View Single Post
      09-10-2012, 04:59 PM   #14

Drives: M3
Join Date: Jul 2010
Location: sitting down, facing the keyboard

iTrader: (0)

Originally Posted by yakev724 View Post
The bailout of a hedgefund in 1998 (LCTM) added significantly to the plagued risk-ignorant culture on Wall St. Then, Clinton signed some brilliant legislation. First Gramm-Leach-Bliley, aka repeal of Glass-Steagall, allowing investment and commercial banks to merge, growing them to sizes requiring some sort of bailout if they were to fail, and more importantly, allowing them to play with regular clients' money. Next, Clinton signed the Commodity Futures Modernization Act, allowing for unregulated trading of complex derivatives which would play a central role in the 2008 crisis. The banks would later convince the SEC to allow them to leverage past 12:1 in 2004, which also had a tremendous effect on the bubble.
You left out what I consider to be a huge factor, which is Clinton's affordable housing act, which basically made it much easier for anyone with a pulse to get a mortgage. This drove prices to irrational levels, because the previous barrier to entry to get a mortgage was gone, so now you have dumb highschool dropouts who understand nothing about economics engaging in crazy bidding wars. Once they lose their shift at Jack in the Box, now they cant make the payments on their original mortgage, plus the HELOC they used to buy a new speedboat they couldnt afford either. That planted the seeds for the housing bubble, which, combined with the Acts described above, started the financial death spiral we are all too familiar with today.

I'm not saying Dubya was the finest president ever, but to blame him 100% for what happened is quite short sighted. Perhaps some of the posters are too young to remember what happened when Bill was in office.

Even as things started to collapse, in the final days of the dubya administration, I dont recall them saying the housing crisis is all Clinton's fault, the way the Obama administration likes to say it's all Bush's fault. Every president after Washington had to deal with the baggage of their predecessor, it comes with the job. I dont recall any of them pointing the finger at the previous administration as much as the current one does.