What do you do in a crisis? As quickly as possible you assess the situation, and look for the fastest ways to stop impending danger. Once imminent danger has been averted, you then look for ways to fix underlying problem. You investigate the causes and eventually come up with a plan to correct the situation, alleviate causes and avoid having the crisis happen again. Finally you follow the plan to reach your desired goal.
I believe much of what the US government did as the sub-prime mortgage crisis was unfolding followed the above pattern. However the government has and is still in the process of falling down on the job of correcting the situation and avoiding the possibility of future recurrence.
As this crisis was unfolding, the Federal Reserve and US treasury became involved in a myriad of triages to stop the impending danger of US economy and possibly world economy collapse. They provided bail out money and facilitated needed restructurings of many financial companies like JP Morgan Chase, AIG, and Merrill Lynch. I believe the US government did an excellent job of "stopping the bleeding" in our financial system and our economy owing mostly to the philosophy of then Federal Reserve Chairman Ben Bernanke.
Once imminent danger had been averted, the US government only lightly focused on ways to fix the underlying problems. A few good results followed. Congress signed the Dodd Frank Wall Street Reform and Consumer Protection Act in 2010, and there were a few (emphasis on few) criminal prosecutions of people involved in the Crisis at lower levels. (See politifact.com article for a specific listing). I don't have the expertise to analyze the correctness or appropriateness of the US Government's approach to fixing the underlying problems of the Sub-prime Mortgage Crisis. However as this Crisis did lead to something we call "The Great Recession" which we are still climbing our way out of years later, I do wonder some things as an Accounting student and as a citizen.
For instance, why was Lehman Brothers allowed to fail while other investment companies such as JPMorgan Chase, Goldman Sachs, and Morgan Stanley were aided/bailed out by our Government? After reading many articles with analysis and quotes from involved people like Timothy Geithner and Henry Paulson, I feel like there is some missing basic information; the proverbial elephant in the room that no one is mentioning. I don't see any obvious reasons why Lehman should not have been helped by the government along with the rest of the companies. I'm hoping really hard that this situation is not akin to the high school click situation where the "in group" just doesn't like a certain person no matter how hard they try. But as I mentioned, I really don't have the expertise to analyze the correctness or appropriateness of the US government's approach. And I suppose this falls into the "water under the bridge" category.
Another for instance follows that is quickly about to become water under the bridge since the statute of limitations is upon us. Why have NO high level executives been criminally prosecuted?? As Neil Irwin writes in his September 2013 blog for the Washington Post, "Zero Wall Street CEOs are in jail... Which isn't to say nobody is in jail. There have been prosecutions of various mortgage brokers and other small fish who lied or encouraged clients to lie on their applications for a home loan... And, yes, major banks have been working through billions of dollars in civil settlements for shady behavior in the runup to the crisis."
What if anything has been done by the government as our primary law-making entity, our national police officer as it were, to make sure future fraudsters don't see this as acceptance of the behavior by silence? Is this the economic and financial future we have to look forward to in the United States of America? This is one of the important things the Occupy Wall Street Movement was angry about although they didn't do a good job of communicating it. As stated in PolitiFact.com (link), "... the one thing protesters have in common (is): "We are the 99% that will no longer tolerate the greed and corruption of the 1%."
There is no lack of information, but there seems to be no will (or ironically no resources) by federal legal stewards to follow through with criminal prosecution. There may be no one obvious person(s) or company(ies) holding a smoking gun to go after here, but one also gets the distinct impression there is no prosecutorial will or energy to find any sort of guilt at all. A bizarre situation at best in my opinion. Perhaps some believe there is no guilt because the laws at the time didn't appropriately address the fraud. This does not make the fraud any less egregious.
And since the government has done so little to prosecute the perpetrators of the Sub-prime Crisis to date, how can we trust they will follow through with policing any new regulations they have developed since the crisis??? The Dodd Frank Wall Street Reform and Consumer Protection Act seemed like an in-depth, hopeful start to creating the needed laws to avoid and alleviate the potential for another crisis like this in the future. The Act however was signed into law four years ago and to date here's what's happened:
• As of July 1, 2014, a total of 280 Dodd-Frank rulemaking requirement deadlines have passed. Of these 280 passed deadlines, 127 (45.4%) have been missed and 153 (54.6%) have been met with finalized rules.
• In addition, 208 (52.3%) of the 398 total required rulemakings have been finalized, while 96 (24.1%) rulemaking requirements have not yet been proposed.
