Assignment due for Senior Current Issues on Monday October 20
OK guys, lets take a good look at the past three decades in regards to this banking crisis. Check the link to the McClatchy News article. Click on PDF Questions that go with it. Answer the questions. You can work with a friend to help you think through the questions, however in the end and on paper I want “YOUR WORDS” not theirs.
The article will give a good solid overview on the history of this deregulation problem which has morphed into a global financial crisis.
hey Mr. Wood,
I trying to figure out how to do this assignment for tomorrow. My boyfriend has internet but there is no way for me to print it out and he doesn’t have word for me to copy and past the question and article for me to save it to my flashdrive to bring home so I can do it on my computer.Because we have word and stuff but no internet or printer. If i were to come to your class when school is out could i get a printed assignment and use your computer to print the article so i can type it out and do the assignment on my computer at home if my boyfriends brother can’t figure out a way for me to save this stuff to my flashdrive. My email is courtneyjean0908@yahoo.com if you could just email be back by the end of the school day that would be great thank you.
Please don’t Delete this one!!!
1) What exactly is meant by “deregulation”? Provide an example of what deregulation might be in your own life.
Deregulation is to remove the rules that regulate a system or business. An example of deregulation would to be grounded from my car by my parents but they still allow me to use it any way giving me mixed messages and allowing me to interpret that my actions won’t have fierce consequences.
2) Kathleen Day, a spokeswoman for the Center for Responsible Lending, a consumer-oriented research group, explained the regulatory lapses more starkly: “The job of regulators is that when the party’s in full swing make sure the partygoers drink responsibly,” She said. “Instead, they let everyone drink as much as they wanted and then handed them the car keys.” I think this is a good description… what do you think she meant by that?
I know that she meant that the regulators were throwing caution to the wind. They didn’t just “turn the other cheek”, they actually encouraged this behavior and supported it.. I love this quote and one at the very end of the article that the author chose. “Day, of the Center for Responsible Lending said: “No one wanted to kill the goose that laid the golden egg.”“ These quotes really give you a feel for how crazy this scandal really is.
3) Go to Wikepedia-go to your mom-to your dad-to Courtney-to Rachel-to Mr. Barry- find out best you can-what was the 1933 Glass-Steagall Act? And what impact did it have on banks?
I found from Wikepedia that the Glass-Steagall Act of 1933 was a bill made during the time of the New Deal. The act separated commercial banking from investment banking, and protected the people who deposited into the banks from the additional risk associated with security transactions. The act also introduced the FDIC which insured bank deposits.. The act had oppressed the banks in a good way, they could not make risky investments, depositors money was safe, and if something did go awry the banks were insured by the FDIC.
4) How did the administration of President Clinton, President Reagan, and President G W Bush all add to the mortgage meltdown problem?
For President Reagan’s terms he advertised trust in the government by proclaiming faith in the free markets. Then in the late 90’s Clinton signed the Financial Services Modernization Act, which torn down the walls of separation between the banks, securities and insurers. Then after Clinton, Bush carried on with the promotion of home ownership; as a result the market grew for loans to borrowers with bad credit about one-third of those bonds were supported by supreme loans and thus began our certain downfall.
5) And Congress was involved. What does this quote from the article mean, “With Congress eager to expand home-ownership, regulators felt pressure to deal lightly with mortgage loans to low-income households, and virtually no one proposed national regulation of non-bank lenders or mortgage brokers.”
I think this quote reflects the power of our government and how it bends others to its will. Regulators would turn the other way if “peer pressured” into it, in fear that if they didn’t certain perks and privileges might be lost. I would think of this more like agreeing with a parent to avoid conflict even when you know they don’t know what they’re talking about.
6) One more time in your own words- summarize the entire mortgage meltdown-banking crisis for me here. Lay it out form beginning to end in your words.
Okay…this housing crisis didn’t just appear from anywhere it’s been blinding stewing for over the past 3 decades; starting with Ronald Reagan’s time in office. He wanted the people to feel more comfortable with the government, to trust it, so he advertised this by loosening the belt that FDR had so tightly pulled around the American Banks. One presidential term later Clinton was in office and following in Reagan’s steps. Clinton signed the Financial Services Modernization Act even further loosening the belt, but it was still snug. G.W. Bush continued to deregulated until the belt finally snapped sending America into a frantic struggle to keep their pants up. With banks taking higher and higher risks and no one to slap away there greedy hands, Americans soon realized they could not pay their mortgages with fluctuating interest rates, it seemed that ignoring past credit histories and no down-payments were to good to be true. Soon homes were foreclosing everywhere and everyone was being affected by the downfall of the housing market. So now here we are after adding another $700 billion to our debt by bailing out Wall St. and we’re no better off now than we were 2 weeks ago.
7) What ways does it effect you now, and will effect you in the future? What do you think it will do to the US and World Economy?
Currently I guess…it’s been helping and hurting. Let me elaborate, see I live with my dad one week and my mom the next. I switch between houses and incomes. My Mom has a pretty stable income from her work and my step-fathers; there I’m not really hurting. In fact tonight I found that we had won the bid on the house we were looking at. It was foreclosed in result of the housing crisis and was much cheaper than it was worth because no one is buying right now. Quantity is high, demand is low. While on the other hand my dad works in a factory and recently was injured while on the job. After fighting with insurance companies for a month and also on leave because of his injuries, we had no real source of steady income. So we’re about this close – to losing our home. I’m not so worried about myself than I am about my dad.
And as for the future, I worry that if the bail out didn’t work what will I do for student loans? How am I going to pay for college this next year? I mean my first bill is due May 1st! I think this crisis is really going to taking a piece out of the stock market. Sending invested businesses all over the world in to a panic for at least the next few months. From there…I’m not quite sure what will happen. All I can do is be optimistic for the time being and apply to as many scholarships and grants as I can.
8) What do we do about it now?
Like I said above, I don’t think there is much we can do right now. In the future we need to point and throw a tantrum if we happen to see deregulation unweaving our balanced economy; but for now kick back and watch the world as it goes to hell with corrupt politics, global warming, nuclear warheads, Sarah Palin, and the Banking Crisis. Hold on it’s going to be rough.