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Live Chat: Robert Scheer on the Financial Crisis

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If 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 Truthdig
April 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 Truthdig
April 15, 2010 3:58 PM
We’re about to get started.

3:01 Truthdig
April 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 Scheer
April 15, 2010 3:01 PM
Hello

3:02 Comment From Guest
April 15, 2010 3:02 PM
hey

3:03 Robert Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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 Scheer
April 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?
3:11 Robert Scheer
April 15, 2010 3:11 PM
Yes.

3:12 Comment From GilreathM
April 15, 2010 3:12 PM
mrfreeze methinks u’ve got it right
3:12 Robert Scheer
April 15, 2010 3:12 PM
But they couldn’t done it without the greed for a peculiar set of
government beurocrats who parlayed their political power into enormous
personal game. The mixture of the private and the public here was toxic.
3:12 Comment From mrfreeze
April 15, 2010 3:12 PM
Robert, who is holding all the toxic assets now? And what’s ultimately
going to happen to that “fake capital?”
3:13 Robert Scheer
April 15, 2010 3:13 PM
YOU ARE.
3:13 Comment From mrfreeze
April 15, 2010 3:13 PM
Gee Thanks!!!!!!!!
3:13 Comment From GilreathM
April 15, 2010 3:13 PM
no Mr Sheer “we are”  YOU own a piece of this too!
3:13 Robert Scheer
April 15, 2010 3:13 PM
The tax payers, because it is the federal reserve and the treasury
department that have stepped in to guarantee in effect, trillions of
dollars of these toxic derivatives. You, meaning the rest of tax
payers, will ultimately be paying the bill.
3:13 Comment From Debbie McCormick
April 15, 2010 3:13 PM
To your knowledge, did Barney Frank ever acknowledge that Mr. Falcon
was the hero in this mess, or one of them?
3:14 Comment From Bluepunk
April 15, 2010 3:14 PM
What about the change in state laws that allowed these bad loans
“loan-sharking” to go on?  Did it not created this time-bomb?
3:15 Robert Scheer
April 15, 2010 3:15 PM
No, not to my knowledge and I believe that Barnie frank, acted in a
totally shameful and otherwise irresponsible manner, as regards Falcon.
He and a number of other progressive, including Maxine Waters, from
California, claimed to be protecting the interests of working and poor
people and expanding affordable housing, but in fact allowed a
situation in which the most vulnerable people in society, were the
ultimate tragic victims, losing life savings, homes and their jobs.

3:15 Comment From mrfreeze
April 15, 2010 3:15 PM
The one commentator mentioned above that the Obama Administration is
trying to keep a lid on any substantiative investigations of these
crimes. I think that’s a mis-characterization of the president. I would
like to know what can really be done to prevent this activity in the
future. What do you think?

3:16 Robert Scheer
April 15, 2010 3:16 PM
(responding to Bluepunk) Your absolutely correct that the preemption of
state lending laws in all areas – housing, credit cards, etc, demanding
by the financial industry, lobbyist in Washington, destroyed consumer
protections that existed in any state, including CA where I happen to
reside.

3:17 Comment From Guest
April 15, 2010 3:17 PM
We know that crimes were committed.  
What’s  being done about it?

3:18 Robert Scheer
April 15, 2010 3:18 PM
well I think that Fannie and Freddie should not be allowed to go back
to business as usual and that we do need a public mechanism for
creating liquidity in the housing market, we do generally accept that
access to housing is desirable, a source of stability and indeed
justice in our country, but it should be done, as we are now doing,
thanks to Obama, with student loans, taking the profit out for it to be
a straightforward accounting procedure. Fannie and Freddie should not
be allowed to make more and they were allowed to make 15 million more
than they should have.

3:18 Comment From Debbie McCormick
April 15, 2010 3:18 PM
When you say we tax payers will pay the bill, what do you mean
exactly?  What will that look like?

3:18 Comment From GilreathM
April 15, 2010 3:18 PM
If the States failed to protect their citizens what exactly was the
Federal Gov’t to do in this instant?  I really want to know.

3:20 Comment From Ian
April 15, 2010 3:20 PM
I spend a lot of time reading Simon Johnson on Baseline Scenario as
well as reading Christopher Hedges on this site. To different degrees
they both see the influence of financial corporations (Fannie Mae ext.)
as the cause and as a roadblock to meaningful reform. Do you feel that
this congress can actually produce legislation that will have a
meaningful effect.

3:20 Robert Scheer
April 15, 2010 3:20 PM
First of all, we are already paying the bill because the economy has
suffered as a consequence of the balloon bursting. WE’re run up our
deficit in order to prevent further collapse. The overall debt has
increased dramatically. But what i was alluding to was that the federal
reserve and treasure have assumed an enormous suspect of collateral
mortgage obligations, and those obligations are continuing to go sour
as the foreclosure rate has increased rather than decline and housing
prices have tanked.

3:21 Robert Scheer
April 15, 2010 3:21 PM
The only reason we have a chance of getting decent legislation is
because the public is aroused and we have a narrow window here in which
the president and leader of congress of both parties might feel
sufficient heat that they will turn against the lobbyist from which
they otherwise seem to slavishly serve.

