[ExI] How do we construct workable institutions and ethical behaviors?

[Jeff Davis]

On Thu, Dec 8, 2011 at 4:49 PM, spike <spike66 at att.net> wrote:
...... <snip>...  Other healthy institutions were
> compelled to buy the bad loans,..

.<snip>
...> The bank isn't at fault: they were compelled to give out the bad loans,


> another healthy bank was compelled to buy the bad loans...


> It was the fault of those who set up the rules to compel banks to give out risky loans.

            ************************************

I've heard this "they were forced/compelled to give out the bad loans"
thing quite a few times.

I think it's right wing echo chamber HooHah,... yet... I could be
wrong as I have only tidbits of information.

Some years ago some law was passed by the feds prohibiting the
practice of "redlining".  This was where banks wouldn't give home
mortgage loans in minority neighborhoods.  I'm very suspicious that
this is the origin of the notion that "the banks" were "forced" to
give out the bad loans, when what was really "forced" on the bank was
the prohibition of racial discrimination in banking services.  So my
theory has it that "they were forced" is a classic case of right-wing
truth torturing with its time-honored "blame the liberals(and the
niggers and spics, too)" formula.

I think the issuance of "bad" mortgages came from entrepreneurial
Randians (thieves) in the mortgage business, responding to Wall
Steet's insatiable demand for "more" -- as in "more mortgage paper and
we won't be asking any questions."  With all the various govt
regulators, insurance companies, rating agencies, accounting firms,
and all their legal departments... all signing on and partying down.
All govt at all levels and on both sides of the partisan divide in on
party as well, what with the housing bubble being the wild exuberant
ride that it was on the way up.

I don't know how to resolve this, since anything posing as "analysis"
is so thoroughly politicized.

No, I blame the bankers and the whole "financial services" sector.
I'd nationalize the whole shebang: retail banks, commercial banks,
investment banks, and ALL stock and bond markets.  Put them under govt
control.  Outlaw any private commerce in that area.  Close the
casinos.

If anyone has something, some kind of documentary "smoking gun" which
supports the "the banks were forced" thesis, I'd like to see it.

Best, Jeff Davis

 "It is as morally bad not to care whether
 a thing is true or not, so long as it
 makes you feel good, as it is not to
 care how you got your money as long
  as you have got it."
            -Edmund Way Teale,
              "Circle of the Seasons"