By Jack
Now the truth comes out. It seems the Regents of California took out some risky investments and now they put the UC system billions in debt. I knew the money wouldn’t go to the pockets it was intended, but I thought it might take longer than this to find out. Here’s you new tax dollars at work folks! (This is why you read PS)
According to a report released Tuesday by researchers at UC Berkeley:
Over the last decade, the UC Board of Regents has engaged in risky deals with Wall Street banks called interest rate swaps. Banks sold swaps to the university and other public institutions as insurance against rising interest rates on variable rate bonds. Under a swap agreement, borrowers such as the university paid a fixed rate to the bank in exchange for the bank paying the university a variable rate based on the markets’ interest rates for borrowing.
Now these swaps have turned out to be losing bets. UC is taking huge losses because interest rates plummeted following the financial crisis of 2008 – allegedly in part because of illegal manipulation by the same banks that sold the swaps – and have stayed at record lows. Swap deals already have cost UC nearly $57 million, with $200 million more in losses anticipated. Of the $250 million UC expects to receive from Prop. 30, some $10 million a year will go to swaps payments unless the deals are ended.
In other words, the UC Regents forgot the first rule of casino gambling: The house always wins!
There goes a big part of Prop 30 money and you wondered why we said no more money until you guys get your house in order? This is why!
Read more: http://www.sfgate.com/opinion/openforum/article/Prop-30-funds-for-UC-will-go-to-Wall-Street-4031472.php#ixzz2CDsGwm23
“UC is taking huge losses because interest rates plummeted following the financial crisis of 2008” … etc.
Jack, that’s why all our public institutions, including those pension funds, lost money. That’s why you lost money.
How is this malfeasance? And if you’re still in the market … and I know you are! … then you’re still playing the same dumb game against the street, and got no business chiding anybody else … for playing what you all insist on believing is the only game in town.
Socialists of the world, arise! unite! conquer!
Well, SURPRISE SURPRISE!!! Or as Gomer Pyle would exclaim, “SUUUUPRISE, SUUUUPRISE
Libby sure got it right this time — “Socialists *hic* of the world, arise *hic*! unite! *hic* conquer!”
Like the corrupt Democratic party progressive machine that runs this state would ever attack itself.
If anyone took the time to READ the proposition instead of listening to the hype, it was very obvious that there was no guarantee of $$ going to schools as was touted by Gov Moonbeam. Moonbean out and out lied to the voters. Period.
Libby rants: How is this malfeasance? And if you’re still in the market … and I know you are! WOW now the great Bay area socialist is clara-vocal as well obtuse, now she See’s nothing and but spins it all.
Hay Lib, if Jack is still in the market, he is in it with HIS money, not tax payers. So put a cork in it, or back in the bottle, which ever helps us the most!
Jack, your take on this story seems to me to bury the real problem, identified in the source article:
“These swap deals are part of a dramatic change in UC’s relationship with Wall Street. In 1990, none of UC’s top management or regents had direct ties to the major Wall Street banks. Today, those banks have a growing foothold among top UC management with direct oversight over UC’s finances.
For instance, the chief financial officer, Peter Taylor, came to UC from Lehman Bros., where he was managing director for public finance until Lehman collapsed in the largest bankruptcy in American history. While Taylor was at Lehman, the company was hired to help expand UC’s debt load. Lehman ultimately was party to one of UC’s interest rate swaps – a bad deal that has already cost the university more than $23 million.
California taxpayers have entrusted the regents with stewardship of the university, but the regents’ cozy ties to Wall Street raise questions about their financial priorities. It’s time for the UC Board of Regents to stop gambling with California’s future.
The millions of Californians who voted for Proposition 30 deserve nothing less.
http://www.sfgate.com/opinion/openforum/article/Prop-30-funds-for-UC-will-go-to-Wall-Street-4031472.php#ixzz2CFYnAkcH
But it’s not like we need to put more regulations on banks, or anything. Let’s just stand idly by while they continue to take further control over our schools, our elected officials, the middle class, and the world.
As Mitt Romney said, “Banks aren’t bad people. They’re just overwhelmed right now.
http://articles.latimes.com/2012/jan/24/news/la-pn-romney-banks-arent-bad-people-20120124
I’m definitely not happy with 4% of the funds from Prop 30 going to the banks that got us into this mess in the first place. But you should be directing your outrage at the banks, not on those of us who are trying to clean up the mess.
Libby: “…that’s why all our public institutions, including those pension funds, lost money.”
What the hell are public institutions doing making “risky deals” with public money?
I submit to you that the UC Board of Regents has a fiduciary responsibility to make SAFE investments!
