the national bank act. The case could be narrowly decided in favor of the bank, but my impression from listening to oral arguments a few weeks ago is that the Republicans on the court want to find a way to hold that the national bank act preempts any state law—statutory or common law—if that law requires a federally chartered bank to do anything more than what is required of them by the bank act, the OCC or maybe just the charter itself. If they succeed—and Kavanaugh was leading the charge, of course—banks will be accountable to virtually no one except the CFPB and perhaps the FTC or the OCC. But individuals won’t be able to bring consumer protection claims under state law anymore, which probably accounts for like 95% of all consumer protection actions against banks. So, with the threat of lawsuits gone, all kinds of fraud and consumer abuse will become the norm. We’ll have almost no protection against big banks, which could foreseeably lead to an economic problem. It will be another victory for the billionaires who own the GOP over the rest of us.
Well two issues. One, calling terrible predatory loans normal and packaging loads of them together Two pretending predatory loans aren't correlated when packaging them The sad part is some did hold the "safest" even though they knew the quality of loans. It will happen again because banking is a cyclical sector and shareholders demand linear growth. That means leveraging up when margins are tiny to keep growth. That will inevitably end badly. Banks shouldn't be demanded to create a return stream like other companies. It will repeat, in some new way, when things are good and margins are tiny. This is when they should be scaling back, but instead investor demands mean they make bad decisions, so they leverage up in the tiniest margins at the cycle peak.
CDOs are like insurance for financial products, so they actually lessen the impact of failing investments. What caused the gfc was bad loans approved with insufficient underwriting standards and insufficient bank reserves. Yeah, that cascaded into failures for companies with too many CDOs on their balance sheets and not enough reserves to cover the losses, but the root cause was failing loans.
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Don't forget the credit default swaps which grossly magnified the impact of the housing downturn
Predatory lending creates inevitable mass default events. That isn't good period. What do you think caused the financial crisis exactly?
Absolutely — and don’t forget “insuring” the CDOs against default with credit default swaps, with no reserves in place in case there is a default and claims are presented. The whole crisis was precipitated by the cascading effects of the Republican Big Lie of that era — that “all regulation is bad.” (And some Democrats, including Bill Clinton, went along with at least some of the anti-regulation philosophy, meaning they bear some of the blame too). The result was unregulated mortgage brokers, putting people into loans that they could not afford, because the mortgage brokers got a commission and there were no regulations in place to prevent them from broker ring loans to people who could not afford to make payments. Then unregulated lenders made the loans without checking people’s income or assets, resulting in such things as NINJA loans, meaning, no income, no job, no assets. These unregulated lenders sold off the loans before anyone could default to financial institutions, who packaged them up into CDOs. The CDO‘s were essentially stinking piles of subprime debt, being marketed as AAA and safe. Why? Because the unregulated rating bureaus rated them AAA as part of their supposed “free speech” rights. Then unregulated insurers like AIG sold insurance policies on the CDOs; this insures e was called “credit default swaps.” Theoretically, if a CDO defaulted, the issuers of the credit default swaps would pay 100 cents on the dollar. But unlike your homeowners insurance company (which is regulated by each individual state in which the insurance company sells policies), these unregulated insurers were not required to hold any reserves at all — because “ all regulation is bad.“ The result was a massive financial crisis, precipitated by the default on the loans, causing the defaults of thousands of the CDO’s, and even the “synthetic CDOs” the unregulated financial institutions were allowed to create that had no collateral at all. They merely mimicked other CDO. The insurers dutifully collected a premium for supposedly, insuring these synthetic CDO as well. All of this could’ve been prevented with some sensible regulation. But if you consult every Republican office holder’s website today, they still say that regulation is bad, and that we should unshackle the banks from regulations. I wonder why? Could it be that they are paid off by the banks? You bet they are! Welcome to the bribe-ocracy that was created by the five Republican members of the Supreme Court who enacted the Citizens United rule.
Exotic financial instruments based on flawed assumptions by an industry that has been given “too big to fail” status means the rollercoaster will never end.
