Occupy Wall Street

[VDZ]

Why were investment bankers able to get away with the things that they were doing? We've all seen the serious, debilitating effects of a bubble collapsing multiple times over the last 400-500 years (since the invention of a free market economy).

Because what they did was not against the law, and we do not legally punish people for things that were not forbidden under law (theoretically; the government has often abused its power to punish even those who legally did nothing wrong, but only for their own interests and always in secret). This unfortunately means sometimes people get away with misdeeds, but more importantly it also means innocent people are not unfairly punished. People are easily manipulated, so we have laws to judge people rather than subjective opinions.

The other issue is: either nobody called any/enough attention to the potential toxicity of the assets being created and traded OR someone did call attention to them and to the right party and it was summarily swept under the rug (either because of ignorance or a large sum of money).

Tragedy of the commons . Multiple people or organizations acting independently will exploit current the situation for their own benefit even if it means everything will go to hell because of it. It's kind of related to the bystander effect; even if everybody notices it, if there's other people able to solve the problem they'll just go 'well, someone else will solve it, not my business'.

People behave differently when there's a group involved. It's human nature, you can hardly blame them. Sure, they fucked up. But I doubt most people here would've not fucked up were they in the same position.

[MagicManICT]

Why were investment bankers able to get away with the things that they were doing?

Because what they did was not against the law, and we do not legally punish people for things that were not forbidden under law

Yes, lawful standings aside, there are a lot more consequences in this world than just "go to jail".

Tragedy of the commons . Multiple people or organizations acting independently will exploit current the situation for their own benefit even if it means everything will go to hell because of it. It's kind of related to the bystander effect; even if everybody notices it, if there's other people able to solve the problem they'll just go 'well, someone else will solve it, not my business'.

I've been quite guilty of these in the past and currently. It's a constant dilemma. Do I try to act on something or should I let others handle it? It's as much a survival instinct as anything. If we were to attempt to act on everything wrong, we'd quickly die from the stresses. Thus, we have to make that conscience decision (or unconscious for those that don't even bother to think for themselves). Unfortunately, the law of averages gets tossed in there, too, and you get a lot of problems that are just ignored. The deal is: how many unsolved problems are just ignored and how many have been worked on, but the work was just ineffective or by the wrong person/people (and thus appearing to have been just ignored).

[Biytor]

Biytor, I don't know if you're a troll, being sarcastic or being serious. On the offchance that you're serious, can you explain this for me:

3.) Why were banks forced to make home loans to people who couldn't repay them ?

I don't understand. Do you believe that this happened? If so, I'd like to see some evidence, please.

1977 The Community Reinvestment Act (CRA) was brought online. This act forced banks to make loans to people that couldn't afford them. The catch was that the interest rates were high and the fees used by the banks were prohibitive, thus allowing the banks to cover the bad loans. Along comes ACRON and other "community organisations" in the 90's screaming and yelling about how these common sense measures were "predatory" and "discriminating" to the people that couldn't afford the loans in the first place. So around 95 96 time frame they changed the the way CRA worked. No longer did banks have to show they were looking for eligible candidates, they had to make a certain percentage of loans based on criteria set forth in CRA. Then add in the charter change to Fannie and Freddie making affordable housing a priority , a.k.a loaning money to people that can't afford to pay it back.

Now all this by itself does not make the perfect storm, that didn't happen until 1999 and the repeal of the Glass-Steagall Act. Now you have commercial and investment banks being allowed to merge. CitiFinanical is a prime example of this. You now have government backed regulations to loan money to under qualified buyers while at the same time allowing banks to trade these same bad loans on the open market due to deregulation of the banking industry. This produced a bubble of biblical proportions in the housing market. The effects of this would be felt later, as rising house prices and easy, quick refinancing was readily available. Fannie and Freddie were snapping up a lot of the sub-prime loans at this time to prove to Congress that they were fulfilling their amended charter to provide affordable housing. This caused an increase in competition for those same loans by private-label issuers (who were the mainstay of the sub-prime market for years) to dig even deeper for mortgage's.

Now fast forward to 2005 2006 time frame. Fannie and Freddie start to show signs of strain from the massive amount of junk loans they now hold, due to government regulation and requirements. They start cooking the books to hide whats happening. Estimates are floating around that it could be as low as 1 trillion and as high as 1.6 trillion dollars that are being held in bad loans. Which makes the S&L bailout of the 80's look like child's play. Now add to this the state laws that have allowed a lot of people to walk away from their bad investments in the housing market. You now have the perfect storm.

So the interference of the "Government" caused this. If they had not tried to make everyone a home owner, had they left well enough alone with the current laws and regulations, if they had not "forced" banks to make bad loans etc etc etc. It all circles back to government regulation or lack of that caused all this. It wasn't the corporations that did this, they worked within the bounds of what the government allowed them to do. So I ask again. Why are they protesting Wall Street ? They need to be at the Capital protesting the very people that created this entire mess.


This is a fast quick breakdown of where all this started and how it played out. It would take pages and pages to cover all this in detail, but if you want even more info and where all this came from, go look it up. Do some work for yourself.