Financial Fellow

15 responses so far ↓

• 1 the weakonomist // Feb 25, 2009 at 8:19 am

  I saw this last week. It is a fantastic video. My only problem with it is he doesn’t need to vilify the investors to still make his point about what has happened.

• 2 Brian E // Feb 25, 2009 at 6:47 pm

  This is an outstanding explanation and should be required viewing for our Congressmen, Senators, Treasury Secretary and President. Perhaps by watching the video, they would see that the plan outlined by the publisher of Barron’s to fix this situation is indeed the best idea out there.

• 3 Financial Fellow // Feb 25, 2009 at 10:55 pm

  I feel like he does a pretty good job treating all involved parties equally without laying too much blame. Based of his explanations I think the main blame should be directly to the event that served as the catalyst: The Fed dropping interest rates to 1% to keep the economy rolling… It kept the party going longer than it otherwise would’ve but it made the hangover way, way worse.

  John

• 4 Financial Fellow // Feb 25, 2009 at 11:36 pm

  Brian -

  I’d hope that our federally elected, or appointed, officials (particularly Geithner and Bernacke) would have a good grasp of the matter at hand. I’m all for mandating them watching this video that Jonathon Jarvis put together (apparently as part of a thesis).

  What is the solution that the publisher of Barron’s is pushing?

  Thanks for the comments.

  John

• 5 Alex // Mar 2, 2009 at 8:32 am

  Great post John– enjoyed it.

• 6 Paul Strauss // Apr 6, 2009 at 12:37 pm

  Here’s the much, much more entertaining version of the same exact explanation:
  http://www.youtube.com/watch?v=mzJmTCYmo9g
  I’ll buy your box of CDO’s if you don’t fall out laughing at this one.

• 7 Blake Dow // Jun 22, 2009 at 11:13 pm

  Seriously? This video fundementally misses the point. The problem was not that ibankers were greedy, it was a that we had credit agencies that slapped AAA ratings on Fredie and Fanny while at the same time requiring that Fredie and Fanny had at least 40% of home loans originate with sub-prime conditions or lowere standards. I think its a bit humorous how the public lays blame on the bankers who admittedly are greedy but were only able to reep profits from being greedy because politicians forced the “affordable housing” inititives (ie more subprime loan requirements for Fredie and Fanny. Its like blaming the village for existing in a fload plane, as long as the levies hold all is well. But once they break everyone has a finger to poing. The bankers didnt cause the rain in this scenario the politicians did.

  Unfortunately, democracy works until politicians realize they can bribe the public with the publics money. Currently less than 5o% of people in the US pay taxes–that day has come.

• 8 Financial Fellow // Jun 23, 2009 at 9:33 pm

  Blake -

  I agree with you on the IBankers. There sole purpose is to make as much money as possible by any means. If the government allows them to do something, they will. That’s just what they do. They make money.

  I didn’t interpret the video as laying blame on anyone - just more documenting the situation and leaving it up to viewers to weigh in.

  Thanks for your comments!

  John (Financial Fellow)

• 9 Larry // Jul 8, 2009 at 9:48 am

  Bankers abandoned all lending tenets that were established over generations of experience. No educated banker should ever have agreed to Freddie and Fannie demands to issue subprime loans to unqualified borrowers

• 10 Financial Fellow // Jul 9, 2009 at 10:42 am

  Larry -

  I agree completely. They should make banking as boring as possible. All of these CDO’s and other creative ways of making money should be removed. Just good old fashioned lending to quailified applicants.

• 11 Roger Halstead // Jul 10, 2009 at 12:23 am

  Although the videos explain a default swap, they fail to say that our congress critters were the ones pushing the sub prime (a home for every one) since the Carter times. This was pushed even more and particularly in the Clinton years with banks being threatened by the government if they made “ability to pay” one of the criteria for some home loans as it was considered discriminatory. When asked in hearings about the state of Freddie and Fannie the head of them (Barney Frank) lied and said they were fine. Now he states how he fought for them.

  So we not only had some banks and lending institutions making predatory loans (not mentioned in the video), but we had our own congress pushing sub-prime loans well past any sustainability. From there it was a string of dominoes that turned into a world wide crisis of which the CDS was only a part.

• 12 Financial Fellow // Jul 12, 2009 at 9:57 pm

  Roger -

  Very astute insights. I especially agree with the comments on Barney Frank. There are direct quotes of him defending Fannie and Freddie’s lending practices prior to the housing collapse. I find him to be hypocritical in his role as head of House’s Financial Services committee.

  Thanks again for your comments!

  John (Financial Fellow)

• 13 JULIE JAMES // Jul 22, 2009 at 2:34 pm

  Pretty simple. You should never be able to get something for nothing. When you don’t have to put up any downpayment you have no vested interest. Very easy to walk away when you have no vested interest.

• 14 Financial Fellow // Jul 23, 2009 at 10:10 pm

  Julie -

  Agreed. I think the bottom line is that lenders need to return the days of more stringent standards. Indeed I believe they already have.
  Thanks for the comments!

  John (Financial Fellow)

• 15 Roger Halstead // Jul 27, 2009 at 10:39 pm

  Government blackmail.
  I should have mentioned this earlier, but I believe it was the *previous* Governor of Georgia fought the sub primes and predatory lending practices. He worked to get a bill passed that outlawed those practices. He stated on a TV news interview that he was told by several senators if the bill passed that Georgia would lose its credit standing and banks would become unable to get money. They covered this in depth in the interview. The bill passed, and the banks in Georgia were cut off. Shortly there after a campaign was started blaming him for the banks in the state being unable to get money for loans. He lost the next election and shortly after the new governor took over the bill was overturned and the banks were able to get money again.

  Ever since they overturned the Glass Setigel (sp?) act it’s been a downhill trip.

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