WI: 2008 Financial Crisis avoided?

In November of 2006 the first signs of the looming financial crisis appeared. The Commerce Department reported that new home permits dropped an average of 28% in the US. What if the Bush administration and the Federal Reserve had taken heed of this and increased regulations on mortgage brokers and hedge funds? First, would that have worked? Second, if it would, what would the political ramifications of it be?
 
2006 was too late. Last chance to avert the meltdown was 2004, when banks were allowed to significantly increase their leverage ratios.

There wouldn't be political ramifications for the policy changes anyway. The Democrats benefited from the six year itch, the Abramoff scandal, and conservative frustration with Bush finally boiling over.

If we avert the meltdown, 2008 is different. Obama wins by a smaller margin and doesn't have supermajorities in Congress. That means no Obamacare, which in turn means Hillary wins in 2016. (The three Rust Belt states that unexpectedly turned red all had double digit premium increases and all went to Trump by very slim margins - undoubtedly smaller than the number of people who got those letters in October.)
 
Probably not. The housing bubble had been forming for quite some time before 2006. It wasn't enough to notice that there was a housing bubble, they had to see precisely how subprime housing had managed to interact with credit default swaps to infiltrate the balance sheets of major banks. Nobody in power saw that in OTL and I'd need to see a precise POD for how they find out and exactly what regulations they put in place.

The next problem is that I don't see how any President could have politically survived trying to limit the subprime housing market. The reason is that most people saw it as a GOOD thing socially because it undeniably made expensive housing easily available to poor people and the banks saw it as good business. In The Big Short, they talk about how Steve Eisman's Jamaican baby nanny had mortgages on six Manhattan townhouses and how an illiterate Mexican strawberry picker in Bakersfield got a mortgage for an $800,000 house. Those are the extreme examples, but there were a ton of people who could never have gotten mortgages if there had been more sensible regulations (which would in the aggregate have been a good thing since they lost them anyway and led to extensive economic damage, but people in 2006 wouldn't have seen it that way because they didn't have the Great Recession to give them perspective).

Nobody wanted to be the guy who ran against affordable mortgages for Americans, not in Congress, not in the White House. Wasn't going to happen.
 

Greenville

Banned
The crisis is inevitable in 2006. I was one of the few people seeing well before that that a crash was coming and knew what the impact would be. I don't the arrogant Bush administration would've taken any seriously about.
 
Probably not. The housing bubble had been forming for quite some time before 2006. It wasn't enough to notice that there was a housing bubble, they had to see precisely how subprime housing had managed to interact with credit default swaps to infiltrate the balance sheets of major banks. Nobody in power saw that in OTL and I'd need to see a precise POD for how they find out and exactly what regulations they put in place.

The next problem is that I don't see how any President could have politically survived trying to limit the subprime housing market. The reason is that most people saw it as a GOOD thing socially because it undeniably made expensive housing easily available to poor people and the banks saw it as good business. In The Big Short, they talk about how Steve Eisman's Jamaican baby nanny had mortgages on six Manhattan townhouses and how an illiterate Mexican strawberry picker in Bakersfield got a mortgage for an $800,000 house. Those are the extreme examples, but there were a ton of people who could never have gotten mortgages if there had been more sensible regulations (which would in the aggregate have been a good thing since they lost them anyway and led to extensive economic damage, but people in 2006 wouldn't have seen it that way because they didn't have the Great Recession to give them perspective).

Nobody wanted to be the guy who ran against affordable mortgages for Americans, not in Congress, not in the White House. Wasn't going to happen.

The housing bubble also artificially propped up the economy. People were using their houses as ATMs. Since nobody wants to be an incumbent in a recession, everyone had an incentive to ride it as long as it lasted. You also had very large numbers of people buying too much house.

There were people who could have acted earlier. Chris Dodd took a sweetheart mortgage deal from Countrywide and Barney Frank ignored the problems at Freddie because his boyfriend was on the board of directors.

Leaving Glass Steagall in place might have helped. The damage could have been contained like it was on the 1980s. Back then we had a housing bubble and a stock market crash, but it didn't take down the entire economy.
 
There were people who could have acted earlier. Chris Dodd took a sweetheart mortgage deal from Countrywide and Barney Frank ignored the problems at Freddie because his boyfriend was on the board of directors.

IIRC he also took a bunch of campaign contributions from them.
 
The crisis is inevitable in 2006. I was one of the few people seeing well before that that a crash was coming and knew what the impact would be. I don't the arrogant Bush administration would've taken any seriously about.

I was wondering the same thing myself circa 2003-2004. The construction industry was... 'volatile' at the time & I expected a sharp recession to start by 2005. Was three years off.

