2009-06-01 — blownmortgage.com
" Krugman points to the 1982 signing of the Garn-St. Germain Depository Institutions Act that deregulated mortgage financing, encouraged absurd levels of personal debt and ushered in a period of government deficit spending that while curtailed by Clinton was exacerbated by Bush to a point where we were caught with our pants down for the payoff of 25 years of deregulation and debt-binging."
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ronin at 03:16 2009-06-02 said:
The one thing that Krugman leaves out is that the S&L de-regulation may have been a punishment for the banks who opposed the Reaganite proposal for banks to withhold part of all interest and dividends they were to pay. This money would have been turned over to the Treasury where it would sit until people filed their income taxes. The ABA came out strongly against the proposal, which was eventually watered down to "standby withholding" but the White House went nuts. Anything that looked like a bank subsidy program became a target of the Reagan Administration and its cheerleaders like the Heritage Foundation and the National Federation for Independent Business. One of the first targets was the SBA, which the Reagan-Bush League tried to wipe out every year until they were voted out of office. Allowing anybody who could pony up some money, real or imagined, to get into the lightly regulated S&L business was right behind that. The banks were weakened by competition that was allowed to play by a much more liberal set of rules. Weak, ill-managed and soon-to-die S&Ls became the norm. The Resolution Trust Corporation delayed prosecuting everybody but Charlie Keating until the statute of limitations ran. Anybody who is old enough to buy a beer remembers the rest of the story. Permalinktvsterling at 07:44 2009-06-02 said:
Everybody who was around & aware back then remembers Reagan less than fondly for his brilliant proposal to tax food. Arguably the most regressive tax proposal of modern times. People in California still look like they smell something when his name is mentioned. Permalinkadd a comment | go to forum thread
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