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June 18, 2013
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 Live Chat: Robert Scheer on the Financial CrisisPosted on Apr 15, 2010If you missed Robert Scheer discussing his latest column, the financial meltdown and its enablers with readers or you just want to relive the excitement, you can read a full transcript right here. Robert Scheer discusses his column every Thursday at 3pm PT in a live Q&A.  2:41 TruthdigApril 15, 2010 3:41 PM Hello. We're going to start in a little over 15 minutes but feel free to chat until then. 2:47 Comment From GilreathM April 15, 2010 3:47 PM Why call it a crisis when it was manufactured? 2:55 Comment From GilreathM April 15, 2010 3:55 PM Knowing what happened and having neither the power nor the will (when you have the power) to make it impossible for things like like this to happen is the same as being where we were and doing what we were doing when it happened the first time around. 2:58 TruthdigApril 15, 2010 3:58 PM We're about to get started. 3:01 TruthdigApril 15, 2010 3:01 PM We're just waiting for Bob to get set up on his computer. Just a minute now.  3:01 Robert ScheerApril 15, 2010 3:01 PM Hello 3:02 Comment From Guest April 15, 2010 3:02 PM hey 3:03 Robert ScheerApril 15, 2010 3:03 PM It is a crisis for people losing their jobs, homes, people having to pay taxes, children and grandchildren inheriting enormous debt and the fact that it was man-made, rather than ordained by a deity or the forces of nature, makes it far less acceptable because it could have been avoidable. 3:03 Robert ScheerApril 15, 2010 3:03 PM (in response to GilreathM) 3:04 Comment From BarbaraM April 15, 2010 3:04 PM Robert, why didn't anyone heed Falcoln's warning when it could have mattered? 3:04 Comment From Tony B April 15, 2010 3:04 PM Hello Room 3:05 Comment From mrfreeze April 15, 2010 3:05 PM Robert, so many of the pundits claim that the banks were "FORCED" to make loans to unqualified buyers. The last time I checked, I've never known banks to be forced to do anything. 3:05 Comment From GilreathM April 15, 2010 3:05 PM hey 3:05 Robert ScheerApril 15, 2010 3:05 PM Because Fannie May and Freddie Mac were dispensing tens of millions f dollars in campaign contributions, they went into every congressional district, extolling their claimed accomplishments, the fact is, that this wedding of public power with private greed, turned out to be too much for congress to withstand. 3:06 Robert ScheerApril 15, 2010 3:06 PM It's a lot of crap. 3:06 Comment From GilreathM April 15, 2010 3:06 PM Fannie and Freedie were not the only dispensers of loans 3:07 Robert ScheerApril 15, 2010 3:07 PM Fannie May and Freddie Mac were playing catch up to not lose because the banks were going hog wild in packaging these dangerous derivatives. in deed it was the private mortgage broker country wide that conducted the main deal with Fannie May that got them into this racket. 3:07 Comment From mrfreeze April 15, 2010 3:07 PM Actually, Fannie and Freddie don't do loans, do they? 3:07 Robert ScheerApril 15, 2010 3:07 PM No, they buy them and they either hold them or repackage them, which is how they ended up underwriting 50% of the mortgage debt. 3:08 Comment From GilreathM April 15, 2010 3:08 PM so everything is Freddie and Fannie's fault is what you are saying? 3:08 Robert ScheerApril 15, 2010 3:08 PM But without what appeared and in fact turned out to be the reality of a government guaranteed for those highly suspect mortgages, the market would not have inflated as fully on its own. What Fannie and Freddie did, was provide legiticemy to an activity that was inherently illegitimate if only the laws were written correctly. 3:09 Robert ScheerApril 15, 2010 3:09 PM No. 3:09 Comment From GilreathM April 15, 2010 3:09 PM Freedie and Freedie should have written better laws? 3:10 Robert ScheerApril 15, 2010 3:10 PM What I am saying is that Fannie and Freddie acted in the same spitit, same motivation, same greed, as did the other financial dumas in the private sector. they were essentially private organization traded in the public sector, and the bonuses were tied to their stock price. 3:10 Comment From Guest April 15, 2010 3:10 PM The Obama administration seems most reluctant to investigate the political crimes of the Bush administration or the crimes of banking and other financial institutions. It looks like they want to keep a lid on everything. 3:11 Comment From GilreathM April 15, 2010 3:11 PM Bush administration crimes didn't take place overnight. there is still time. 3:11 Robert ScheerApril 15, 2010 3:11 PM No, Fannie should not have been allowed to lobby in this unrestrained way to prevent better laws from being written. The whole problem here has to do with the power, not only of Fannie and Freddie but of the private sector to prevent laws requiring effective regulation. Armando Falcon, as I wrote in my column, was in fact a de-fanged regulator with severely under-budgeted agency, and as he testified last friday, was only the weakest of regulatory powers. 3:11 Comment From mrfreeze April 15, 2010 3:11 PM So, what your saying is the private sector shifted risk to the public sector and then cried foul? Advertisement
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Bank of America Lied to Homeowners and Rewarded Foreclosures, Ex-Employees Say
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A Progressive Journal of News and Opinion. Editor, Robert Scheer. Publisher, Zuade Kaufman.