Do have to say I benefitted indirectly from the crash of 08. Locally there is a non profit NCHI, that acquired run down student housing near the university & rehabs them into single family residences tenured professors & well salaried administrators will pay a premium for. For some five years after the crash NCHI was able to rope in a larger number of houses at near nothing, giving me several extra rehab contracts during the recovery years.
 
The crisis is inevitable in 2006. I was one of the few people seeing well before that that a crash was coming and knew what the impact would be. I don't the arrogant Bush administration would've taken any seriously about.

New Agency Proposed to Oversee Freddie Mac and Fannie Mae: 2003

** 2001

April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: Pres

ident Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

“[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

Timeline

Bush and Congress knew there were issues in the mortgage market, issues don't mean a problem so deep it was leading to a potential second Great Depression, but they had opposing ideas as to what the nature of the problem was and how to deal with it.
 
Last edited:

Ak-84

Banned
Basically impossible. No one saw it. Oh lots of people gave "warnings" and "knew it was going to come". Pure horse manure. Many people saw that there would be likely a recession, even a big one and a sharp fall in the market. No one foresaw what actually happened on 15 September 2008, which was essentially, Great Depression Mk2 and the collaspe of the economy. Anyone whp days they forsaw that was lying. Its like predicting a bellyache and getting a myocardial infaction.

I have vivid memories of those days. On the morning of 15th of September 2008, I had an arbitration case in the City of London to attend to. By the time we were done, in the evening, the market had collapsed. On Friday 19th September I had dinner with several friends in high places in the financial world in Canary Wharf. Many of these guys had been warning about a crisis, they were flabbergasted by what actually came. I remember one person pointing to One Canada Square and saying that it was the gravestone of Western Capitalism. At least the meal was good.

In short, no one realized just how rotten everything was. At best, maybe Bush II could have punted the problem forward a year. Tops. If he acted in 2007. The Democrats in Congress would oppose him on principle. He barely managed to get the first bailout in September 2008 as it is.
 
Leaving Glass Steagall in place might have helped.
Not really, I'll quote a previous post of mine from when we've discussed it in the past.

If looked at dispassionately Glass-Steagall would have done very little if anything to avoid the crash.

AIG, Bear Stearns, Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch, none of them would have come under the authority of the Act - their problems came from investments in residential mortgages and residential mortgage-backed securities. Lehman Brothers, Merrill Lynch, Bear Stearns, Goldman Sachs, none of them were parts of or tied to commercial banks. Even Obama has stated that "there is not evidence that having Glass-Steagall in place would somehow change the dynamic." Elizabeth Warren, she of the 21st Century Glass-Steagall Act, when asked in a New York Times interview whether the financial crisis or JPMorgan's $2 billion trading loss could have been prevented if Glass-Steagall was still in place responded that "The answer is probably 'No' to both." She's admitted that even though it wouldn't have done anything, because this myth has grown up around it and that it has name recognition that it's an easy issue for the public to understand and "you can build public attention behind." It's basically a case of trying to get your foot in the door with this piece of regulation and then hopefully expand upon it afterwards.

Looking at the timeline of events the first to go was Bear Stearns, an investment bank with nothing to do with commercial banking, and then Lehman Brothers which was again an investment bank so neither covered under the Act. Third in line was Merril Lynch which again had pretty much zero links to commercial actions so again not affected by the Act. AIG was an insurance company so no luck there either, likewise Fanny Mae and Freddie Mac. Then we come to the actual commercial banks. Bank of America did lose some money due to investment banking and trading but the real body blow came from buying the subprime lender Countrywide Financial. Wachovia's problems also mostly came from buying a mortgage lender in the form of Golden West which ended up bringing a crapload of bad loans with it, both of which were perfectly legal under the Act. Citigroup is the one main example of where it might have actually changed things since it caused its problems by making bad loans and buying up large numbers of CDOs. The Act would have prevented it from racking up the trading losses and stopped it growing so recklessly. Citigroup however only went down when Bear Stearns, Lehman Brothers, A.I.G., Fannie Mae and Freddie Mac had already either imploded or were right about to implode with the markets being complete carnage so it could have possibly survived if not for that as well. I'll leave it up to those more skilled at economics than myself to argue that debate.