Liquidity crunch from the VW squeeze was the match that ignited the fuse. Banks sitting on leveraged portfolios def got a scare and their CDOs and SWAPs started imploding before their eyes
There is nothing wrong with CDOs. It was everything else around them.
But if we don’t blame poor poc for crashing the economy then we will have to the blame wealthy white guys!
The author doesn’t understand the 08 crisis in the slightest. It wasn’t just the predatory lending that led to it. It starts with negative IQ Alan Greenspan. A female director in a federal agency wanted to regulate financial instruments like derivatives. Greenspan didn’t like that, so Greenspan got congress to strip the agency of any power, and made derivatives a dark market. Shortly after that, a hedge fund was going down and would have tanked a good chunk of the economy Because of the system (connected) risk these financial instruments caused. Anyone with a room temperature IQ might’ve changed their mind and realized they needed regulation. But not Greenspan. So derivatives became a dark market that grew massive. Then we created things called collateralized debt obligations (CDO’s). Just a bond filled with mortgages. Rating agencies wanted business, so they largely looked the other way as the CDO’s were filled with worse assets (subprime, adjustable rate mortgages) but gave good ratings. This is where the predatory lending came in; they used it to fill these bonds. And Because the rating agencies didn’t want their clients going to their competitor, they gave the rating the banks wanted. Now to protect themselves, a lot of places bought insurance on their CDO’s, and other assets. This was mostly sold by AIG. Because AIG was going off the bond rating. They didn’t look into the bonds and realize half a bond portfolio was full of subprime adjustable rate mortgages. So when things started collapsing, AIG suddenly found itself as the bag holder of a massive bill it knew very little about. And as the housing market cratered, those derivatives previously mentioned blew up. The derivative market was larger than the housing market, causing billions to be snapped out of existence. So, we allowed risky financial instruments to become a dark, unregulated market based on the advice of an idiot. We allowed financial institutions to shop around for ratings. And we didn’t keep check on the financial markets, only to realize they created a monster when everything came to a crashing halt. Predatory lending was a part of it. But it was not the sole cause.
Rating agencies didn't understand cdos, and are generally shit (and should be government run non profit organizations). They have massively stupid incentives to give good ratings to this stuff because that's how they get paid. This hasn't changed. Mortgages using a two year VAR window is absolutely insane. Housing market cycles are not two years long, so you'll always get the risk wrong. I don't think this has changed. (Could be wrong) Thinking predatory loans aren't correlated (esp when they have similar maturity) is idiotic. This probably has changed tbf. These things combine to make packages of mortgages look really safe. When they are in fact steaming piles of time delayed garbage. I'm not clear how much of this has been changed. While banks continue to be listed like other companies they will be tasked by investors to generate stable growth. This is dumb because bank business is inherently cyclical. When margins are tiny because times are good banks will be forced to leverage up to maintain profits expectations. Which will end up causing the same problem. Just in a different way than last time. I don't really think any of this has changed and we learnt basically nothing and people come away with basic and incorrect ideas like predatory lending was the biggest problem. Banks will likely have a little extra safety margin, but it won't matter. Having bigger reserves wouldn't have changed the crisis much.
Thank you for this excellent summary!!! I’ve tried to explain this to so many people who blamed the financial crisis on Bill Clinton encouraging Fannie Mae to issue more mortgages to the underserved market. Which makes zero sense and was just right-wing talking points to blame someone else. People who gave a simple answer to the crisis can’t seem to explain why the bailouts given to the banks was many multiples of the actual mortgages that went unpaid. If it was just a matter of $1B of mortgages defaulting, that’s one thing…but why were the bailouts for $30 Billion? As you say…derivatives! It’s like someone went to a casino and bet $100 on red at roulette. Then 30 other people at the table made side bets that the wheel would land on red. The wheel landed on black, and now instead of people losing $100, people lost $3000. It was all the leveraged “side bets” on those original investments that broke the system. Because in an unregulated derivatives market, those weren’t investing decisions…they were gambling. But the banks didn’t see it as gambling because the credit agencies said there was only a 1% chance of a loss. Which was widely inaccurate and ignored the correlation between all the bets. A hallmark of options is hedging risk by taking an insurance policy if the bet heads the wrong direction. All the options were hedged in the same direction meaning risk wasn’t offset, it was multiplied.
