FCIC Report is very Illuminating
Posted: April 9, 2011 Filed under: commercial banking, Economy, Equity Markets, financial institutions, Global Financial Crisis | Tags: causes of the financial crisis, FCIC, Financial Crisis of 2007 25 Comments
The Financial Crisis Inquiry Commission (FCIC) is a congressional sponsored study into the reasons for the Financial Crisis. They were authorized by the President in May 2009. They have issued their final report and are disbanding. Google FCIC and you will find their information is being maintained by Stanford University. The published report is available on the website and at booksellers (ISBN 978-1-61039-041-5). It is more than 500 pages long. I have personally purchased about 15 books on the Financial Crisis over the last two years. (I know I should get a life). Each book discusses a separate segment of the crisis. This report is the most comprehensive book to date and is very readable by a person interested in the subject.
The commission was chaired by Phil Angelidies and former congressman Bill Thomas. There are eight additional commissioners appointed by the Democratic and Republican party. They had a staff of 60 people. They held hearings in Washington and locations in states hardest hit by the Real Estate bubble.
The first chapter summarizes their findings and they are quite illuminating on the many facets of the Financial Crisis. They dispel many myths and examples are provided below. One can definitely say we had less government in the Finance world. The evolved system was unsustainable. The end result was the crash of September 2008.
Conclusions of FCIC
1-The Financial Crisis was avoidable
Despite the “once in a 100 years” admonitions of regulators and politicians, this crisis was avoidable. The document does a thorough job, point by point highlighting and disputing the many actions in the last 20 years.
2-Failures in Financial Regulation and Supervision proved devastating to Financial markets
Greenspan was authorized to stop the writing of toxic mortgages despite the rising evidence that they were massive and detrimental. In 2004, the Federal Reserve could have denied loosening of capital reserves from 12/1 to 30/1. In other words, they would need $1 dollars in the bank for every $30 dollars of assets. This is considered very high leverage. In 2000 the government declined to regulate Credit Default Swaps (Derivatives). Repeal of Glass-Steagle allowed mixing banks and Insurance companies. Citi bank was acquired by Travelers Insurance immediately. Under the regulation of the Federal Reserve Bank of
NY (Tim Geithner) Citi was one of the first banks to get into trouble and require a massive government bailout.
3-Dramatic failures of corporate governance and risk management at important financial institutions, key cause of the crisis.
Many banks (not all) acted recklessly took on too much risk with too little capital to address the crisis, being very dependent on short term funding which evaporated as the crisis evolved. They were not able to raise capital to address demand claim of customer. In short they were not able respond to a run on the bank. This is called a liquidity event. Recall that Investment banks were lightly regulated and did not have access to the FED window for emergency loans. They relied on unproven software to evaluate their risks. In short they loaded up on Real Estate securities which turned toxic and they could not absorb the losses. This was done despite the fact that they knew the underwriting of the real estate loans was poor. Goldman Sachs recognized this and curtailed purchasing of bad loans and they survived. The financial community was not able to police itself, requiring a massive government bailout. Risk people identified the problem and were ignored.
Saturday: Cerebral Is as Cerebral Does
Posted: April 9, 2011 Filed under: morning reads 54 CommentsMorning, news junkies.
First up… a personal note of congratulations to my blogger friend, Lake Lady, who on Wednesday was elected mayor of her small town in MO. Mayor Lake Lady, you are a true inspiration! Throughout your campaign, I’ve been reminded of this quote from Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
Now, onto my Saturday reads…
- So, a deal was reached at the 11th hour to avert a government shutdown, at least for now. As D-Day over at FDL said last night:
Once the politics are over, we can assess the policy with clear eyes. And I think you’ll find that the failure to put the 2011 budget to bed in the last Congress cost the economy $60 billion.
- ABC News asks the $64,000 question: Where were the women in the budget debate? Here’s the other $64,000 question, the one that the MSM–as well as most of the prog blogs for that matter–won’t ask: What happened when Nancy Pelosi and “This is what a feminist looks like” Obama were at the Stupakistan table? (The war on women didn’t start with the Republican midterm gains…it just got an upgrade from easily ignored tropical storm to Cat 5 hurricane.)
- The Atlantic’s James Fallows has a couple of posts up on the “uncertainty tax” that the possibility alone of a government shutdown has imposed on government operations, particularly at Hillary Clinton’s State Department… the first post is called Third World on the Potomac, followed up by Government-Shutdown Watch: An Inside View. The good news: Whether or not there was a shutdown, Hillary’s meeting with the highest-ranking woman in the Chinese government, State Councilor Liu Yandong, got the okay to proceed as planned next week. The not-so-good news: According to a reader whose wife works at the State department and wrote in to Fallows (see the “Inside View” link above), “it seems as though the government has been doing nothing this week other than preparing for the shutdown.” Another interesting tidbit from Fallows’ reader:
A semi-hard news tidbit: the disagreement over Planned Parenthood is a smokescreen to hide the fact that they can’t agree on the numbers. What I find so troubling about this is that the WH has met the Republicans about 70% of the way, yet Boehner keep moving the goal posts. Why the WH can’t this storyline into the media is beyond me. But then again, as Dan Balz observes today, we are seeing perhaps yet another example of a cerebral leadership style that is still not working.
