House passes bill to loosen banking regulations

[Underseer]

https://www.cnn.com/2018/05/22/politics/house-banking-bill-vote-dodd-frank/index.html

This is too funny.

Weren't we told that the original Teabagger Party protests were about Republican voters being angry about the bank bailout?

But if that's the case, why aren't we seeing massive protests by Republican voters over this? Because this bill is going to make it more likely that another bailout will happen in the future.

Unless those Teabagger protests were really about something other than the bank bailout. Golly, I wonder what that other something might be. Could it be related to the fact that the most racist Republican candidate won the Republican primary? Naw, that can't be it. I'm sure there's a totally innocent explanation for this.

 

[Ford]

This is too funny.

And by funny you mean sad.


This is like telling an alcoholic "well you've been sober for almost a decade, don't you think it is about time you had a cocktail?"


What could possibly go wrong?

 

[Axulus]

Because this bill is going to make it more likely that another bailout will happen in the future.

How do you know? Is this an article of faith or have you done extensive research on this bill?

A good number of democrats were in support:

Democratic supporters in the Senate—17 in all—say the legislation is needed to help smaller, community banks unduly affected by post-crisis regulations. “Too big to fail had become too small to succeed,” Ms. Heitkamp said.

https://www.wsj.com/articles/how-co...ng-rules-in-a-rare-bipartisan-deal-1527030512

 

[Jimmy Higgins]

Because this bill is going to make it more likely that another bailout will happen in the future.

How do you know? Is this an article of faith or have you done extensive research on this bill?

A good number of democrats were in support:

Democratic supporters in the Senate—17 in all—say the legislation is needed to help smaller, community banks unduly affected by post-crisis regulations. “Too big to fail had become too small to succeed,” Ms. Heitkamp said.

https://www.wsj.com/articles/how-co...ng-rules-in-a-rare-bipartisan-deal-1527030512

Among the fixes proposed was raising the threshold at which banks are considered "too big to fail." That trigger, now set at $50 billion in assets, will rise to $250 billion.

This is the big problem. This wouldn't be about saving community banks. This would reduce the oversight to about 12 banks in the entire country!

Oh wait, there is a community bank part:

Community banks with less than $10 billion in assets will no longer have to comply with the so-called Volcker Rule. The rule bars financial institutions from making risky bets with money that is insured by taxpayers.

Wonderful! So banks that don't have a lot of assets can make gambles on risky investments.

 

[Harry Bosch]

How do you know? Is this an article of faith or have you done extensive research on this bill?

A good number of democrats were in support:



https://www.wsj.com/articles/how-co...ng-rules-in-a-rare-bipartisan-deal-1527030512

Among the fixes proposed was raising the threshold at which banks are considered "too big to fail." That trigger, now set at $50 billion in assets, will rise to $250 billion.

This is the big problem. This wouldn't be about saving community banks. This would reduce the oversight to about 12 banks in the entire country!

Oh wait, there is a community bank part:

Community banks with less than $10 billion in assets will no longer have to comply with the so-called Volcker Rule. The rule bars financial institutions from making risky bets with money that is insured by taxpayers.

Wonderful! So banks that don't have a lot of assets can make gambles on risky investments.

Well, banks fail all the time. The issue is that when a community bank fails, the shareholders get screwed. But if a large bank fails, it is so large that it could jeopardize the entire economy and hose everyone. Hence too big to fail.

 

[Jimmy Higgins]

This is the big problem. This wouldn't be about saving community banks. This would reduce the oversight to about 12 banks in the entire country!

Oh wait, there is a community bank part:

Community banks with less than $10 billion in assets will no longer have to comply with the so-called Volcker Rule. The rule bars financial institutions from making risky bets with money that is insured by taxpayers.

Wonderful! So banks that don't have a lot of assets can make gambles on risky investments.

Well, banks fail all the time. The issue is that when a community bank fails, the shareholders get screwed. But if a large bank fails, it is so large that it could jeopardize the entire economy and hose everyone. Hence too big to fail.

The rule specifically covers federally insured money.

 

[Emily Lake]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

 

[Axulus]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

 

[Emily Lake]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

True, the cost of housing does. But the downpayment requirements on them is the banking side of it.

 

[Copernicus]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

True, the cost of housing does. But the downpayment requirements on them is the banking side of it.

True, but those requirements were far easier before the safeguards against risky loans were put in place. It is now supposedly harder to get a loan, but, by your own words, the value of your home has recovered. Why do we need looser restrictions on getting loans?

 

[Alcoholic Actuary]

Oh wait, there is a community bank part:

Community banks with less than $10 billion in assets will no longer have to comply with the so-called Volcker Rule. The rule bars financial institutions from making risky bets with money that is insured by taxpayers.

Wonderful! So banks that don't have a lot of assets can make gambles on risky investments.

In fairness, even Barney Frank is in favor of this part of the new bill. Small banks like this almost never invest in high risk stuff, but spend an inordinate amount of time and money proving to regulators that they don't.

aa

 

[Jimmy Higgins]

Oh wait, there is a community bank part:

Community banks with less than $10 billion in assets will no longer have to comply with the so-called Volcker Rule. The rule bars financial institutions from making risky bets with money that is insured by taxpayers.