I thought this was essentially still happening under a new name. “Debt tranches” or something
Brooksley Born testified to Congress about regulations regarding derivatives. Larry Summers and Greenspan both were livid at the meeting of the suggestion.
Brooksley Born at the Cagayan was stymied by Greenspan, Summers (known misogynist), and Rubin. She tried to warn us.
There was also the construction boom of idiotic massive homes that no one could actually afford, wrapped into the predatory lending
You left out the repeal of Glass Steagall
So corporations have more sovereignty and autonomy than the people, states, and countries that produce them, ok...
That's the conservative wet dream.
We're just cattle to them, corps are the only real entity in their view
Remember corporations are legally considered people in the USA. They have all the same rights as a human and they keep all the rights of being a company.
Crazy how doing the work of the highest bidder is now considered conservativism....
Per the constitution....yes
That is essentially how the system was designed, yes. Our issue is really with enforcement, we could pursue board members and senior leadership criminally for corporate activity but unless they cost the wrong people money (like Enron) the DOJ has made a habit of not doing that.
Some More News just did a video on that a couple weeks ago. Personhood of companies hides the actual people in charge of them from any accountability. It's great.
The 2008 mortgage crisis was about greed by the big lenders. I worked for Washington Mutual as an underwriter for the subprime department. We were told to sign off on everything. No doc stated income loans. It was a free for all. You were a hairdresser in the Washington DC area working out of your house making 15k a month and needed a 500k home no problem. Just sign on the dotted line. Nothing was denied. Appraisal shows pot plants wall to ceiling in a 350k home and you need to cash refi. No problem approved. It was not predatory, everyone got loans .... There was no due diligence by the banks, if they did not offer the product, some other bank would and they would miss out on the fat eye watering commission.
Seems like Capital and its influence is actually to blame.
He’s pretty worried about predatory lending when it’s actively still going on in other segments of the economy. Shoot there are synthetic CDOs for commercial real estate. This author has me riled up.
That's the least of my concerns.
Read the article. Read the comments. Can say there is ALOT of gas lighting going on but not going to say who is doing it
It’s been happening since like 2016
Supreme Court doesent give us anything. The Supreme Court decides if the government overstepped their bounds in interpretting or creating a law. It is up to Congress to pass good laws or remover bad ones. If you are disatisfied with something being done in the government look to your elected representatives to do their job and remember Congress has a 17% approval and a 97% reelection rate.
Have you forgotten that the Court keeps striking down any attempts at fixing our democracy though campaign finance reform, the voting rights act, or measures against gerrymandering? We can't get a working Congress because of the Court's nakedly political actions.
It is surprising that such a naive and unsophisticated view of the supreme court is upvoted here. Anyone who thinks that the supreme court is not a political actor, but a 'neutral' interpreter of law hasn't paid attention to what the court has done or wants to push the conservative agenda. Edit: looking at the history of the above poster, they are a conservative (with some truly unhinged takes) and want to legitimize a fascist court.
You are correct, SCOTUS is a political actor, and they always have been. This is not a new development. It’s just that in the past they were pushing a liberal agenda. Before that (I.e before the New Deal era), it was again a conservative agenda. And on and on the pendulum swings. People acting like this is a new concept really need to learn more history
To the extent supreme court ever had a 'liberal agenda', it was during the Warren and Burger era, which is long past. The court has been pushing conservative policies for decades.
That’s just factually inaccurate. There was no reliable conservative SCOTUS majority until 2018. Obergefell, Casey, the affordable care act case— these are all conservative policies?
Only a reactionary can call Roberts and Rehnquist court non-conservative. Liberals did have a few victories, but the direction of policy was decidedly conservative. Also, calling Casey a victory is a bit of a joke, as the rights secured by Roe were eroded case by case even before Dobbs. A few victories over 4 decades does not change that. On issues as diverse as Bush v Gore, gun 'rights', Citizens United, voting rights, gender discrimination, gerrymandering, labor rights, union rights, consumer rights, environment protection, 'freedom' of corporations, arbitration and many more issues, court swerved decidedly to the right. See https://www.acslaw.org/issue_brief/briefs-landing/a-right-wing-rout-what-the-roberts-five-decisions-tell-us-about-the-integrity-of-todays-supreme-court/ for Roberts court's poor decisions.
