“The final bipartisan bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. Without forcing a veto vote, this bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999.”

Gramm must be a very persuasive guy..

We’ve been fine until banks were deregulated allowing the growth of huge financial institutions with businesses across all financial sectors. This creates a ripple effect.

You’re also a fool if you think anti-redlining was the problem. No one said the banks had to make bad loans. All that was said was that you can’t deny a loan simply based on what neighborhood someone lived it. You actually had to take into account their ability to pay back the loan. What a concept!

The problem was caused by deregulation with huge financial institutions competing across many sectors across the entire country (unlike when we were younger when a bank’s scope only reached to the state borders). Once one company started making bad loans and improving their short-term financial metrics, the other (mismanaged) companies started doing the same thing to compete. This drove house prices up, and encouraged even more bad loans from folks without the ability to pay. Then once the bubble burst and folks started not making payments, the market softened, more folks were upside down on their loans, foreclosures increased, things snowballed, the financial institutions started failing.

So here we are.

Note that if we hadn’t invaded Iraq, we’d have the money!

what the hell are you even driving at? …that if the banks hadn’t been sued, all of a sudden the free market would have created an incentive structure through which they would have stopped making such loans? what, suing banks for making bad loans created a positive incentive for them to make more bad loans?

seriously, Jack. The free market is a powerful tool; so is fire, and both of those things will burn you if you let them run amok. case and point: the real world, right now.

The theory is that the overall economy will improve with the bailout, as a result the housing market will stabilize and the value of these securities will as well.

It is just a theory.

But, is it all gloom and doom ? The existing homes inventory fell 7% in August. Is this a trend or a blip ?

Getting credit flowing and the the economy wheels rolling is the key. Why not eliminate the capital gains and corporate taxes for a year, the influx of foreign money would be huge. I’d like to see figures of how much these 2 taxes bring to the gov’t coffers annually, since elinimating them might be the equivalent of the bailout.

Basically, why charge the taxes in the first place? I’ll tell you why, the gov’t likes to control the flow of the money. McCain should be smart about this and insist on the abolition of these taxes.

Why was there no private competition to Fannie Mae? Because it was making stupid bets and losing money. If the capitalists had figured out a way to make money doing what Fannie Mae was doing, they would have been doing it.

The banks were also not models of capitalism, because the federal government, through Janet Reno, was suing them left and right for “redlining” — making bad loans to people who could not afford them.

Greed does not ruin capitalism, but is actually NECESSARY to it. If people did not want more, they would have little incentive to invest and invent. The problem is, however, exactly what we are seeing happen now — the risk-takers’ getting the rewards for success, and the taxpayers’ paying the price of failure. That system, set up by FDR in 1938, just encourages the risk-takers to take risks that they would not do if they had to pay for their failures themselves.

That is one of the keys to capitalism — you must let the winners succeed and the losers fail.