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