(Around Tokyo Station in 2008)Regulations Prevent Great Depression
I do not think Great Depression will be brought on in the near future, following the current global financial crisis triggered on Wall Street, probably, by the Angel of Justice or the economic Armageddon if not by the God.
SECTION I: Mr. Rothschild Loves Licensing
Mr. Evelyn de Rothschild seems to love regulation and hate corruption.
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Rothschild: Banks turned a blind eye to sub-prime
Jonathan Prynn and Hugo Duncan
02.10.08
One of the banking world's most respected grandees criticised the City today and called for a massive overhaul of regulation.
Sir Evelyn de Rothschild said there had been a collapse in ethical standards among banks in recent years, which had been ignored by watchdogs, rating agencies, shareholders and accountants.
The 77-year-old head of the banking dynasty issued a sombre warning that the crisis would get worse before it gets better. "We should not be under any illusion in this country that subprime is only an American problem," he said.
It came as another senior City figure, private equity boss John Moulton, said it could take seven years for the British economy to recover from the crisis that has brought the world's financial system to its knees.
The outspoken comments were made on another day of grim economic news pointing to increasing damage to the "real economy" from the credit meltdown.
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But the worsening economic outlook increased recriminations over how the City landed the economy in such a mess. Sir Evelyn, speaking on Radio Five Live, accused the banking community, including the regulators, of turning a blind eye to the explosion in the British sub-prime mortgage market.
He also declared that investors in the banks should have acted to control bankers' pay and the risk-taking of management. "What are shareholders for? I think shareholders have not been speaking up."
He added: "You can also look to the accountants. It is their job to dig deep into the accounts and assess the risks a bank is taking. I mean, some of these American banks were 20 to 30 times leveraged - that is something I have never heard of."
De Rothschild said the only way out of the crisis was to improve regulation and license anybody involved in financial services.
The veteran financier, who has seen many crises, added: "You have to have regulators who are properly paid and who properly understand the situation. And you should have a licensing system like you have in pubs where if you break the rules, they take away your licence."
http://www.thisislondon.co.uk/standard/article-23563009-details/Rothschild:+Banks+turned+a+blind+eye+to+sub-prime/article.do
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I do not think that the Rothschild clan truly welcomes the possible Great Depression.
Their wisdom is that regulation can prevent its occurrence.
SECTION II: Liberal Regulation Caused Subprime Loan Crisis?
It might sound like a conspiracy, though it sheds a light on a less-discussed aspect of mentality of the U.S. elite.
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Friday, March 07, 2008
Who Exactly is Responsible for the Sub-prime Meltdown?
by David Hinz
We have heard professional Congressional bureaucrats scream about the Sub-prime Mortgage meltdown. We have heard about predatory lenders and unscrupulous mortgage brokers taking advantage of poor and minority homeowners; homeowners who were unqualified for the loans they received.
So who really is to blame for the resulting crisis? Well, while banks and mortgage lenders are not blameless, Congress must bear a large part of the blame as well. It has been Congress, and their (we can only assume) well-meaning meddling with the economy, in the interest of fairness, that has created the fiasco.
Congress, in an attempt to confront discrimination against minorities, enacted the The Home Mortgage Disclosure Act (HMDA) in 1975. The purpose of the act, according to the FFEIC website:
The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and is implemented by the Federal Reserve Board's Regulation C. This regulation provides the public loan data that can be used to assist:
in determining whether financial institutions are serving the housing needs of their communities;
public officials in distributing public-sector investments so as to attract private investment to areas where it is needed;
and in identifying possible discriminatory lending patterns.
So, in 1975 the Federal Government decided to monitor lending institutions, scrutinizing them for any perceived discrimination against minorities -- and guaranteeing by their very action, that lending institutions would be lenient in their lending practices toward minorities -- for fear of being deemed to be racist.
Since it's passage, the HMDA has gone through several amendments -- all of which have been detrimental to lending institutions, while providing windfall opportunities for poor and minority homeowners.