Chris: “Today, those banks have a growing foothold among top UC management with direct oversight over UC’s finances.”
Management from Wall Street would be well aware of the fiduciary responsibility. No excuses for these guys!
Wall street is all about risk. There are three levels of risk: high (bigger return if you win), medium, and low (as safe as any investment can be).
UC regents, no matter from whence they come, just do not put taxpayer money in investments of high risk! These are crooks not victims of a banking system. And don’t think for one minute that the regents that were not ex bankers or from Wall Street weren’t equally willing to risk “other peoples money” to enrich themselves. An excerpt from the article:
And lets not even forget the perks that go along with the job. TALK ABOUT ENTITLED!
http://www.thecollegefix.com/post/11781
But let us all keep in mind that Tea Partiers railing against big government and conservatives complaining about the lack of morality in our society are just old and out of touch.
Here’s another informative article on the UC system’s failure to deliver on its charter:
http://www.realclearpolitics.com/articles/2012/08/29/california_higher_educations_hollow_core_115232.html
Tina
Chris: “But it’s not like we need to put more regulations on banks, or anything. Let’s just stand idly by while they continue to take further control over our schools, our elected officials, the middle class, and the world. ”
The banks have control of the regents and your elected officials…and the whole world? What are they…Puppets?
A crook is a crook and that is the truth. Nobody forced these guys to risk taxpayer money! They did it out of their own sense of greed…with other peoples money!
Banks are regulated. Regulators are required to oversee banks using the regulations as their guide. It’s a flat out lie that banks are not regulated:
http://www.frbsf.org/education/activities/drecon/2006/0611.html
Re: “But it’s not like we need to put more regulations on banks, or anything. Let’s just stand idly by while they continue to take further control over our schools, our elected officials, the middle class, and the world.”
Wow! That is about the weirdest, most dysfunctional, lunatic, paranoid, moronic, left-wing-progressive-Occupy-Whatever-extremist-conspiracy-theorist garbage that I have ever read. (Or close to it.)
Thank you, I thoroughly enjoyed it.
Gee, I wonder why Obama bailed out so many banks if the object of these nefarious institutions is to “take further control over our schools, our elected officials, the middle class, and the world.”
Hot damn! It just dawned on me! The bankers OWN Obama! Those sneaky bastards!
Harold, it’s not a rant … it’s a question. Any malfesance was on the part of the banks who concocted these “financial products” and sold them as solid investments, when they were nothing of the kind.
You must try to keep it straight, and not let your prejudices color your judgment … and for heaven’s sake, and the sake of your mental health, stay away from “news” outlets that encourage you to do so.
And you and Pie both can take your scurrilous inuendo and put it where the sun don’t shine. Why do you always have to resort to that sort of thing, anyway? It don’t persuade anybody of anything … except of course of the weakness of your position, argumentatively speaking.
“Wow! That is about the weirdest, most dysfunctional, lunatic, paranoid, moronic, left-wing-progressive-Occupy-Whatever-extremist-conspiracy-theorist garbage that I have ever read. (Or close to it.)”
These over-dramatic statements from you have lost all meaning, Pie. At this point, I could write, “Hello Pie, how are you today?” and I’d likely get a similar response. Your default setting is hyperbole.
I don’t entertain conspiracy theories, Pie; I leave that to you.
The article Jack cites goes into detail about the increasingly cozy relationship between Wall Street and the UC system. I am not trying to absolve the UC system for their actions in making these bad deals. But it’s abundantly clear that Wall Street has taken on an undue amount of influence in politics, business, and now our education system.
I had hoped that OWS and the Tea Party could find some common ground on this issue. When the Tea Party started out, I remember many complaining about the relationship between big government and big business. This was when it was a more libertarian movement. Now, unfortunately, it seems Tea Partiers don’t care about big business. They believe the free market requires us to allow big corporations to do whatever they want, and that they actually have to advocate for even MORE perks and tax breaks to these corporations. What they don’t realize is that the politicians telling them these things are themselves incredibly cozy with Wall Street lobbyists. The Tea Party seems to be yet another institution bought by Wall Street.
The other side’s not much better. President Obama himself recieved record donations from Wall Street. It’s been speculated that his decision not to nominate Elizabeth Warren to be the head of the consumer protection agency she basically created was due to extreme pressure from Wall Street groups who hate Warren’s guts.
Pointing out the control Wall Street has over our government isn’t conspiracy-mongering. It’s an acknowledgment of reality. If you don’t want our politicians, universities and businesses making risky deals that jeopardize our nation’s future, then you need to start advocating for more Wall Street regulation. If you’re not willing to do that, then you can only hope to fight symptoms of the problem, not the root cause.
