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Banking and business leaders reportedly are meeting with Tea Party-backed House members who...

Banking and business leaders reportedly are meeting with Tea Party-backed House members who pledged to stop raising the debt ceiling to explain what they think would happen if the members carry out their threat: "Interest rates would spike; S&P and Moody's would downgrade U.S. debt, raising the price of borrowing; there would be a market selloff - it would be a disaster."
Comments (30)
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    The cost of borrowing is irrelevant. Already-issued debt has fixed coupons and newly-issued debt is being purchased by the Fed, to which the Treasury does not pay interest. Want to try again, debtsters?
    10 May 2011, 05:57 PM Reply Like
  • bbro
    , contributor
    Comments (9841) | Send Message
     
    "The cost of borrowing is irrelevant"???

     

    Great let me charge you 30% for your Mortgage
    10 May 2011, 06:43 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    No problem, as long as we agree that a week after you originate it you'll sell my mortgage to another company, which has agreed in advance to refund all of my interest payments to me.
    10 May 2011, 07:25 PM Reply Like
  • djn21
    , contributor
    Comments (77) | Send Message
     
    Naturally. "A disaster." Where have we heard that before?? Oh yeah! So you're saying it would be almost as bad as if we hadn't bailed out the banks in '08-09. That bailout thing was great. We've institutionalized TBTF - how can that be bad? And surely increasing our sovereign borrowing needs exponentially into the indefinite future would be without consequence if not for this pesky debt ceiling thing. A "disaster" indeed.
    10 May 2011, 05:59 PM Reply Like
  • sixpackistan
    , contributor
    Comments (262) | Send Message
     
    "S&P and Moody's would downgrade U.S. debt" - what a joke. the same morons that had AAA on the junk mortgage backed securities.
    10 May 2011, 05:59 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (2897) | Send Message
     
    The crony capitalists do not want their secret keys to the USTreasury vaults confiscated. Without this access, the 10% tithes to the politicians might cease.
    10 May 2011, 06:01 PM Reply Like
  • Duude
    , contributor
    Comments (3382) | Send Message
     
    Enough of the scare tactics. Its only design is to keep our hired politicians from doing the difficult business of reform which we've paid them to do.
    10 May 2011, 06:28 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    If debt ceiling is not raised, that will be the end of tea party.
    10 May 2011, 07:02 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    If the debt ceiling is not raised, it will be the end of everyone BUT the tea party...
    10 May 2011, 08:53 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    I agree. There will be plenty of blame to go around for the repercussions, and it will all be sticking to the TeaBaggers and Republicans like super glue. I almost want it to happen. I always like to encourage their idiocy.
    11 May 2011, 01:41 AM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    That is 99% of the US population.
    11 May 2011, 09:10 AM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    "That is 99% of the US population."

     

    That is why the debt ceiling will be raised.
    11 May 2011, 10:55 AM Reply Like
  • davidbdc
    , contributor
    Comments (3165) | Send Message
     
    What do they think will happen if they raise the debt ceiling? We'll make it multiple choice!

     

    A. Politicians will race to spend all the new money on their favorite constituencies, expanding government bureaucracies, imposing more regulations on the average person, and enlarging crony capitalism.

     

    B. Become responsible adults, making the truly difficult choices to balance the budget. Explaining to Americans why many programs have to be cut. Eliminating several departments like the Department of Education, Commerce, etc, etc. Telling lobbyists to pound sand, reforming the tax code, and demanding prosecutions of all the fraud that led to the financial crisis. Oh, and they and their staffs take 50% pay cuts also.

     

    Ok, you can stop laughing, we all know the answer.

     

    Isn't this the same sorry excuse that we heard for TARP and the stimulus package? Same excuse for not prosecuting fraud?

     

    Wow, we will blow up a corrupt system that has been shrinking our liberties and freedoms. My oh my!

     

    Let the government live on cash... money in equals money out. And yes it will be painful but it will stop placing additional burdens on our children and grandchildren. And it will stop much of the corruption that currently passes as democracy in Washington DC.
    10 May 2011, 07:19 PM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    Same old hackneyed lines...

     

    "It's a crisis"

     

    "We must do it for the children"

     

    "If we don't things will be worse"

     

    Of course you never hear this if you miss a mortgage payment or tax bill.

     

    At the level of the individual and household it is "obey the law".

     

    Beyond that it is "make taffy with other people's money" or the sky will fall.
    10 May 2011, 08:39 PM Reply Like
  • trimmer30_98
    , contributor
    Comments (5) | Send Message
     
    The conversation is moot of course they are going to raise the debt ceiling.
    10 May 2011, 08:50 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3531) | Send Message
     
    Why are there no government programs that can be cut or scrapped? Why is every federal employee and federal contractor indispensable?
    10 May 2011, 09:58 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    We need to cut social security, Medicare, Medicaid and food stamps right away...

