Obama wrong, Wall Street not to blame!

Obama Wrong! Source
In the first week of his presidency Obama found someone to blame. It was the COEs on Wall Street and their excessive salaries. Let's take a look.

America’s economy is the engine of the global economy. We represent less than 5 percent of the world’s population and a disproportionate 25 percent of the world’s GDP. We remain the reserve currency of the world.


Wall Street has played a major role in American capitalism. Its executives should be well compensated.


I am not angry at Wall Street because the current economic crisis was not caused by Wall Street. And Wall Street is not prolonging the pain.


Our economic problems have emanated from Washington and from the Federal Reserve.


If any one needs to be shamed, how about starting with Congress? Congress has offered so little oversight of Wall Street — not to mention the executive branch and the Federal Reserve.


And yes, both Republicans and Democrats have played a role in the current mess.


What is abundantly clear in just the first two weeks of the Obama administration is that the Democrats have the wrong approach in fixing our problems.
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Today, we need to place blame where it belongs. Where was Washington when the Fed and our regulatory agencies allowed zero percent loans to mortgage recipients who weren’t qualified?


Where were they as the financial institutions began collateralizing these loans and then leveraging them 10 to 1 or more?


Where were they when Fed Chairman Alan Greenspan slammed the monetary gas, dropping interest rates to a record low of 1 percent?


Where were they when, in 2004, the Fed reversed course and slammed the brakes on the U.S. economy, raising rates over 400 percent from 1 percent to over 5 percent in less than two years?

More of Christopher Ruddy:

"We have seen that in the massive $800 billion-plus “stimulus” program, which largely goes to directly helping the unions that backed Obama and which benefits a massive laundry list of social welfare and pork barrel spending.


A careful examination shows the stimulus is nothing more than payback to many of the special interests that supported his campaign and the Democrats in 2008.


Commentator Ben Stein estimates that almost half of the stimulus will directly benefit the private and public unions that backed Obama and the Democrats in the recent election.


Then, other hundreds of billions of dollars are spent on federal and state welfare programs. Even illegal aliens can collect checks of up to $1,000.


When I hear Obama wag his finger at bankers on Wall Street, I wonder if he really is serious about fixing our economy or simply replaying Franklin Roosevelt and the 1930s.


Unsuccessful at solving the country’s economic woes, some argue FDR’s policies actually prolonged the Depression for almost a decade and shifted the public’s focus on “evil” Wall Street.


During the ‘30s, FDR demonized corporate America in a skilful public relations effort that pitted Main Street against the wealthy elites."

If wall street had the insight and the honesty to regulate itself and attempt to not screw people, then yes your assumption is correct.

But these were the people who were managing the companies, it's not the Fed's, nor Congresses fault if they mis-managed they're businesses and now require a government handout, those are the people that Obama is blaming.

Now i do agree that the Fed and Congress should have been a little more vigilant. Well in all honesty the Fed is a criminal organization and should be demolished, and Congress...well, they're no better really.

But there is blame to be placed everywhere. And i don't know about you, but i don't think the Leman Brothers CEO should get any sort of parachute or even a salary this year based on their inability to run an effective company.

I think the 500K cap was very generous, i would have given them a dollar.

~Keeper

Wall street and congress are both to blame. Wall St PAYS our congressmen to not exercise any oversight. Every congressmen who voted for the bank bailout plan was paid millions of $ by the bankers.

Originally posted by Make Speed Limit 45
Wall street and congress are both to blame. Wall St PAYS our congressmen to not exercise any oversight. Every congressmen who voted for the bank bailout plan was paid millions of $ by the bankers.

I believe your insight is correct, but your facts are a bit off. Essentially, I am about to repeat what you said with a little expansion...

Congress IS Wallstreet. It is their corporate dollars that put them where they are, in fact, they do pay millions upon millions to make certain that their candidate, the one who is loyal to them, gets elected.

The orchestrator of this phenomenon used to be the Fed; but I think from now on it will be the work of the Treasurer, who's corporate loyalty to the financial cartel ruining our country is unquestionable.

Of course, these are generalizations.

Now i do agree that the Fed and Congress should have been a little more vigilant.

reply to post by tothetenthpower


This financial crisis started with CRA back with Carter. Powerful Senators in the Financial Committees like Barney Frank and Chris Dodds blocked reform for years so if anyone is to blame, they are!

But Obama can't blame Franks and Dodds, he has to work with them so he has to go after CAPITOLISM!

reply to post by plumranch


You can't go after Capitalism without crashing the whole system. To be quite honest that's exactly the great solution everybody has been looking for. Let it all burn to the ground and rebuild it with new standards. Sure it'll suck for a while, but not as much as in twenty years when we've trippled our dept and finally realized that we can't get out of debt by printing more money and creating more debt.

You could eliminate some competition, giving certain companies monopolies in they're respective markets, but that would not work in the long run because companies in charge would inflate they're prices.

I can't wait till the revolution starts and people start to stand outside the Senate and the House Of Representatives with clubs.