Re: “I don’t entertain conspiracy theories, Pie; I leave that to you.”
I have never espoused nor promoted any conspiracy theories you liar chump. I am merely an occasional mirror to you.
Who was it who posted “But it’s not like we need to put more regulations on banks, or anything. Let’s just stand idly by while they continue to take further control over our schools, our elected officials, the middle class, and the world?”
So you are not a conspiracy theorist, just a self contradicting OWS lunatic who espouses conspiracy theories and then denies it. Sheesh, do you EVER listen to yourself?
While I am not a member of the Tea Party or your ludicrous and lunatic OWS crowd, I can never see Tea Party members ever finding any common ground with a duplicitous, self-negating crackpot like you.
But, I suppose it could happen.
“Banks are regulated. Regulators are required to oversee banks using the regulations as their guide.”
You don’t say. (Honestly, this splendidly general statement sounds like you copied it out of a civics book.) But if you are actually trying to tell us that the “credit default swap” (a financial product which resulted in ruinous financial losses to the UC System) was born of a excess of government regulation …
… we is going to have to write you off for one oblivious ninny.
And we are NOT going to recount for you the entire history of the current economic debacle. It is freakin’ common knowledge to any and all sentient beings who’ve lived through the last eight years. If you won’t own it, you ain’t one of them … sentient beings, that is.
Pie: “Hot damn! It just dawned on me! The bankers OWN Obama! Those sneaky bastards!”
http://pjmedia.com/blog/contributions-to-obama-campaign-track-bailout-money/
2009
Pie what we have here is a syndicate…I said in comments elsewhere that Obama was the Godfather in a Santa suit but after checking out this site…
http://www.fanabala.com/
…I find I was wrong. Obama is the “Don”…”capo di tutti capi”, Valerie Jarret is his “consiglieri”, he’s got a supply of lawyers that act as “enforcers” and a mob of activists, his “crew”, that apply pressure in the community…and let us not forget the big “earners” (the bundlers) that bring in the money for the family. The media and fawning followers are his “associates”…Cosa Nostra – Italian for “this thing is ours”.
Bankers can cooperate or be run out of business and even then there are no guarantees. It’s the Chicago Way only now it has taken over our country.
Chris: ” Now, unfortunately, it seems Tea Partiers don’t care about big business. They believe the free market requires us to allow big corporations to do whatever they want…”
That’s not true Chris. A crook is a crook and business and government (or gov sponsored education) should NOT be in bed with government.
What has always bothered me is that you think government is the victim…an innocent bystander being duped by the bad businessman. that is a** backwards.
Banks cannot bring the power of government against you, tax you, limit or control your activities…government can. Government has the ultimate control. Our government leaders have overstepped their authority and abused their positions. If we don’t stop it soon this free country is lost.
Seems we are hitting on a nerve of Libby’s, the only thing weak about our positions on Post scripts is that it is wasted on deaf ears such as Libby’s.
Well, I can see my sarcasm and facetious comments never really strike home with Chris. Somehow they always seem to fly over his head. Perhaps I should discard them.
The notion that banks actually own Obama is, of course, as ludicrous as Chris’ conspiracy theory that banks are seeking “control over our schools, our elected officials, the middle class, and the world.” Moreover, while I have no doubt that Obama is a thug I would argue that he isn’t really a very effective thug given the state of the economy which continues to go down hill. His and the Democratic party’s thuggery have served to further ruin and send the USA towards bankruptcy.
I suppose I could go into detail and several pages and expound why my facetious comment about banks owning Obama and Chris’ conspiracy theory are both completely idiotic, but why bother? It would simply fall on a deaf ear, or blind eye as the case may be.
Besides, Jack and Tina could probably do a better job of it than I.
The devil is in the details of policy and ideology, or rather bad policy and a failed ideology. Four more years.
Pie I love your sarcasm…very creative and funny…especially when it sends me off on a rant!
“Regarding Libby’s dismissive, “But if you are actually trying to tell us that the “credit default swap” (a financial product which resulted in ruinous financial losses to the UC System) was born of a excess of government regulation …”
Poor lady can’t let the truth in no matter how much evidence she is given. First she mischaracterizes what I said then she makes me wrong for it…ditzy!
Bill Clinton:
Why did old Bill admit to this “resistance”?
“Cause he knows thewhole sordid truth is there for anybody who wants to see it!
Who invented Credit Default Swaps (CDS)?