- ‘Cerebral’ sure has come to mean something else in these truthy times. (Now, Stephen Colbert…that’s someone I’d peg as having a cerebral style. See the 49-second mark on the clip at the link.)
- I’d also like to say that when it comes to the kind of intelligence that matters, cerebral is as cerebral does. It’s not mere lack of ideas that is plaguing our politics, nor is it as benign as the sanitized “cerebral style” meme would like you to believe. What is plaguing our politics is lack of action and political will. Simple and reasonable ideas like ones on closing the corporate tax loopholes only get floated by the Bernie Sanders in our political class, precisely to be designated as outside the realm of what’s achievable in our current political system.
- Speaking of political bankruptcy, and to link to James Fallows again… he has written an excellent takedown of the “brave and serious” Mr. Ryan, in which he elaborates on his contention that Ryan’s budget proposal is neither brave nor serious but rather “partisan and gimmicky,” which — as Fallows notes — would be par for the course as far as these sorts of plans go, if it weren’t for the laudatory way it has been received.
- Meanwhile, here are the two descriptors Krugman uses for Ryan’s plan: Ludicrous and Cruel. From the link:
In the past, Mr. Ryan has talked a good game about taking care of those in need. But as the Center on Budget and Policy Priorities points out, of the $4 trillion in spending cuts he proposes over the next decade, two-thirds involve cutting programs that mainly serve low-income Americans. And by repealing last year’s health reform, without any replacement, the plan would also deprive an estimated 34 million nonelderly Americans of health insurance.
So the pundits who praised this proposal when it was released were punked. The G.O.P. budget plan isn’t a good-faith effort to put America’s fiscal house in order; it’s voodoo economics, with an extra dose of fantasy, and a large helping of mean-spiritedness.
- Predictable as ever, David Brooks says Ryan’s proposal is the stuff of his political wet dreams: “Liberals are on the warpath. Republicans are aroused. This is great. It’s democracy — how change begins.” Ick. If what is meant by ‘change’ is the American public losing their lunch while listening to the chattering classes hail the destruction of what’s left of the FDR/LBJ social policy legacy, then I’m sure Republicans and DINOs alike will continue to get off on such
changeshort-changing of the American people.
- Where was the beltway punditry last month? Why didn’t they breathlessly praise Bernie Sanders for his Emergency Deficit Reduction Act? Did he not boldly provoke a debate we need to have in this country? Moreover, Sanders’ ideas were actually sound and in line with what the public wants. Paul Ryan’s ideas are neither. Again, we don’t just have a Where’s Waldo president. We have a Where’s Waldo fourth estate.
- Over at FP.com, Rothkopf’s got the perfect piece to read after that nauseating pablum from Brooks: Dear freedom fighters, pay no attention to American democracy. Teaser:
Are you fighting for freedom of speech and assembly and representative government, those supporters must be asking, or is it inadvertently a fight that will ultimately bring you your own versions of Tea-Partiers and gridlock and the complete sacrifice of national interests on the altar of cheap political showmanship?
- Switching gears back to Hillaryland… John McCain at the Christian Science Monitor breakfast earlier this week, upon being asked to rate Obama’s national security team: “I think the international star is Secretary Clinton. She has done a really tremendous job.” Can’t argue with that.
- Here’s some of that tremendous job our Energizer Secretary is doing… via NPR, Clinton Has Tough Words For China On Human Rights. The headline is in reference to yesterday when Hillary unveiled the 35th annual report to Congress on human rights. Click on the link for a transcript of Hillary’s remarks. (Hillary also announced a new website: humanrights.gov. In Hillary’s words, “This site will offer one-stop shopping for information about global human rights from across the United States Government. It will pull together reports, statements, and current updates from around the world.“)
- In other human rights developments right here at home… a Good As You (G-A-Y) Exclusive: Anti-gay marriage strategist, Louis Marinelli, comes out for marriage equality. Here’s a link to Marinelli’s announcement. Also, via Igor Volsky at Think Progress:
As Hooper put it in a Tweet this morning, “Today, my friends, we have more proof that exposure to our lives = @freedomtomarry.”
- In 2012 sideshow news… Bill Cosby says Donald Trump is “Full of It,” Tells Trump to “Run or Shut Up.” Amen.