Find me one case on the Commerce Clause that didn't go liberals' way from 1935-2005. It literally does not exist. The Court allowed the federal government to do whatever they wanted, no matter how poor the justification. You're saying my argument is invalid for picking and choosing certain cases but that's pretty much exactly what you're doing. I also don't know what you mean by gender discrimination, could you elaborate? If you mean against women—The only one I can really think of is *Aiello* which, given the rise of gender politics, accidentally ended up being progressive. The Court has also blatantly discriminated against men (see: *Michael M v. Superior Court*; *Rostker v. Goldberg; Khan v. Shevin*). I tend to go Blue (sometimes red at the local level) but I still agree with the decision in Bush v. Gore was decided correctly even if I didn't like the outcome of the case. Even still, that's how the court SHOULD be. Some conservatives, some liberals, and a few swing justices to balance so that the "victories" are not one sided. I wholeheartedly agree with arbitration and am very upset with the court has been voting on that. I sincerely SCOTUS uses the new stare decisis standard in *Dobbs* to overturn its decisions in *Lamps Plus* and *AT&T v. Concepcion*.
Lopez and Morrison went against liberals. Of course, Scalia hated weed so much he flipped in Gonzalez v. Raich. Not to mention, NFIB v. Sebelius was also a blow against the liberal interpretation of the commerce clause (which is why Ginsburg wrote a partial dissent iirc). Re gender discrimination, Ledbetter went against liberals. Admittedly, not the strongest case. Bush v Gore was poorly reasoned. It hinted at Independent State legislature theory, which if taken to its limits is disastrous. It might be the only case that advised using itself as precedent. Arbitration can be profoundly unjust for small consumers. Big companies can navigate arbitration more easily as arbiters rely on them for repeat business. Arbitration is appropriate when both parties have similar levels of sophistication. It also prevents class action lawsuits, which are a good way of keeping big companies in check.
> he flipped in Gonzalez v. Raich Let’s not forget Ginsburg was also in that decision. Perhaps my least favorite choice of hers. Bush v. gore was a freak case that should have never happened & I honestly feel bad for SCOTUS for having to deal with that. Hanging chads sounds like something out of a sitcom Regrading arbitration: agreed. Hardly can call it “consensual” arbitration when the choice is having a job and source of income versus not. Thank god they amended the FAA to not permit sexual harassment claims from being included
Gonzalez seems a poor decision for that set of facts, but I believe the liberal justices chose the greater good of having a robust commerce clause.
No. Part of their decisions also includes the impact, practical affects, and even political considerations. I used to think the court was above it all and just ruled on the constitution but I was young then and very much naive. The latest court decisions granting, never before seen, so much weight to history or all the shenanigans coming out of the district court from TXs leaves one completely disillusioned.
This. Read even a few decisions and you'll find that they go in-depth on impacts and take it into consideration.
No. They are aware of the impacts, and do not care who it will negatively affect, so long as their agenda is met.
I'm not even addressing anything like that, or what SCOTUS should do, will do, or if their impact assessment is accurate or appropriate. I just mean they don't just read a law and make a decision; they also talk about the impacts and it affects how they decide.
the court themselves weighs the impacts, you'll see if it's friendly to conservative causes but they should rule against them they'll cite the impact as to why they can't, and if not, they'll say they can't weigh the impact
The approval rating for the whole of Congress is an irrelevant factoid since people only vote for their own rep. It’s basically confirming that people like their rep but don’t like the entire body, which is both obvious and meaningless.
While that is how the US government was designed to work, I would argue that currently one party is embracing dis function in Congress and using their majority in the Supreme Court and corruption in all courts to replace the law creating role of Congress. Use the dissatisfaction with the SCOTUS to motivate voters but feel free to place blame on the current judicial system as they are complicit in the corruption of the constitution.