© 2013 Truthdig, LLC. All rights reserved.
© 2013 Truthdig, LLC. All rights reserved.
By David Vognar, April 18, 2010 at 8:02 pm Link to this comment
(Unregistered commenter)
Scheer, money goes to kill people in other countries. How is this a good thing?
Report thisBy Vincent OBrien, April 17, 2010 at 1:59 pm Link to this comment
(Unregistered commenter)
I keep hearing how some people got very rich “betting” against this or that stock, fund, or whatever. I have tried in vain to find out how this works. This much I know about betting. You make a wager and someone has to fade you. If you win the bet you keep the money. If you lose, the one that took or faded your bet keeps the money.
Report thisMy question is: Who fades the bet ? How do you place such a bet ?
By Tim Trevathan, April 16, 2010 at 9:48 pm Link to this comment
(Unregistered commenter)
http://www.ft.com/cms/s/0/e2c10df6-619d-11de-9e03-
Report this00144feabdc0.html
Insight: SEC gets tough on Wall St tribalism
By Gillian Tett
Published: June 25 2009 16:52 | Last updated: June 25
2009 16:52
In recent years, Henry Hu, a finance professor of
Texas University, has often been a thorn in the side
of the banking world. In his academic research, Hu
has repeatedly highlighted the systemic risks created
by credit derivatives and other complex instruments.
Most recently, he has expressed alarm about the so-
called “empty creditor” problem – or the fact that
lenders, such as banks or hedge funds, are
increasingly using credit derivatives to hedge in
ways that create perverse incentives to tip companies
into default.
EDITOR’S CHOICE
More columns by Gillian Tett - May-28
By Christopher C. Currie, April 16, 2010 at 6:27 pm Link to this comment
(Unregistered commenter)
Wall Street’s “Credit Default Swap” SCAM!
This is my take on Wall Street’s near financial collapse in the fall of 2008, based on the situations and points revealed in Simon Johnson and James Kwak’s book “13 Bankers—The Wall Street Takeover and The Next Financial Meltdown.”
PROBLEM: Wall Street firms liked to pedal Credit Default Swaps as if they were ”insurance policies” to “hedge investors’ bets” against any potential default on a loan, bond, or in some cases other “financial instruments” created by Wall Street firms. But unlike insurance companies which were required by law to maintain adequate “statutory reserves” to ensure that they will have adequate cash on hand to pay up when the insured liability materializes, the issuers of Credit Default Swaps rarely (if ever) maintained such reserves. They got away with this, because Credit Default Swaps are considered to be “derivatives” that are created, sold, and traded in Wall Street’s unregulated “shadow banking” markets. Being “backed up” only by their issuer’s reputation, I believe it would be more accurate to call them “unfunded liability swaps” or “insurance scam swaps.” Nevertheless, they were very popular, because even if the Credit Default Swap creators kept the large commissions/fees that they received in a “statutory reserve” of some kind, those reserves would probably not have been sufficient to cover the corresponding default risks, so the purchasers of Credit Default Swaps thought they were getting a “really good deal” for their money.
IMPACT: The fact that Credit Default Swaps are inherently fraudulent in nature is bad enough, but the destructive role that they play gets even worse. By using Credit Default Swaps to create elaborate interlocking financial dependencies among themselves (and by using their alleged “hedge your bet” capabilities to create an illusion that they are far more “financially solvent” than they really are), large Wall Street firms have created a situation whereby the bankruptcy of even just one of them will create a chain reaction of “pay up” requirements that will bankrupt ALL of them (unless our government quickly “bails them out”)! This is what happened when Lehman Brothers went bankrupt, because the US Treasury Secretary couldn’t find any other firms who were willing to “buy them up” (unlike the case with Bear Sterns). The resulting chain reaction of “pay up” requirements created primarily by the interlocking (and crumbling) “house of scam-cards foundation” of Credit Default Swaps quickly brought the rest of the “Big Banks” to a point where they were technically bankrupt as well. But rather than declare bankruptcy, their CEOs essentially decided to simply stop trading altogether and wait for our government (and US taxpayers) to bail them out. And as Paul Harvey used to say, “The rest is history.” The impact of Wall Street’s Credit Default Swap Scam on America’s economy (and the economies of many other nations) has been PAINFUL, to say the least.
RECOMMENDED SOLUTION: So because they are essentially fraudulent in nature, and because they have been playing such a key role in making “Wall Street Banks” seem to be “too big to fail”, Congress should OUTLAW ALL CREDIT DEFAULT SWAPS, but give those Wall Street firms about a year to “unwind” their interlocking “house of scam-cards foundation” in a way that will enable them to remain solvent and functional.
Christopher C. Currie
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