~Keeper

In my opinion overleveraged investing by Wall street firms and hedge funds using margin way above assets on hand is the problem according to everything that I have read, Wall Street bears a huge part of the responsibility for this problem, plain and simple, a main street subprime or even as we are finding out prime loan holder possibly knowingingly borrowed more than they could afford but as with anything qualifying for a loan is only a short term bar or snapshot of one's situation in a period of time, it says nothing about future responsibility or financial decline, anyone that has a great job can lose it, anyone that is in a trade that might make money enough to qualify for a loan might find what they do obsolete so really no one can afford to buy a home on credit, I don't care how great your job or your income is, you can't see the future.

But I bet you there are very few homeowners that possibly borrowed 100 to 1000 times their assets or provable income, and the debt to income ratio was at least used in some of the loans given was nowhere near what the wall street investment firms and brokerages were doing with investor money and also quietly using funds pumped into the economy and banks to gamble with.

Now the only reason i used the above examples was that the Wall Street investment banks that no longer (we know their names) exist were using margin money or loaned money to buy stocks betting that they would profit and be able to pay it back, essentially gambling, well we know that some of these banks might only be worth as just an example 1 million dollars, assets and everything, their debt might be 10 million.

On top of that they go out and get loans against their current stock value (buy on margin) for 500 million to buy stocks, but at any point in this process the ability to make money off the over leveraged 500 million loans and the value of the money they invested goes down they cannot repay the money fast enough so then on top of that you start adding in derivitaves and bunch of really poorly packaged mortgage securities that are worth less than half paid for you can see the dillemma created

The banks have overborrowed and overextended their credit essentially buying things they could not afford just like the people on mainstreet are accused, people buying homes the last 6-8 years have been accused of causing the mess, well the banks have loan officers and standards, someone decided to change the rules and make loans easier government partially to blame but the banks who did it and did so irresponsibly are to really blame, we know that the greed on Wall Street is probably about 95% of the problem so I have to disagree Wall Street is the biggest culprit in this collapse because even before the bailout, the Federal reserve was injecting billions of dollars monthly into banks to keep them afloat almost the last year, no one mentions these money injections much.

Also don't forget about the ratings agencies that valued these firms, the products they sold and other thngs investors use as guides are also as responsible for this mess because they overvalued much of the securities being traded and sold all over the world, also the other factors are credit default swaps and corrupt financial executives like Madoff.



[edit on 7-2-2009 by phinubian]

reply to post by phinubian



exactly...derivitives worldwide were not regulated, CDO's (credit default options) and CDS's (credit default swaps) were the ponzi schemes created by the world's wealthy and run by investment houses across the globe.

example: a 1000 mortgage portfolio would be created by an investment house or bank. that portfolio (usually) would be a mix of AAA mortgages all the way down to subprime mortgages. it would be sold, then combined with other 1000 mortgage portfolios. then that whole package of portfolios would be sold. this continuely leveraged (or resold) up to 30 to 40 times. every participant (investment houses and banks) would take a transaction fee for each time sold. THIS WITH NO REGULATION BY ANY GOVERNMENT IN THE WORLD!! then when a couple of thousand of these subprime mortgages started to default, the loans were called to be paid in full, on up the food (money) chain. then the proverbial snowball rolling down a hill came crashing down around everybody.ok....simplistic...but that's it in a nut shell.

So you can't blame Wall Street but you blame congress and the Reserve for not providing enough oversight on the goings on? I hope I am not the only one who sees the irony here.Criminal A does the crime while criminal B,C,and D looks the other way, so let's place all the blame on criminal B,C,and D? The Fed reserve, being a privately contolled entity, IS to blame, no doubt. As is congress for it's "in bed" ignorance. But to let the actual companies and CEO's off the hook for shady business practices to maximize thier profit margins and bonuses as well as causing a major financial meltdown is ludicrous. I respect your opinion but this shouldn't be looked at as the stifling of captialism but rather capitalism run unchecked.

reply to post by phinubian

Your comment: "In my opinion overleveraged investing by Wall street firms and hedge funds using margin way above assets on hand is the problem according to everything that I have read, Wall Street bears a huge part of the responsibility for this problem, plain and simple,"

That "overleveraging" was made possible by bad legislation originating from the Banking Committees (read Barney and Dodds).

CRA and Clinton legislation FORCED banks to make high risk loans to low income people who DID NOT qualify, had no income (other than welfare).

Obama himself was involved as a CHICAGO lawyer sewing CITIBANK for not making enough of these BAD LOANS. Forcing CITI to make bad loans! This was what Obama claimed as part of his experience to qualify for the presidency!

The Banking Committee then went on to require AGI (now nearly defunct) to insure these bad loans in the form of credit default swaps, thereby making them high grade securities (now nearly worthless), triple A even! And then going on to require Fannie and Freddie (federal mortgage agencies) to buy up these wortless mortgages and try to peddle them. They did to places like Lehman, Goldman Sack, foreign banks, nearly everywhere!

The Banking Committees and Congress CAUSED the financial crisis. They are taking NO blame for it but rather are blaming everyone else. They had YEARS to make reforms but FRANKS and DODDS stood in the way of reform lieing their butts off saying that reform was not needed.

And the culprits are getting ZERO blame. Barney, the queen of the banking committee remains guilt free!