3:22 Truthdig
April 15, 2010 3:22 PM
Repeating GilreathM’s question: If the States failed to protect their
citizens what exactly was the Federal Gov’t to do in this instant? I
really want to know.
3:23 Comment From mrfreeze
April 15, 2010 3:23 PM
Robert, your article points out, once again, that there were a number
of “whistle blowers” from many different fields that predicted (or at
least worried) about the housing crisis. What is it about our system
that so squelches their voices?

3:24 Robert Scheer
April 15, 2010 3:24 PM
I believe it would be wise to restore the right of the states to
protect the consumers. In California for example, we have had
constitutional restriction on by scripture, incidentally. But those
restrictions are no longer in effect because of Federal preemption. I
think the power of the lobbyist over the federal government is too
strong to expect congress to protect ordinary consumes. we’d be much
better of with notion of state’s rights envisioned by founding fathers,
where state legislators and governments had the power to protect the
voters who are physically closer to them and is the case with
washington politicians.

3:24 Robert Scheer
April 15, 2010 3:24 PM
     Responding to mrfreeze
 
3:26 Truthdig
April 15, 2010 3:26 PM
     We’ve got about 5 questions in
the pipe. We’re going to stagger them to make the answers clearer.
Sorry for the delay, we’ll try to get to everyone.

3:27 Comment From GilreathM
April 15, 2010 3:27 PM
What kind of answer is that?  Individual states used to have
laws against usury but even those laws have gone the way of the dodo.

3:28 Comment From Samuel the Brave
April 15, 2010 3:28 PM
Hi Robert — big fan of your work. Are you at all optimistic that Obama
can enact anything like effective change when it comes to reforming the
financial industry?

3:29 Robert Scheer
April 15, 2010 3:29 PM
  I dont know if there were many, there was the
wonderful Brooksley Bourne, who has chaired the commodity futures
regulation strongly sounded alarmed at the entire derivitates market
was in deep trouble. there is mr. falcon, who attempted to regulate
Fannie and Freddie, but most people who knew better kept silent out of
concern for their careers, or were being paid off by the lobbyist, in
the form of campaign contributions or future job oppportunities. Take
the case of Enron, where wendy Gramm, who proceeded Brooksely Bourne as
the commodities regulator, and whose husband, Phil Gramm, pushed
through the law, preventing any, any regulation, of the commodities of
the derivates market, went to work as a member of the board and chair
of the audit committee board of directors of Enron. The revolving door
between government and the big corporations is employed by
both  democrats and republicans ad the result is that there
are very few whistle blowers to protect the public interest. when they
do dare to stand up to the consumer, as Bourne and falcon did, they are
quenched by their superiors in the government. Tiothy Geitner and
Lawrence Summers come to mind, who are running dogs of the large
corporations.  

3:29 Comment From Richard Nixon
April 15, 2010 3:29 PM
There voices are squelched for the same reasons they always have been,
people don’t want to look at the truth when it is negative.

3:30 Robert Scheer
April 15, 2010 3:30 PM
     yes, but only if there is a
far larger public outcry.  

3:30 Robert Scheer
April 15, 2010 3:30 PM
     (to sam)
 
3:30 Comment From Bluepunk
April 15, 2010 3:30 PM
So if it was at the state level, and the county level where
foreclosures are fought over, then that is where the problem is
at…?  Are we ready to fill in the holes with good laws and
investigate our own state and local leaders?

3:31 Robert Scheer
April 15, 2010 3:31 PM
     Bluepunk: We have a better
shot at controlling politicians on the state level than we do
federally, which is the wisdom that founders of this country grasped.
 

3:31 Comment From Debbie McCormick
April 15, 2010 3:31 PM
Besides pelting the president, Ms. Pelosi and Mr. Reid with emails
supporting financial reform, what should we be doing to help?

3:32 Robert Scheer
April 15, 2010 3:32 PM
     We should be in those emails
and letters, wanting Obama, not to fall for the advice of his key
economic advisors, particularly Summers and Geitner, who got us into
this mess, who were playing the same role in the Clinton
administration. He should turn to Joseph Stigleitz and Reisch and other
well-intentioned economists who know exactly what should be done.
 

3:32 Comment From Kafka
April 15, 2010 3:32 PM
Just a question: why is the US unable to hold its ‘elected’ oficials to
confront an international war tribunal?

3:33 Robert Scheer
April 15, 2010 3:33 PM
     We’ll answer that in a
subsequent column and I have to go get something to eat

3:33 Truthdig
April 15, 2010 3:33 PM
     OK thanks everyone

3:33 Robert Scheer
April 15, 2010 3:33 PM
     see you next week!

3:33 Truthdig
April 15, 2010 3:33 PM
     Thanks Robert

3:33 Truthdig
April 15, 2010 3:33 PM
     We’ll be back next week

3:33 Comment From GilreathM
April 15, 2010 3:33 PM
I hear a lot about states rights but I never hear about states
responsibilities.  Why is it that everybody wants their rights
but nobody wants the responsibilities that go with rights?

3:33 Comment From Debbie McCormick
April 15, 2010 3:33 PM
thank you!

3:34 Comment From GilreathM
April 15, 2010 3:34 PM
bye

Robert Scheer
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Robert Scheer, editor in chief of Truthdig, has built a reputation for strong social and political writing over his 30 years as a journalist. His columns appear in newspapers across the country, and his…
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