What laws or regulations were broken that led to the crisis?

[mahina]

I know that the mortgage companies wrote bad loans, and the credit rating agencies rated junk securities as AAA grade. But did that break laws, or regs, and if so, which ones?

Thanks a lot DU brains.

[DJ13]

1. Unjustly rating securities as being less risky than they were would be fraud

[hatrack]

8. To say nothing of ratings agencies being paid by the companies they rated . . .

No moral hazard there, nosiree Bob!!

:eyes:

[texastoast]

2. Well, if you consider the banking lobby the johns

and the elected deregulators for the benefit of big busines the whores, well, there you are.

Big business is pond scum and so are people like Phil Gramm and his friends.



http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

http://findarticles.com/p/articles/mi_m6528/is_1_53/ai_n25019601/pg_4?tag=artBody;col1

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000

[GeorgeGist]

3. The first law broken was sanity ...

By any other name profit is still theft. Amen.

[Turbineguy]

4. Few if any

they changed the laws first so it would be legal.

[Common Sense Party]

7. Which laws were changed?

What USED to be illegal that was subsequently made legal, thereby causing this fiasco?

Or what specific regulation was rescinded that directly caused this?

That's what I've yet to read. I keep hearing this is the result of deregulation, but I never hear anyone explain specifically how. HOW did the repeal of Glass-Steagal cause this mess? If Glass_Steagal had never been undone, would this meltdown have been impossible?

[Turbineguy]

10. Yes, part of it was the change in Glass-Steagal in 1999

Of course that only made it possible, but not necessary. For that we needed cheap credit, bad business models, regulators asleep at the wheel and a Government intent on allowing fake economic wealth to be created to hide the fact the Bush Admin was bankrupting the country and had no plan for economic growth.

[Common Sense Party]

11. Yes, there were SEVERAL things that contributed to this perfect sh*t storm.

I'd like to know HOW the repeal of Glass-Steagall contributed to this. What part of this happened BECAUSE Glass-Steagall was rescinded, that WOULDN'T have happened if it had been left in place? Does anyone know?

Robert Scheer has been ranting for months about this, but he has never explained HOW it harmed us.

[Turbineguy]

12. It allowed unregulated

(which is to say, unregulated in that area) Wall Street brokerages to get into commercial banking.

It created a secondary unregulated area to sell home mortgages into. Then came the sub-prime liar loans.

Repubs say that it's because they lent money to the "poor" (under the program started much earlier. Repubs prefer to blame the victim and invent the victim when pressed) but it was money lent to ordinary, but unqualified people.

The interest rates could be low because of leverage.

It was a way to generate commissions.

[stillcool]

5. I want to know too..

These people kept on buying the debt, when they knew there was no there, there. Seems like a money-laundering thing.

[barb162]

6. Securities fraud laws were broken all over the place

Distorting or hiding info, misleading clients, etc.

[Xenotime]

9. You get into this mess when you let pugs and banks work together.