Wonderful! So banks that don't have a lot of assets can make gambles on risky investments.

In fairness, even Barney Frank is in favor of this part of the new bill. Small banks like this almost never invest in high risk stuff, but spend an inordinate amount of time and money proving to regulators that they don't.

aa

Okay fine. If you are going to go all quote one of the architects of the original bill, clearly my gut feeling isn’t welcome anymore.

 

[lpetrich]

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

Except that (cost of housing) = (property values)

High cost of housing = high property values
Low cost of housing = low property values

By supply and demand, building a lot of housing will lower property values, and are any homeowners here willing to accept that? The NIMBY's described in that Vox article weren't.

 

[Playball40]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

This is not true in most areas. However, in strict development controlled areas and areas with no more additional land to build, yes. However, easy credit does the most to artificially raise home values.

- - - Updated - - -

The cost of housing has more to do with building restrictions (city codes) than banking regulation.

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

Except that (cost of housing) = (property values)

High cost of housing = high property values
Low cost of housing = low property values

By supply and demand, building a lot of housing will lower property values, and are any homeowners here willing to accept that? The NIMBY's described in that Vox article weren't.

No always. Land is immovable so building more homes does NOT necessarily lower the value of homes in highly sought after areas.

 

[Playball40]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

I agree they overcorrected the requirements to get a home loan. But they could go back to programs prior to the MBS bubble. They need to separate home loans from securities and revamp the FHA programs (that worked for millions of lower income home buyers). It was the secondary market greed that created the problem, not the housing market or initial mortgage requirements (lending). Once they combined mortgages with investment securities, we were effed.

 

[Loren Pechtel]

It is going to take measures like CA's SB 827 (which unfortunately failed to get anywhere) to make a significant dent in housing costs:

https://www.vox.com/cities-and-urbanism/2018/2/23/17011154/sb827-california-housing-crisis

I like the idea about allowing them to build tall. However, I do not like removing the parking issue. Even if they use mass transit to work they're likely to still have a car. Those parking requirements exist because parking becomes such a nightmare otherwise. Perhaps a lower parking requirement would make sense but not no parking requirement.

 

[Emily Lake]

True, the cost of housing does. But the downpayment requirements on them is the banking side of it.

True, but those requirements were far easier before the safeguards against risky loans were put in place. It is now supposedly harder to get a loan, but, by your own words, the value of your home has recovered. Why do we need looser restrictions on getting loans?

The value of my home has recovered, and I have equity in that home so that I can afford to move again. But if I were younger, it would be almost impossible for me to save enough money to afford the downpayment on even a modest home. People who already have homes are mostly fine now; people trying to buy their first home are mostly fucked.

 

[Emily Lake]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

I agree they overcorrected the requirements to get a home loan. But they could go back to programs prior to the MBS bubble. They need to separate home loans from securities and revamp the FHA programs (that worked for millions of lower income home buyers). It was the secondary market greed that created the problem, not the housing market or initial mortgage requirements (lending). Once they combined mortgages with investment securities, we were effed.

Agreed.

 

[Harry Bosch]

Partisanship aside, this might be a good move. Yes, I lived through the 2008 crash, and my home value has only recovered in the last 3 years. I spent 7 years underwater... but also screwed for a lot of the federal resources for refinancing because my income was too high. I definitely don't want that to happen again! On the other hand, however, it's almost impossible for a young person to get a house today. The banking restrictions make it really difficult for anyone except the wealthiest young people to be able to afford even a simple house. There are still some pretty significant wage pressures remaining from the crash. Even a small house in the Seattle Metro area can run $400K... which means that a 20% downpayment is $80K. That's a virtual impossibility. So pretty much, if you didn't already have a house prior to 2008... getting a house is a serious challenge.

Maybe it's worth looking into what the bill is actually about. It would be a nice surprise to find the government doing something beneficial.

I agree they overcorrected the requirements to get a home loan. But they could go back to programs prior to the MBS bubble. They need to separate home loans from securities and revamp the FHA programs (that worked for millions of lower income home buyers). It was the secondary market greed that created the problem, not the housing market or initial mortgage requirements (lending). Once they combined mortgages with investment securities, we were effed.

Agreed.

I don't disagree that it's a problem. But as a former banker, I've always taken the view that people should put some money down when they buy a home. They should have some skin in the game. If not, every time the market corrects, people will bail.

 

[Emily Lake]

Agreed.

I don't disagree that it's a problem. But as a former banker, I've always taken the view that people should put some money down when they buy a home. They should have some skin in the game. If not, every time the market corrects, people will bail.

That makes great sense... as long as house prices are reasonable compared to income levels. Where I'm at right now, a modest house or townhouse is going to run around $400,000. That's not fancy, that's not even in a particularly nice part of town - that's just not a dump needing a roof replaced. A 20% down payment on that is $80,000. Median household income here is $50,000. So that's a yeah and a half income! Even if a person is relatively aggressive and saves 20% of their income toward a down payment, they're looking at 8 years before they can afford to buy!