     

    We need also to keep the interest rates low to absorb the spending cuts shocks....

     

    And yes we would need to raise the debt ceiling for the sake of our children and middle class....
    10 May 2011, 10:04 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    No mention of raising taxes.........what a good little NOT SO FISCALLY CONSERVATIVE.

     

    I know, if you raise taxes the rich won't have any money to invest in business. The problem with that is they are investing in businesses in emerging markets. Not in the USA.

     

    The best example of how to pay down debt occurred during the Clinton administration. Why not do that again????? Oh the NOT SO FISCALLY CONSERVATIVE REPUBLICANS won't raise taxes.

     

    Their vocabulary still only consists of one word...."No".
    12 May 2011, 05:59 PM Reply Like
  • buyitcheap
    , contributor
    Comments (1892) | Send Message
     
    I'll raise you a debt ceiling if you get me 1 significant player jailed for this whole mess. Perhaps seizure of TBTF bank executives down to the branch managers?

     

    There is a ready source of funds available beyond additional taxes. We need to seize the hundreds of billions in exempt sector endowments that have benefited from obscene tax "breaks" for decades. It's sitting idle. It's dead money. Let's put it to use. What the hell, if Obama can break GM bondholders, why not self interested donors.
    10 May 2011, 10:25 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Why the hate for bank employees? If you can prove they committed fraud, I'd be all for it. The best I've seen so far is shoddy paperwork; maybe there's a case there, maybe not. You'd think with all the ambitious DAs out there and thousands of "bank executives down to the branch managers" there'd be at least something by now. Since there isn't I have to assume any cases are weak, because you'd have to think bringing those guys down would make plenty of political hay right now. Unlike, for example, individual borrowers who claimed to have $200k in income when they really had $40k so they could buy a fifth house and flip it 3 months later for a 20% markup. That, in fact, IS fraud, and it's trivial to prove, but there's no point in bringing civil cases because the combination of bad publicity and poor recovery prospects makes it a waste, and there's nothing for some young hotshot prosecutor to gain tossing a hundred broke real estate fraudsters in the clink. And, of course, everyone was doing it. Hell, you were leaving money on the table if you weren't, right?

     

    I hate TBTF as much as anyone, but I place the blame correctly. A bank exec who knowingly makes loans at rates that don't compensate his company for the risks associated with unverified applications should be fired. If he is an officer, the shareholders may be able to sue him. And if he gains from doing this and does not inform his superiors of the problem, he may even be guilty of criminal malfeasance. But that's still a crime against the shareholders, not you or me. The blame for what's happened since lies entirely with Congress and the Administration. Only THEY could create "TBTF". Only THEY could take money out of your pockets and give it to the banks' creditors. Only THEY, the government, not the bankers, could rape Americans to the tune of $3 trillion dollars and counting. If you're angry, and you should be, blame the government. Without their actions, the banks' shareholders and creditors would have borne the losses, not you and me. They would have been the ones taking the execs to court, and let me assure you, with the sums involved they would have been vicious and relentless. Your hated execs would not only have been personally bankrupted but they would have gone to jail, some of them for a long time. Instead, well, we got this. I'd tell you to write your Congressman but who would I be kidding? He doesn't care. Remember that at the next election. In the meantime, get off your high horse and quit blaming people who, however slimy and dishonest, did nothing to you.
    11 May 2011, 12:24 AM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    To think that the citizenry would not have paid a stiff price if the banks failed is, well, just plain wrong to say the least. We bailed the banks out and we are still paying the price. If the financial institutions failed we would still be dealing with 25% unemployment. And of course we certainly couldn't assist GM after letting the banks fail. I'm not sure what the real answer is, but, I do know what the answer is not, And the answer is not yours. The bankers manipulation of securitized mortgages, from marketing, to loaning, to securitizing, and then selling the fraudulent assets was clearly criminal.
    11 May 2011, 03:22 AM Reply Like
  • buyitcheap
    , contributor
    Comments (1892) | Send Message
     
    :-) why assume I have a high horse? I don't even like horses. And how does one infer "hate" when I'm asking for investigations and prosecutions of guilty parties? Unless, you're one of them? Perhaps a relative? :-)

     

    We agree more than disagree b/c you described the exact employees to whom I'm referring: " A bank exec who knowingly makes loans at rates that don't compensate his company for the risks associated with unverified applications should be fired." I completely agree. The mortgage loan originators were the managers of the local branches, you know, the people that facilitated this fraud and helped write these liar loans in the first place - those are the people I'm talking about. This is well documented in the testimony of a number of prosecution witnesses who went after Mozillo among others. I want ALL of them prosecuted.