A woman banker! A woman (who is now) environmentalist banker! A woman who invented the CDS as a way to ensure Exxon against losses after the Valdez incident. A woman who hopes to apply this same instrument in the carbon tax schemes now being placed on the front burner by the Obama administration. (The money machine for democrats continues)
Big players in the Democrat Party (and its many causes/activists) are knee deep in creating the regulations and instruments that became the foundation of the hot housing market and ultimately the bubble and financial crisis…they also profited from it and continue to look for new ways to keep the money machine going.
Spread the wealth? They are talking about themselves!
First the woman who invented CDS:
http://georgewashington2.blogspot.com/2009/12/woman-who-invented-credit-default-swaps.html
This instrument (CDS on sub-prime mortgage bonds) would become the means to wealth redistribution on steroids in the housing market under deregulation implemented by Clinton and facilitated by Obama and ACORN…a lot of money was also kicked back to the party.
The best article Ive read so far that explains (politically) how the housing mess began and evolved is at the link below. It’s written in timeline fashion and in plain English:
http://tjhancock.wordpress.com/housing-bubble-financial-crisis-detailed-comprehensive-assessment/
I double dog dare you to read the entire timeline, Libby, and then tell me that Democrats aren’t responsible for the whole mess, including the UC Regents playing footsie with Obama and using the taxpayers money i a risky scheme. Connect the freakin dots!
Pie Guevara: “I suppose I could go into detail and several pages and expound why my facetious comment about banks owning Obama and Chris’ conspiracy theory are both completely idiotic, but why bother? It would simply fall on a deaf ear, or blind eye as the case may be.”
I never said that the banks “owned” Obama, and I never promoted a conspiracy theory. I said that banks currently have too much control over our political process and our elected officials. That’s not a conspiracy theory. It’s not even a controversial statement. It’s a fact.
Tina is the one saying the Obama administration is a “syndicate” comparable to an Italian crime family, yet I don’t see you accusing her of being a conspiracy theorist. That’s hypocrisy.
Tina: “What has always bothered me is that you think government is the victim…an innocent bystander being duped by the bad businessman. that is a** backwards.”
I have never characterized government as “the victim.”
Tina, I didn’t read the entire blog post you cited from TJ Hancock, but skimming over it, it seems he lays most of the blame for the crisis at the feet of Freddie, Fannie, and the CRA. And yet, according the a bipartisan commision set up by Congress to investigate the causes of the crisis…
“…The market shares of Fannie Mae, Freddie Mac, and CRA-regulated lending institutions dropped tremendously during the housing bubble. Meanwhile, the market share of private mortgage securitization, which the FCIC majority largely blames for the crisis, and which the FCIC minority completely ignores, grew in lockstep with the rise of the housing bubble.
The relative market share of Fannie Mae and Freddie Mac dropped fairly dramatically during the 2000s bubble, from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent at the height of the bubble in 2005 and 2006. Notably, this decline occurred contemporaneously with the unsupported rise in housing prices and the deterioration in underwriting standards that virtually all observers blame for the collapse of the housing markets.
Similarly, the market share of financial institutions for which CRA applied has been steadily declining since 1977, when CRA was passed. CRA-regulated institutions, primarily banks and thrifts, accounted for only 28 percent of all mortgages originated in 2006 (the height of the bubble), a significant decline from their share in the late 1990s and early 2000s. As with Fannie and Freddie, this market share drop occurred in lockstep with the rise of the housing bubble.
In contrast, the market share of private mortgage securitization, a pillar of the shadow banking system that was not backed by the federal government and not regulated for safety and soundness in the way that Fannie, Freddie, and regulated banks and thrifts were, rose sharply and contemporaneously with the rise of the housing bubble. In 2002, the share of mortgages originated by private securitization was just over 10 percent of the total market. Over the next four years, this share grew rapidly, accounting for nearly 40 percent of all mortgage originations by 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006.”
http://www.americanprogress.org/issues/economy/news/2010/12/21/8832/politics-most-blatant/
“…But the Financial Crisis Inquiry Commission established by Congress concluded in January that the 1977 law designed to prevent redlining was not a significant factor in subprime lending or the crisis. Ben Bernanke, chairman of the Federal Reserve, had made a similar statement two years ago, but the criticism continued.
The bipartisan commission also found that the affordable housing goals contributed marginally to purchase of risky mortgages by Fannie and Freddie.”
http://newamericamedia.org/2011/02/loans-to-minorities-did-not-cause-housing-crisis-study-finds.php
It’s not surprising that the bipartisan commission found no evidence that the CRA was to blame. As you know, 84% of subprime loans made during the financial crisis were from lenders who were not subject to the CRA’s regulations. Furthermore, most of the suprime loans were concentrated in suburban areas, not urban areas where CRA loans are typically made. CRA loans actually were much less likely to default than non-CRA loans.
http://www.outsidethebeltway.com/looking-at-the-causes-of-the-financial-crisis/
So if Freddie, Fannie, and the CRA couldn’t have caused the crisis, what did? Deregulation which favored predatory lenders. Did you know that the Bush administration, through the Office of the Comptroller of the Currency, took regulatory power away from the states?
