Originally Posted by BroncoBeavis
The WSJ article sums it up best...
You want to ignore the fact that your Government miracle workers didn't even properly rein in the Government Sponsored Entities they had oversight authority over. Yet you're saying they would've kept everything else in line, if only given limitless power to regulate whatever whenever.
The regulation that would have prevented the problem WAS in place, but was removed. Glass-Steagall and sane reserve requirements. The banks lobbied to get these regulations removed, and then proceeded to go hog wild.
It's pretty simple. With a sane 12:1 reserve requirement, 8% of mortgages would have had to been in default before the bank would have become insolvent. Instead, that reserve requirement was abolished for the big banks, and they all quickly ramped up to an average of 50:1 leveraging, meaning that only 2% of mortgages had to be in default before the bank became insolvent.
The default rate never got about 4%, even in the worse of the crash.
In other words, with SANE REGULATION REMAINING IN PLACE there would still have been a 4% buffer and the major banks would not have become insolvent from mortgage problems alone.
Of course, with Glass Steagall in place, even the insolvency of the investment banks would have been perhaps manageable, since commercial banks would not have been affected, and YOUR money would have been safe from the insanity going on in the mortgage market. Of course, without that bit of SANE REGULATION, we had no choice but to bail out banks since it's not just the investment banks that go under, it's everyone that has a deposit with those banks since there is no longer a separate between investment and commercial banking.
But, keep up with your stupid commentary. It's quite entertaining to watch you desperately try to defend deregulation and pretend the private sector wasn't the problem.