- Trump, not content to shit or get off the presidential pot just yet, has sent a crack investigative team into Hawaii looking for god only knows what. The only ‘shocking’ discovery Trump could dig up as far as I’m concerned is the whereabouts of Obama’s long lost core convictions. This is the only mystery worth considering when it comes to any ESOTUS (Empty Suit of the United States.) The rest is static…or, to paraphrase Eleanor Roosevelt… Great minds look for core convictions, average minds seek to be part of ‘cool’ events, and small minds continue to ask for Obama’s or Trig’s birth certificate.
- Salon’s Alex Pareene: South Carolina GOP confirms five clowns for first 2012 debate. A depressing slate of bozos — Pawlenty, Ron Paul, Gingrich, Buddy Roemer, and Rick Santorum — but as Pareene says, “This is the preliminary list of losers, so there is still time for more clowns to RSVP.” I think that pretty much sums up the outlook for 2012, both the primaries and the general.
- Keeping up with the one chance we have at something other than a bozo, even though it’s a long shot… CNN: Huntsman heading to South Carolina in May — to deliver a commencement address on the the 7th. “But a source close to Huntsman’s potential presidential campaign told CNN that it’s unlikely he will participate in the debate. The source said, though, that no final decision will be made until he returns from China.” Huntsman is also scheduled to give a commencement address in New Hampshire on the 21st.
- Public Policy Polling says at this point, only Romney would make NH competitive. Blech. No mention of Huntsman in any of the other matchups either. I have a hunch he’d make it more competitive than Romney would.
- Bruce A. Dixon/BAR asks an excellent rhetorical question about Obama’s firewall of support in 2012… The Black Wall Around Barack Obama: Who Does It Protect Him Against?:
The presumption that Barack Obama, no matter what he does or doesn’t do, enjoys nearly unanimous black support is a veritable wall around the president. But who does it protect him against? Republicans? Banksters? Tea partyers, warmongers, torturers? Or black people and the left, his supposed base?
- Last Saturday I highlighted the plight of black migrant workers in Libya. BAR’s Glen Ford has an update. The NYT Sunday magazine and the UK Globe and Mail have finally devoted some ink to this story. Like Ford says, “As usual, it is only after the U.S. government has embarked irrevocably on the warpath that corporate media reveal the flaws in the rationale.”
- And on that note… check out this special roundtable on Libya by Beck Bennett and his youth panel. It’s likely the most honest talking head discussion on Muammar Gaddafi you will ever come across:
- I’ve been watching The Kennedys on the Reelz channel, and I have to say, despite all the critical pans of the series and even with its glaring weaknesses (chief among them, the omission of a whole lot of Kennedys), I am enjoying it. Perhaps it’s just the RFK fan in me, but I love watching Bobby and the relationship between Bobby and Jack through the lens of fine acting and a humanizing script. Anyhow, for anyone who’s missed out… there’s a Saturday marathon to catch up on episodes 1-6 today (April 9th), starting at 2 pm eastern. There will be another replay of episodes 1-6 tomorrow before the miniseries concludes in a 2-hour finale (episodes 7 and 8.)
- As a companion piece to anyone’s viewing of The Kennedys, I highly recommend historian Carl Sferrazza Anthony’s riveting series at his blog… Playing Presidents: Good History vs. Good Drama and The Actor JFK (and Jackie) Wanted To Play Him. That’s Part 1. There’s also a Part 2 and Part 3. If you click over, be sure to read all three posts. Everything I’ve ever read from Anthony seems like the antidote to the corporate media’s infotainment coverage of politics and political figures.
- I also just finished up a tv marathon of my own the other day trying to get through all of the second season of Top Chef Masters before all the episodes disappeared from my cable provider’s On Demand rotation. I don’t want to ruin it for anyone else, just in case you’re like me and end up catching up on most tv shows after they’ve already aired–so don’t click on either of the following links if you don’t want to be spoiled. I’ll just put it this way, without giving too much away: I was really thrilled to see that the charity the winner picked for the money he/she won is working toward a cause that our Madame Secretary has been working to draw attention and awareness to.
- Two quick geek reads before I wrap up… first, via CNN’s Elizabeth Landau, Is it a new particle, or just a fluke? There’s a congressional budget angle to this story, too:
Suddenly, this week, physics enthusiasts’ eyes turned to Tevatron, a much smaller and less powerful particle accelerator in Batavia, Illinois, that is scheduled to be shut down for good after September. And, depending on what happens with the budget crisis on Capitol Hill, it could be even sooner. At Tevatron, part of the Fermi National Accelerator Laboratory (Fermilab), scientists said they may have found evidence of a particle never observed before.
- Via Ron Cowen at Wired Science, Mysterious Cosmic Blast Keeps on Going. Cowen reports that “Astronomers have witnessed a cosmic explosion so strange they don’t even know what to call it.” Sounds like a metaphor for our times.
