On November 5th 2012 (the day before the election) President Obama spoke to a group in Columbus, Ohio.After hearing an excerpt from the speech I began to wonder if he actually believes what he said, or if he's just rearranging history to suit his goals. I hope you will watch the video at the following hyperlink to its end. I think I ask some relevant questions in the last minute, or so.Economics professors will tell you that one of the best ways to create jobs, and to stimulate an economy, is support home building. (Think of all the trades, products and services that are required to build and furnish a home.)But, I've never heard of any economics professor who advocated a long-term policy of providing loans to people who couldn't afford to repay the loans (However, I think some of what are called "Keynesian Economists" seem to favor such policies over as a short term prescription for economic stimulus.)I’ve come to believe that many of the policies embraced by President Bill Clinton produced great economic results during (and, for awhile after) his administration. But, as those policies and political pressures went to excess, they eventually led to the housing bubble and the financial crisis.It seems, the financial bubble that burst during the last year of George W. Bush's administration was a long time in the making.Just a thought . . . .
The Scandal Too Few Are Discussing
You might be aware that in the United States we have what are called Nationally Recognized Statistical Rating Organizations (NRSRO’s). Under this system a small number of credit rating agencies (Moody’s, Standard & Poors and Fitch) were approved as raters of the credit risk of debt instruments. Institutional purchasers of debt, like insurance companies, banks, and general fiduciaries, are required by law to use these organizations’ ratings as a guide to their purchases. In general, such investors are required by law to only purchase debt instruments which are rated by the NRSRO’s as “investment grade”. Other’s investing in debt also rely on the NSRO’s ratings as a indication of the risk profile of their investments. [See, Nationally Recognized Statistical Rating Organizations Wikipedia entry at: http://en.wikipedia.org/wiki/Nationally_Recognized_Statistical_Rating_Organization ].
Recently, I became curious about Financial Crisis Inquiry Commission (FCIC) hearing testimony and Congressional hearing testimony on the subject of the NRSRO’s role in the housing bubble and the ensuing financial crisis. Fortunately, C-SPAN maintains a video library of such hearings, and in the video library I was able to find and watch some interesting questions and answers on the role of the NRSRO’s in the housing bubble and financial crisis.
The full hearings are a bit long, but I was able to copy a couple exchanges which I thought were interesting and characteristic of each of the two hearings from which they came. I’ve posted my brief video-clip copies on youtube. I thought you might find the video-clips interesting. The URL’s below are hyperlinked to the hearings
Too Little, Too Late (compare the dates Mr. Raymond McDaniel mentions to your bubble timeline):
The Role of The Rating Agencies (pursuing market share?):