“The worst thing the OCC has done in the past decade was the preemption of state regulations against national banks. The OCC regulates the national banks– including the largest banks in the country. But prior to 2004, states could enforce their own rules against national banks operating within their borders. That meant that for national banks, the OCC’s rules served as a regulatory floor– state regulators couldn’t enforce weaker standards than the OCC. But the states could enforce stronger rules than what the OCC enforced.
In 2004, the OCC asserted sweeping powers to preempt state authority over these big banks. By aggressively pushing this agenda, the OCC prevented states from cracking down on abusive national banks. The OCC even joined a bank lobby group to sue state regulators who tried to prevent predatory lending.”
http://www.ourfuture.org/blog-entry/2010041408/john-dugan-lying-about-bank-predation
“State whistleblowers tried to curtail greedy lendingand were thwarted by the Bush Administration and the financial industry
More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation’s top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.
Roy Cooper of North Carolina and Tom Miller of Iowa headed a committee of state officials concerned about new forms of “predatory” lending. They urged Hawke to give states more latitude to limit exorbitant interest rates and fine-print fees. “People out there are struggling with oppressive loans,” Cooper recalls saying.
Hawke, a veteran banking industry lawyer appointed to head the OCC by President Bill Clinton in 1998, wouldn’t budge. He said he would reinforce federal policies that hindered states from reining in lenders. The AGs left the tense hour-long meeting realizing that Washington had become a foe in the nascent fight against reckless real estate finance. The OCC “took 50 sheriffs off the job during the time the mortgage lending industry was becoming the Wild West,” Cooper says.”
http://www.businessweek.com/stories/2008-10-08/they-warned-us-about-the-mortgage-crisis
“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
Re: “I never said that the banks “owned” Obama, and I never promoted a conspiracy theory. I said that banks currently have too much control over our political process and our elected officials.”
I never said that you said the banks owned Obama. Where the heck do you get that? Is plain English your second language or do you always retreat to the progressive rhetorical maxim “blind them with bullsh*t when you can’t dazzle them with brilliance.” I merely made note of your conspiracy theory and quoted … YOU …
Chris: “But it’s not like we need to put more regulations on banks, or anything. Let’s just stand idly by while they continue to take further control over our schools, our elected officials, the middle class, and the world.”
Now this fellow, while denying his plainly stated conspiracy theory tries to prop it up with the “Blame Bush” argument. Make up your mind, Chris, if you have one.
In any case I suppose I could give a brief synopsis (I am all for brevity, especially in the face of a windy blow hard who has the signature progressive propensity to confuse and convolute.)
Supposedly TARP prevented a core global financial meltdown. I don’t buy that and suggest an alternative would have worked with less long term pain — let the market correct itself. Those banks that could survive would have survived and bought out banks that could not.
The whole mess really is quite simple to understand. Government encouraged banking and lending institutions to take on what would normally be considered to be bad loans and promised that the government would back up such loans. Financial institutions went along. Hey, what the heck, we can do that. We are willing to go along with the government. Selling loans is what we are all about and why not sell more loans?
Institutions handling these loans quickly realized that they were poison and packaged them into a paper commodity and sold them back and forth with or without full disclosure.
Then the US economy faltered, people lost income or were suddenly unemployed and the “real estate always increases in value” hypothesis stumbled hard. Real estate flippers working the bad loan system and others simply trying to fulfill the American Dream of owning a home were walking away from over priced bad investments and often balloon payments they could not afford.
So, the government made good on it’s promise to back up the banks it encouraged to engage in bad loan practices. The suggestion that “predatory lending” practices lead to the financial meltdown is junk. At best it is a side issue concerning unethical practices. Those practices, engaged in by some lending institutions, were not responsible for the global banking crash. It was a combination of colliding factors around a key government solicited factor. Can you name those factors? There will be a quiz next Wednesday.
End of story.
Now back too the Proposition 30 issue, which is what this thread was about before the deflection into who and what caused the banking meltdown.
Read it and weep, the Democratic party machine that runs this state just duped and hosed the voters with Proposition 30 —
http://www.chicoer.com/opinion/ci_22009319/editorial-its-miracle-money-found
Who was it carrying the banner for Prop 30 in these environs? Was it some snotty and mocking progressive sucker/dope? I forget.