Source: http://www.davispolk.com/Dodd-Frank-Rulemaking-Progress-Report/
We are able to elect a new president every four years. Why is that easier to do than legislate Wall Street? Isn't legislation after all the primary job description of Congress?
Gary Rivlin states it well in his article for thenation.com saying, "Dodd-Frank's Achilles' heel is that it leaves the tough work of writing the actual regulations to existing federal agencies like the Federal Reserve and the Securities and Exchange Commission, which had failed so miserably at protecting the public interest in the run-up to the 2008 crash, as well as to backwater independent agencies like the Commodity Futures Trading Commission (CFTC), which was tasked with regulating a derivatives market that played a central role in the collapse of the global economy."
Perhaps some would say it is not the place of the government to get more involved in financial matters. Maybe we as US citizens should want to limit government so it does not inhibit Capitalism. To these people I ask how we should go about stopping people and organizations that steal and squander other people's (Occupy Wall Street's "99 %") money. This is effectively the crime that has been perpetrated. The companies involved concealed important financial information about their securities (the fact that sub-prime mortgages were included in with non-sub-prime mortgages). These securities proved unprofitable as a result of that concealed information (the sub-prime mortgages) and so cost investors money. It also had a crippling ripple effect over the entire economy causing the Great Recession. If it is not the government's job to stop such fraud, how do we expect our society to remain orderly, healthy, and prosperous as a whole?
So is that it? Is this as good as our government gets?? Is our government going to sit by and watch the rich get richer and let the rest of us fare for ourselves? Will it allow the 1% to continue until... until... until what? Until the 1 % come to rule the rest of us like has happened historically in most past societies and empires??? The only thing I know of that stops a cycle like that is revolution. Is our country about to go the way of so many previous empires and societies and be destroyed by avarice?
As an Accounting student and more importantly as a very proud citizen of our United States of America, I am worried about what I am, or rather am not seeing getting accomplished by our government. While my expertise is limited, it is obvious to me that the US government has not fixed the underlying problems causing the Sub-prime Mortgage Crisis, nor has it come up with an actionable plan to avoid another similar crisis in our future.
Let the US government know how you feel about their inaction regarding the Sub-prime Mortgage Crisis NOW before the statute of limitations on prosecution runs out!
Article Source: http://EzineArticles.com/?expert=Carrie_L_Goodman
Article Source: http://EzineArticles.com/8629687
I believe much of what the US government did as the sub-prime mortgage crisis was unfolding followed the above pattern. However the government has and is still in the process of falling down on the job of correcting the situation and avoiding the possibility of future recurrence.
As this crisis was unfolding, the Federal Reserve and US treasury became involved in a myriad of triages to stop the impending danger of US economy and possibly world economy collapse. They provided bail out money and facilitated needed restructurings of many financial companies like JP Morgan Chase, AIG, and Merrill Lynch. I believe the US government did an excellent job of "stopping the bleeding" in our financial system and our economy owing mostly to the philosophy of then Federal Reserve Chairman Ben Bernanke.
Once imminent danger had been averted, the US government only lightly focused on ways to fix the underlying problems. A few good results followed. Congress signed the Dodd Frank Wall Street Reform and Consumer Protection Act in 2010, and there were a few (emphasis on few) criminal prosecutions of people involved in the Crisis at lower levels. (See politifact.com article for a specific listing). I don't have the expertise to analyze the correctness or appropriateness of the US Government's approach to fixing the underlying problems of the Sub-prime Mortgage Crisis. However as this Crisis did lead to something we call "The Great Recession" which we are still climbing our way out of years later, I do wonder some things as an Accounting student and as a citizen.
For instance, why was Lehman Brothers allowed to fail while other investment companies such as JPMorgan Chase, Goldman Sachs, and Morgan Stanley were aided/bailed out by our Government? After reading many articles with analysis and quotes from involved people like Timothy Geithner and Henry Paulson, I feel like there is some missing basic information; the proverbial elephant in the room that no one is mentioning. I don't see any obvious reasons why Lehman should not have been helped by the government along with the rest of the companies. I'm hoping really hard that this situation is not akin to the high school click situation where the "in group" just doesn't like a certain person no matter how hard they try. But as I mentioned, I really don't have the expertise to analyze the correctness or appropriateness of the US government's approach. And I suppose this falls into the "water under the bridge" category.
