The Political Bridge

McClatchy Newspapers: The Goldman Sachs Group Bet Secretly on an U.S. Housing Crash

WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies

The Congressional Financial Service Committee Dillutes the Bank Regulation Bill

by Matthew Rothchild in the Progressive, October 23, 2009

Originally, the (Bank regulation) bill would have granted wide authority to the states to regulate banks more vigorously than the federal government has been doing.

A few (bank-friendly) Democrats and Republicans (on the Congressional Finance Service Committee) tried to outlaw entirely the rights of states to impose stiffer regulations.

The House ultimately compromised by allowing the Comptroller of the Currency to override the state regs if they are “significantly” at odds with the federal regs.

Well, what does “significantly” mean?

Former Federal Reserve Chief, Paul Volcker, Wants to Break Up the Big Investment Banks: The Obama Administration is Saying NO

(Former Fed Chief Paul Volcker is another hero of mine. I believe that it was he not Ronald Reagan that safe the American economic system during the 1970s and 1980s period of stagnation, DrTed)

From the NY Times, October 20, 2009

The aging Mr. Volcker (he is 82) has some advice, deeply felt. He has been offering it in speeches and Congressional testimony, and repeating it to those around the president, most of them young enough to be his children.

He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations...