Originally posted by B Grace So let's put part of Glass-Steagall back into place. A Republican congress passed the bill that repealed it and President Clinton signed it. It was bi-partisan. Instead of blowing up the banking market we should step in with targeted regulation that still allows the market to function properly. Either way, we're talking about fewer Americans buying their first homes sooner rather than later but also fewer losing their homes in the future.
The repeal opened the door and like a fire exit during a fire the banks used it.
Recognizing that both parties drank this Kool-Aid is more productive than blaming Bush, Clinton or Barney Frank. I don't know if it can happen, now.
The entire Real Estate industry needs some careful scrutiny. There is no one on the ground with an incentive to turn down a bad transaction. Everyone from the real estate agent to the loan officer to the title officer is paid only when and if the transaction closes. No one tells the buyer he is paying or borrowing too much, and most people just aren't sophisicated enough to figure it out.
Also, the banking industry needs to get out of the "gotcha" approach to making money. From the credit card rules that change just to haul in late fees to the real estate loans with interest rate time bombs, banking has gone from an honorable lubricant of commerce to a gimmick. I don't buy that it is the consumer's fault for not reading the inches of paperwork one signs to buy a home. This is so rare that title officers have a label for them, "readers," and they are looked upon with disdain.
Allowing mergers to form huge banks (and other businesses) also contributed to this problem. For capitalism to work, there must be competition and there must be the possibility of failure. We have parked antitrust laws over in a corner gathering dust. These laws keep capitalism in existence, and they need to be enforced again. For Banks, this is a special issue since the government guarantees them.