What caused the crash was the ability to securitise the mortgage debts and move them off the banks balance sheets by selling them to investors at a profit. It meant they didn't have to be too picky or do their due diligence since they were just going to be sold straight on. Why waste the time and money when the housing market is going up like a rocket, better to simply pile them high, bundle them together and then shove the investments out the door to hungry investors. And these are the commercial/retail banks I'm talking about not the investment ones. Before when they mostly kept the mortgages and made their profits from them they were bound to be more careful, when they found out that they could make more money from creating these investments and selling them then that was the start of things. Throw in a housing market that had quite literally gone insane, in part thanks to the symbiotic relationship to this, and a whole bunch of investors that were too enthusiastic to look at the underlying figures and realise that they were shit and you've got your perfect storm.
On the confidence front then one of the best measures that I can think of without doing any serious research is the FEC's decision in 2004 to raise the bank's debt-to-cash ratios from 12:1 to 30:1. If that never happens then they won't be able to as overextend themselves as they did and/or the extra cash on hand should hopefully provide a bit more breathing room than we had in real life to try a figure out what was going on and un-fuck things. Not sure if it would help in the long-run but anything that can take the edge off the panic is a good thing I would have thought.

It might not be a silver bullet but avoiding the 2004 authorisation for banks to increase their cash-to-debt ratios couldn't have hurt. What you really need is increased regulation of the mortgage market and securitisation and selling of them. Apologies if this is a bit terse but currently on my phone.
 
New Agency Proposed to Oversee Freddie Mac and Fannie Mae: 2003

** 2001

April: The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”

** 2002

May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)

** 2003

January: Freddie Mac announces it has to restate financial results for the previous three years.

February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (“Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03)

September: Fannie Mae discloses SEC investigation and acknowledges OFHEO’s review found earnings manipulations.

September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact “legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises” and set prudent and appropriate minimum capital adequacy requirements.

October: Fannie Mae discloses $1.2 billion accounting error.

November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any “legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk.” To reduce the potential for systemic instability, the regulator would have “broad authority to set both risk-based and minimum capital standards” and “receivership powers necessary to wind down the affairs of a troubled GSE.” (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)

** 2004

February: The President’s FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: “The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator.” (2005 Budget Analytic Perspectives, pg. 83)

February: CEA Chairman Mankiw cautions Congress to “not take [the financial market’s] strength for granted.” Again, the call from the Administration was to reduce this risk by “ensuring that the housing GSEs are overseen by an effective regulator.” (N. Gregory Mankiw, Op-Ed, “Keeping Fannie And Freddie’s House In Order,” Financial Times, 2/24/04)

June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying “We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System.” (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)

** 2005

April: Treasury Secretary John Snow repeats his call for GSE reform, saying “Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system.” (Secretary John W. Snow, “Testimony Before The U.S. House Financial Services Committee,” 4/13/05)

** 2007

July: Two Bear Stearns hedge funds invested in mortgage securities collapse.

August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying “first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.” (President George W. Bush, Press Conference, The White House, 8/9/07)

September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.

September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.

December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying “These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I’ve called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon.” (President George W. Bush, Discusses Housing, The White House, 12/6/07)

** 2008

January: Bank of America announces it will buy Countrywide.

January: Citigroup announces mortgage portfolio lost $18.1 billion in value.

February: Assistant Secretary David Nason reiterates the urgency of reforms, says “A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully.” (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)

March: Bear Stearns announces it will sell itself to JPMorgan Chase.

March: Pres

ident Bush calls on Congress to take action and “move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages.” (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)

April: President Bush urges Congress to pass the much needed legislation and “modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes.” (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)

May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.

“Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans.” (President George W. Bush, Radio Address, 5/3/08)

“[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator.” (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)

“Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans.” (President George W. Bush, Radio Address, 5/31/08)

June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying “we need to pass legislation to reform Fannie Mae and Freddie Mac.” (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)

July: Congress heeds the President’s call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.

Timeline

Bush and Congress knew there were issues in the mortgage market, issues don't mean a problem so deep it was leading to a potential second Great Depression, but they had opposing ideas as to what the nature of the problem was and how to deal with it.
To Bush's credit he did understand that there were issues with Fannie and Freddie, with that said considering his party controlled both houses of congress for most of his Presidency, his attempts to reign in on them were pretty half assed.
 
To Bush's credit he did understand that there were issues with Fannie and Freddie, with that said considering his party controlled both houses of congress for most of his Presidency, his attempts to reign in on them were pretty half assed.

When the public and Congress through lobbying cash are making big money from the whole thing it was functionally politically impossible in our system of government to force a heavy re-regulation without a crisis.

Take away money from the campaign finance system it might be possible, but it would still have been hard. Everyone in the process was making too much money as the bubble built and money is free speech in America.
 
When the public and Congress through lobbying cash are making big money from the whole thing it was functionally politically impossible in our system of government to force a heavy re-regulation without a crisis....

Years ago i saw a clever board member in a organization get around such a phenom. He was acting as temp CEO & with the connivance of one or two others took some actions that forced the crisis. Tho everyone lost some money & there was a lot of screaming and panic it allowed his successor & co conspritors reorganize the company before things got far worse.
 
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