Another for instance follows that is quickly about to become water under the bridge since the statute of limitations is upon us. Why have NO high level executives been criminally prosecuted?? As Neil Irwin writes in his September 2013 blog for the Washington Post, "Zero Wall Street CEOs are in jail... Which isn't to say nobody is in jail. There have been prosecutions of various mortgage brokers and other small fish who lied or encouraged clients to lie on their applications for a home loan... And, yes, major banks have been working through billions of dollars in civil settlements for shady behavior in the runup to the crisis."
What if anything has been done by the government as our primary law-making entity, our national police officer as it were, to make sure future fraudsters don't see this as acceptance of the behavior by silence? Is this the economic and financial future we have to look forward to in the United States of America? This is one of the important things the Occupy Wall Street Movement was angry about although they didn't do a good job of communicating it. As stated in PolitiFact.com (link), "... the one thing protesters have in common (is): "We are the 99% that will no longer tolerate the greed and corruption of the 1%."
There is no lack of information, but there seems to be no will (or ironically no resources) by federal legal stewards to follow through with criminal prosecution. There may be no one obvious person(s) or company(ies) holding a smoking gun to go after here, but one also gets the distinct impression there is no prosecutorial will or energy to find any sort of guilt at all. A bizarre situation at best in my opinion. Perhaps some believe there is no guilt because the laws at the time didn't appropriately address the fraud. This does not make the fraud any less egregious.
And since the government has done so little to prosecute the perpetrators of the Sub-prime Crisis to date, how can we trust they will follow through with policing any new regulations they have developed since the crisis??? The Dodd Frank Wall Street Reform and Consumer Protection Act seemed like an in-depth, hopeful start to creating the needed laws to avoid and alleviate the potential for another crisis like this in the future. The Act however was signed into law four years ago and to date here's what's happened:
• As of July 1, 2014, a total of 280 Dodd-Frank rulemaking requirement deadlines have passed. Of these 280 passed deadlines, 127 (45.4%) have been missed and 153 (54.6%) have been met with finalized rules.
• In addition, 208 (52.3%) of the 398 total required rulemakings have been finalized, while 96 (24.1%) rulemaking requirements have not yet been proposed.
Source: http://www.davispolk.com/Dodd-Frank-Rulemaking-Progress-Report/
We are able to elect a new president every four years. Why is that easier to do than legislate Wall Street? Isn't legislation after all the primary job description of Congress?
Gary Rivlin states it well in his article for thenation.com saying, "Dodd-Frank's Achilles' heel is that it leaves the tough work of writing the actual regulations to existing federal agencies like the Federal Reserve and the Securities and Exchange Commission, which had failed so miserably at protecting the public interest in the run-up to the 2008 crash, as well as to backwater independent agencies like the Commodity Futures Trading Commission (CFTC), which was tasked with regulating a derivatives market that played a central role in the collapse of the global economy."
Perhaps some would say it is not the place of the government to get more involved in financial matters. Maybe we as US citizens should want to limit government so it does not inhibit Capitalism. To these people I ask how we should go about stopping people and organizations that steal and squander other people's (Occupy Wall Street's "99 %") money. This is effectively the crime that has been perpetrated. The companies involved concealed important financial information about their securities (the fact that sub-prime mortgages were included in with non-sub-prime mortgages). These securities proved unprofitable as a result of that concealed information (the sub-prime mortgages) and so cost investors money. It also had a crippling ripple effect over the entire economy causing the Great Recession. If it is not the government's job to stop such fraud, how do we expect our society to remain orderly, healthy, and prosperous as a whole?
So is that it? Is this as good as our government gets?? Is our government going to sit by and watch the rich get richer and let the rest of us fare for ourselves? Will it allow the 1% to continue until... until... until what? Until the 1 % come to rule the rest of us like has happened historically in most past societies and empires??? The only thing I know of that stops a cycle like that is revolution. Is our country about to go the way of so many previous empires and societies and be destroyed by avarice?
As an Accounting student and more importantly as a very proud citizen of our United States of America, I am worried about what I am, or rather am not seeing getting accomplished by our government. While my expertise is limited, it is obvious to me that the US government has not fixed the underlying problems causing the Sub-prime Mortgage Crisis, nor has it come up with an actionable plan to avoid another similar crisis in our future.
Let the US government know how you feel about their inaction regarding the Sub-prime Mortgage Crisis NOW before the statute of limitations on prosecution runs out!
Article Source: http://EzineArticles.com/?expert=Carrie_L_Goodman
Article Source: http://EzineArticles.com/8629687
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