This Day in History (April 9th)
- 1865: Robert E. Lee surrenders.
- 1939: Marian Anderson sings on the steps of the Lincoln Memorial. Here’s audio of the introduction Secretary of the Interior Harold L. Ickes gave Marian–noting that “genius draws no color line”–followed by Anderson signing “My country ’tis of thee“…via youtube:
What’s on your blogging list this Saturday?
[originally posted at Let Them Listen; crossposted at Taylor Marsh and Liberal Rapture]
Breaking: Deal Reached, Gov’t Shutdown Averted, Details TBA
Posted: April 8, 2011 Filed under: just because 39 CommentsAccording to Dana Bash on Anderson Cooper’s show, a deal has been reached to fund the government for the rest of the year. As I find out more, I’ll add to this post. Please post anything you’re hearing in the comments.
David Gergen is saying the Republicans got $40 billion in cuts. Unbelievable! They were 1-1/2 hour from the deadline.
MSNBC First Read: Budget negotiators think they have a deal.. now what?
Press conference, Boehner talking now. A continuing resolution until the deal is hammered out. No details, but Boehner is happy and celebrating.
Defunding Title 10 women’s health provisions (Planned Parenthood) will not be in the deal. Dana Bash says there will be a separate vote on that, but it is not expected to pass.
Now Obama is talking. Ugh… Why can’t he see a speech therapist to get rid of those whistling s’s?
He’s saying the cuts will be painful, but we have to learn to live within our means. Aaarrrrrrghhhh!
Additional updates in comments.
Open Thread: Inside Japan’s Evacuation Zone
Posted: April 8, 2011 Filed under: Foreign Affairs, Japan, open thread, We are so F'd | Tags: evacuation zone, Fukushima nuclear plant, Japan, radiation, Tetsuo Jimbo 12 CommentsVia Raw Story, see what it’s really like inside Japan’s evacuation zone–empty streets, abandoned houses, ruined roads from the earthquake, packs of dogs and livestock roaming free–it’s like something out of a science fiction movie.
Japanese journalist Tetsuo Jimbo made a trip inside the restricted evacuation zone near the Fukushima Daiichi Nuclear Power Plant last week. At 17 km from the plant (about 2 minutes into the video), the Geiger counter alarms go off and remain on for the rest of the trip….
Jimbo terminates the mission at about 1.5 km from the nuclear plant, where radiation is thousands of times above normal.
Watch the video:
See dramatic photos at Buzzfeed
Religious Extremists in House Hold up Budget over Planned Parenthood Funding
Posted: April 8, 2011 Filed under: Women's Rights | Tags: Federal Funding, Planned Parenthood Funding 18 CommentsWill Obama and the Democrats Cave to the Xtian Taliban sitting in Congress?
Democratic officials familiar with the negotiations said that proposed restrictions on money for Planned Parenthood remained the chief sticking point, and that attempts to resolve the disagreement through alternatives like allowing a separate floor vote on the issue had not been successful. Democrats said they were told by the Republicans that the votes of anti-abortion social conservatives would be needed to move any budget measure through the House.
But Reid called it a battle over ideology.
“The debate has nothing to do with the number — it has everything to do with women’s health,” he said, referring to funding of Planned Parenthood during a Friday news conference. “That’s the only issue that was left undone when we left the White House last night.”
Jeff Zients of the Office of Management and Budget, who is overseeing preparations for a possible shutdown, said both the economy and public confidence in the federal government could suffer — even if a shutdown only lasted through the weekend.
“When I think about the scale of the number of operations that will be shut down and then would have to be reopened, I think the impact on the economy even for a short period of time could be relatively significant,” Zients told reporters Thursday.
Call your senators and representatives and tell them not to cave to Religious Extremists.
More from Think Progress:
Three Anti-Abortion Republicans Tell House GOP To Drop Planned Parenthood Rider To Avoid Shutdown
While many Republicans are committed to holding up the budget over a social issue, at least three anti-choice Republicans are recognizing the absurdity of such an obstacle. Sens. Pat Toomey (R-PA), Tom Coburn (R-OK) and — surprisingly — Rep. Michele Bachmann (R-MN) have signaled a willingness drop the policy rider to reach an agreement and avoid a shutdown:
– Toomey on MSNBC: “I think what we should do is cut spending as much as we can, get the policy changes that we can, but move on, because there are other, bigger battles that we are fighting,” he said yesterday.
– Coburn on MSNBC: “And my recommendation to my friends in the House is, you know, it’s highly unlikely that many riders are going to get passed with a Democrat president and a Democrat Senate, so why don’t you take the spending and let’s get on to the budget,” he said Wednesday.
– Bachmann on CNN: “I think that we should have a clean bill that makes sure that the paychecks get to the troops on time,” she told CNN’s John King yesterday.






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