Frontline: The Warning (full episode)

[Robor]

Excellent story about deregulation on Wall Street and Brooksley Born's efforts to stop it before it happened. It's 55 minutes long but worth the watch. I'm no economist but I still don't understand having 'those who broke it' responsible for fixing it. :\

http://www.ritholtz.com/blog/2009/10/frontline-the-warning/

(I see this is from Oct so I hope it isn't a repost - I searched and didn't find it)

 

[Zebo]

Excellent story about deregulation on Wall Street and Brooksley Born's efforts to stop it before it happened. It's 55 minutes long but worth the watch. I'm no economist but I still don't understand having 'those who broke it' responsible for fixing it. :\

http://www.ritholtz.com/blog/2009/10/frontline-the-warning/

(I see this is from Oct so I hope it isn't a repost - I searched and didn't find it)

This is a good show Rober - I mentioned/linked this in the volker thread just to show what's going on with him right now - Volker, once Obama's main man during campaign now exiled to Siberia for daring to suggest the stuff he did in Campaign, the same campaign that got Obama elected..

Woman had nerves of steel facing that gauntlet.

 

[Special K]

I watched this documentary a couple weeks ago and agree it is very good. It was interesting to see how Born's prediction in 1998 that another LTCM-like crisis would occur if derivatives were not regulated ended up coming true 10 years later. She also predicted that these crises would continue to occur if new regulations are not enforced. Somehow I have a feeling that she's right and nothing will be done.

 

[Craig234]

It is a very good show. The important message it doesn't cover is, how badly the system worked at the right message getting addressed - how badly the media did at identifying the issue, at airing her point of view (and the other opponents to deregulation), the media was like one big voice who bought into the pro-deregulation view pretty much, the lack of the 'public debate' to recognize the warnings - the liberal Congressmen who warned against deregulationm were first heard by most after the crash years later, not paid attention when needed. It shows how the 'old boys networkl' was a disaster.

What should be changed in the system so that her warning would get more attention the next time? I haven't seen a good answer to that.

When there's good money to be made from bad rules, it gets a lot of backing. Note how we haven't fixed anything in the system even yet after the crash.

 

[Robor]

It is a very good show. The important message it doesn't cover is, how badly the system worked at the right message getting addressed - how badly the media did at identifying the issue, at airing her point of view (and the other opponents to deregulation), the media was like one big voice who bought into the pro-deregulation view pretty much, the lack of the 'public debate' to recognize the warnings - the liberal Congressmen who warned against deregulationm were first heard by most after the crash years later, not paid attention when needed. It shows how the 'old boys networkl' was a disaster.

What should be changed in the system so that her warning would get more attention the next time? I haven't seen a good answer to that.

When there's good money to be made from bad rules, it gets a lot of backing. Note how we haven't fixed anything in the system even yet after the crash.

I'll just link Zebo's thread as a response :\

 

[WhipperSnapper]

I watched this a couple weeks ago. It's worth watching for anyone who is interested in this. What's scary is that many of these people are still in power.

 

[Icepick]

Call me an extremist if you will but, I believe that the leaders of our financial institutions should all be in jail right now for the calamity their greed has brought down upon us all as a nation.

 

[ericlp]

Well, it's a double edge sword and a fine line to walk...

Since the whole idea of Wall Street is "Free Markets" maybe there should not be any regulation. People that invest or should I say "play the game" of wall street should know that there are real significant RISK'S when you GAMBLE on wall street.

What bothers me is when the markets are going down the crapper the government steps in and "regulates" a free market. Either keep it a free market and let half the market tank... Or regulate the crap out of it.

I don't know about you, but when people were getting loans on half a million dollar properties, while holding down a minimum wage job are stupid. Not just the person taking out the loan (betting he/she can flip it in a few years for significantly more) but the lender (banks) are pretty stupid thinking this person could repay them back.

For me I believe that there should be NO regulation and when the market tanks and you see hundreds of people jumping out windows because they lost it all. How far should the government go to tell them if they put all their eggs in one basket....

The market goes up and down --- that's what it's all about. If you don't want to get burned then stay out of the kitchen.

If you are going to regulate, how far do you go? I prefer to let wall street regulate it self. I think a good crash is healthy... It cleans out the cobwebs and altho some people will get taken the majority knew what they were getting into.

 

[Ozoned]

Well, it's a double edge sword and a fine line to walk...



If you are going to regulate, how far do you go?

Regulation that requires that the loan recipient has some skin in the game. 15-20%

 

[sandorski]

Call me an extremist if you will but, I believe that the leaders of our financial institutions should all be in jail right now for the calamity their greed has brought down upon us all as a nation.

Some probably should be. What shocked me in this episode was Greenspan's utter stupid view regarding Fraud. :\

 

[ebaycj]

Regulation that requires that the loan recipient has some skin in the game. 15-20%

The problem isnt REALLY with the MBS's themselves. While I do agree that there should be some legislation on down payments, the fact that people were not paying their mortgages was only the BEGINNING of the issue.

When the shit hit the fan big time, was when the insurance policies on "unpaid mortgages" didn't pay out, because they were not required to hold enough cash in reserve to make good on the risks that they had taken.

This is where the regulation should start. Normal insurance companies (Life, Auto, Home, etc...) are required to keep a fairly large percentage of cash in reserve to prevent "runs" on the insurance company (similar to a "run" on a bank). An example would be when a hurricane destroys half of the state of Florida. That's a hell of a lot of money to pay out all at once. Companies insuring securities products should have similar (or even more strict) cash reserve requirements, for similar reasons.

 

[Craig234]

Call me an extremist if you will but, I believe that the leaders of our financial institutions should all be in jail right now for the calamity their greed has brought down upon us all as a nation.

As a reminder, in the Savings and Loan crisis there were reportedly ober 700 convictions, and that was under a Republiican adminitration. It does raise questions about the power of Wall Street this time.