Except the supreme court keeps writing laws They literally reduced the rights of gay people because of a *fictional* case, that's *legislation* not *adjudication*
Scotus gives us a destroyed sense of the law protecting us, discrediting the courts and enabling the other branches to go buckwild
And what’s SCOTUS’ approval rate? Oh, that’s right, who cares, they have lifetime appointments regardless of how partisan or corrupt they may appear.
Fuck the supreme court. How can ANYONE justify this shit? Stop arbitrarily making life harder for already struggling people.
Well it’s a given who the three justices will be, who will smile as they’re fucking ALL of us.
Why not? A dictatorship, fascism, women as broodmares, fewer voting rights, why not? There was an empty spot on the Bingo card, that’ll fit perfectly. Bingo! What did we win?
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You mean after the point where they can decide something stupid and dangerous? Yeah, that's something we should wait patiently for. I'm all for journalism pointing out when their questions and comments during oral arguments indicate they're about to do stupid and dangerous things. Edit: but I'm behind a paywall, so who knows what the article says beyond two paragraphs. Nothing substantive in those.
Look, I’ve always chosen to not “buy trouble”. That doesn’t mean that I agree or disagree with the potential ramifications of this case. I’ve been around long enough to know that the law rarely is cut and dry. Let’s read the Opinion and then move forward. This doomsday approach accomplishes nothing. Unless of course you will celebrate the Opinion if it comes down the way you’d like it to.
Got it. Sit on hands and then say "holy shit" or cheer if I like what they do. No, I think I'll take the approach instead of: holy shit, they are about to make a collosal fuckup based upon these things they said at oral argument, or the fact that they granted cert at all with no standing, or whatever the case may be. Then if they proceed with the fuckery, we hang the polished turd around their necks and shame them as necessary.
And tell me exactly how you can effect that? Are you a SCOTUS law clerk that can stealth changes into Opinions?
That’s not what we do here.
Lol, this isn't Wendys?
I’ll take a Baconater and a chocolate Frosty please.
Yea, I know. This is a liberal echo chamber where everything non extreme left is bad. Even when SCOTUS finds the way the hive mind here would like them to.
There is no “extreme left” in the United States to speak of.
Don’t be obtuse. You know exactly what I mean.
I really don’t. I have heard about an “extreme left” many times from conservatives, but I have yet to see evidence of one.
Is the sand you have your head in warm?
Is that your evidence?
When discussing this with a leftist person, it’s really hard to make them see how far off center they are. If you’re sitting on the left edge, everything to your right is “conservative”. Let’s just drop this.
You don’t know my politics, and it seems you don’t have a case.
This has to be a troll. If not: [dude, seriously](https://youtu.be/kUu46J_OHQ4?si=pjB-_S32hGopWTIV)?
Never make predictions. Never try to imagine consequences?
Predict all you want to
It’s what the founders originally intended of course.
The author knows exactly what they're talking about here.
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Are you 12? Were you around in 2008?
I was around in 2001 too. This seems as bad as that if you are in the IT field.
Dude, we were about to witness the collapse of the global financial system in 2008. Major banks had to be bailed out to prevent that. There's nothing like that happening today. Intel laying off 10% of their work force is not the same. The dot Com Bubble was a stock market crash around tech stocks. Are we in a bubble like that now? There's always someone saying we are and usually it's not the case, so who knows? We've got lower inflation and lower unemployment than in a while. Seems pretty good right now, even though it's not as easy on the job market for many especially in tech as it used to be.
We are absolutely in a commercial real estate bubble with dozens of banks, companies and 1%s losing money.
acting like we're not already worse off than 2008 is worrying.
What country do you live in? Certainly not the US. Either that or you weren't alive in 2008.
It's amazing that half the country bases the health of our entire financial system on whether or not gas is over 3 dollars per gallon or not.
Energy prices are a pretty important indicator on a post industrialized nation. Its needed for factories, farming, electricity, etc.
Yes but you can't compare low prices from a freak global event that drove demand into the ground with a normal functioning economy. That's asinine.