     

    You have an ideological "skew" to your assertion that this problem is entirely due to the government - I have NO problem adding them to the list of prosecutions for criminal acts, starting with ineptitude (if that's a crime in politics?)

     

    But to your other condescending and uninformed assumptions:

     

    "If I'm angry blame the government:" I do, but I don't get angry anymore.
    "Remember that at the next election": I did.
    "Did nothing to me?" Are you kidding? Please see current state of economy and housing values.
    11 May 2011, 08:39 AM Reply Like
  • djn21
    , contributor
    Comments (77) | Send Message
     
    If we had let the TBTF fail, smaller banks would get bigger and new banks would form to take gradually fill their role - 2000 banks instead of 200, isn't that how our financial system worked (just fine) for the first 200 years? It would have been incredibly painful, and a rebound would have taken much longer. But it would have been a real rebound - (not this ongoing mirage that we have in place).
    Instead we gave our financial system a dose of morphine in the form of QE's/bailouts, to which we are now addicted. Except we still have the same disease that plagued us in '08, and will still face the same crippling problems, except now with an even weaker surrounded environment. Of course you and I can only speculate, but that's how I see it.
    11 May 2011, 10:05 AM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    If you believe bank employees have an obligation to citizens with whom they have no business or fiduciary relationship, we'll have to agree to disagree. That would make them effectively part of the government. Which is exactly the genesis of TBTF. Banks are independent enterprises just like any other; you do not have the right to demand that the manager of a car wash in Poughkeepsie go to prison because his shop didn't get the dirt off someone else's car.
    11 May 2011, 12:08 PM Reply Like
  • davidbdc
    , contributor
    Comments (3165) | Send Message
     
    I think you miss the point at people's outrage.

     

    The bottom line is that the government chose to "save" the million dollar bonus bankers at the expense of the 2nd shift Deere worker. Plain and simple.

     

    There was no need to bail out failed banks. The government's concern was supposedly ensuring the flow of credit through the financial system. There are many ways to do that from a simple government guarantee all the way to bank nationalization. While I don't believe a simple guarantee would have sufficed, I do believe a resolution trust authority - similar to the S&L debacle would have handled the situation nicely. That would have ensured that investors - both equity and bond holders - would have lost their money first..... and only then would the government lost. It would have ensured failed bankers would have been out on the street looking for jobs. Credit would have continued to flow, knowing the government was there as a backstop. It would have ensured that other bankers would think twice and tighten their practices.... not because of some piece of legislation, but out of fear of their own futures. And perhaps just as importantly there would have been much more prosecution of the actual fraud that did take place (both high and low) and a sense of fairness projected to the nation.

     

    Instead, the government ensured the supposed "masters of the universe" maintained their cushy jobs and lifestyles. They burdened future generations with even more debt. They DID NOT FIX the problem. And perhaps worse of all, they implemented crony capitalism. No one really believes its about hard work and fair play in the USA anymore - its about political power and political connections - how much can you get out of the system, not about how big can you build something. And that is a change that is unbelievably tough to overcome.

     

    Bankers have earned the disgust thrown their way.
    11 May 2011, 12:36 PM Reply Like
  • buyitcheap
    , contributor
    Comments (1892) | Send Message
     
    Thank you for conceding the points. So we've established that you work at a bank then?

     

    Those employees were active participants, and acted to deceive the bank, the wholesale buyers and ultimately pension investors with malice aforethought, in a very large fraud and are criminally and civilly liable. And your analogy sucks. A better one would be: are privates and seargants responsible for executing the criminal orders of their generals, and the answer is yes.
    11 May 2011, 01:50 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Not sure whom you're talking to. I do not work for a bank, nor have I since a grunt job when I was in college. The financial sector accounts for about 8% of my portfolio, most of it a long position in USB. Whatever problem you have with my opinions, they're not related to personal circumstances.
    11 May 2011, 06:32 PM Reply Like
  • buyitcheap
    , contributor
    Comments (1892) | Send Message
     
    No problem here, it was you who initiated the discussion.
    12 May 2011, 10:54 AM Reply Like
  • buyitcheap
    , contributor
    Comments (1892) | Send Message
     
    This is what I mean: soldiers are responsible for executing the orders of their leaders.

     

    www.bbc.co.uk/news/wor...
    12 May 2011, 02:21 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Well, I'm not going to sit here and tell you how wrong you are. I even agree with you to some extent. But, it would have been so painful.
    12 May 2011, 06:03 PM Reply Like
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