L. William Seidman, former chairman of the FDIC and the Resolution Trust Corp., was the lunch speaker at the Securities Industry and Financial Markets Association's Summit on the Troubled Asset Relief Program Monday afternoon. As chair of the FDIC during the last financial crisis, Seidman started off by reassuring the audience that the crisis would pass, but he quickly focused on the seriousness of the situation.
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"These things do go by," he said, "but that's not to take away
from the fact that this is the worst financial crisis since the Great
Depression. In one sense it's worse than the Great Depression, since it's
far more complicated for governments to handle."
Seidman then went on to list the main reasons (in no particular order) for the crisis:
-
The Securities and Exchange Commission for loosening capital requirements
-
Fannie Mae for entering into subprime lending
- Rating agencies for
rating paper that they had no experience with
- Robert Rubin and Alan
Greenspan, who went to bat to prevent the commodities exchange from
regulating derivatives
-
The Federal Reserve for increased the money in the system and refusing to regulate mortgage brokers
-
Securitization and himself
"The nuclear weapon of this situation has been
securitization. This was invented by myself and the RTC, so I add my
name to this list as well," Seidman said. "The exception is that we kept
a piece of it ourselves back then; that part was lost when others
started doing it." -
George White
See more posts from the SIFMA Tarp Summit
Comments
While we obviously need massive restructuring to get us out of this mess, it's still somewhat satisfying to point fingers. History, after all, is all about learning from past mistakes to prevent future ones. This article I just read on the culprits of the collapse really has my head spinning. Clearly I'm not alone in my thinking:
http://www.wealthdaily.com/report/culprits-of-the-financial-crisis/375