In 1980, amendments to HMDA directed the Federal Financial Institutions Examination Council (FFIEC) to compile annually for each Metropolitan Statistical Area (MSA) aggregate lending data by census tract for certain lenders. In addition, the FFIEC was directed to produce tables for each MSA that aggregates the lending activity of institutions by various categories of census tracts, grouped according to location, age of housing stock, income level, and racial characteristics.
Lending institutions in metropolitan areas have been accused of "redlining."
Redlining is the practice of arbitrarily denying or limiting financial services to specific neighborhoods, generally because its residents are people of color or are poor. While discriminatory practices existed in the banking and insurance industries well before the 1930s, the New Deal's Home Owners' Loan Corporation (HOLC) instituted a redlining policy by developing color-coded maps of American cities that used racial criteria to categorize lending and insurance risks. New, affluent, racially homogeneous housing areas received green lines while black and poor white neighborhoods were often circumscribed by red lines denoting their undesirability.
Redlining, discriminating because of race, was made illegal by Congress, and so lending institutions would be naturally fearful of being accused of such a practice. The HMDA, and other subsequent acts of Congress sent "a chill wind" blowing through the lending institutions.
Throughout the history of the act, amendments and revisions have occurred on nearly a yearly basis -- each amendment or revision making it abundantly clear to the lending institutions that it was in their best interests to extend credit to poor and minority homeowners, regardless of creditworthiness.
This government interference in the private lending sector has been a primary cause -- as much or more than greed -- for the sub-prime meltdown we are currently experiencing. A quick overview of some of these revisions and amendments throughout the years;
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In 1993, Regulation C was revised by the Federal Reserve Board to incorporate amendments contained in the Housing and Community Development Act of 1992. The amendments required institutions--in response to requests from the public--to make a modified version of their loan/application register data available within 30 days of the date it was due to its regulatory agency...
...
In 1994, Regulation C was amended by the Federal Reserve Board to make HMDA data available to the public earlier, to improve the accuracy of the HMDA data, and to clarify and simplify the reporting requirements...
In 1977 Congress passed the Community Reinvestment Act (CRA), which, like the HMDA was intended to compel lending institutions to "reinvest" profits back into the community in which they have offices. Like the HMDA the CRA had the unintended effect of intimidating lenders into making questionable loans, out of fear of being deemed racist in their practices. As explained on the government CRA history page:
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The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions.
With each subsequent act of Congress, banking institutions have felt increased governmental pressure to provide loans to poor and minority applicants, regardless of creditworthiness; to look the other way regarding unfavorable credit history. To hold that credit history against a minority applicant is to be labeled as racist -- and lending institutions have been loath to be so labeled.
Have there been unscrupulous mortgage lenders who have preyed upon the poor and uninformed? Without a doubt, there have been. But it would be a travesty to look at the lending climate today, and to to exempt Congress from its fair share of the blame.
Congress, holding congressional hearings on the subject will conveniently forget their own culpability in the entire affair. We must not.
http://www.hinzsightreport.com/2008/03/who-exactly-is-responsible-for-sub.html
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I do not think that the American elite truly welcome the possible Great Depression.
Their wisdom should be directed to other way of applying regulation so as to prevent its occurrence.
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I do not think Great Depression will be brought on in the near future, following the current global financial crisis triggered on Wall Street.
Yet, it is time to think about the difference caused by different scales.
Regulation to be applied to trillion dollar operation must be different from regulation for billion dollar business or million dollar transactions.
Code of practices for dealing with weapons must be different in its contents and application between nuclear weapons and a handgun or a knife.
(But, good girls, your love to God must be far different from your love to any person or persons even if you want to be a blessed wife, though there is no regulation on human love except what Jesus Christ specified.)
"BLESSED ARE THOSE WHO ARE POOR, SINCE THEY WILL BE HAPPY IN HEAVEN"