Another Recession in 2015?

[Adam White]

Your comment dismisses the notion that both sides of the aisle were guilty of walking us into our last major recession. Dodd-Frank and irresponsible home lending ring any bells?

The last recession began in December 2007.  Dodd-Frank wasn't signed into law until July 21, 2010.  Neither Democrats nor Republicans were engaging in irresponsible home lending, that was all on the banks.

Seriously? All on the banks? No responsibility from government mandates? No culpability from the repeal of Glass-Steagall? No blame on the people who signed the flipping mortgages?

It is all the "Evil"Bank's fault? Sorry- I don't agree.

From the invention of the CRA (Jimmy Carter), to the deregulation of the S&L's (Ronald Reagan) to the cleanup of the S&L's (Bush #1) to the repeal of Glass-Steagall (Bill "Blue Dress"Clinton", to the "no homeowner left behind"(Bush part 2) to Holy crap its falling apart lets blame the person in office (Obama), it is hilarious to me that we are blaming the big evil banks for this.

Are they innocent? Of course not. Are they the only reason for the 9 YEARS that we have been like this?

NO.

When are we going to put ANY BLAME on the people who signed the Damn mortgages?

"Lets blame Wall Street"

"Let's blame Congress!"

"Let's blame _____(insert bad bank here)"

Sorry...I put some of the blame on the people who thought housing was like a Ponzi scheme, and they would never lose money.

But that is just me.

Perhaps - but it's not like the banks weren't actively trying to get customers. And it's not like the government's actions that you refer to weren't driven by the will and desires of the banks. It's not like Carter, Reagan, Bush, Clinton, etc woke up one morning and said - I think I'll reduce regulation. They did so because they were asked to do so - and it wasn't by the people who couldn't afford houses.

But I agree that some people probably share part of the blame - and those would be all the idiots taking out five year interest-only loans in the hopes of flipping properties for a profit. I lost track of the number of loans of that nature that I processed for BoA in the early 2000s.

[Adam White]

And I'm no fan of Bill Clinton, but I think it's sad when people seem more concerned about the Lewinsky affair than Iran-Contra.

[Non-RedNeck Westsider]

Banks unscathed?

Hardly. Over a hundred billion in legal claims made post meltdown.

Loss of dividends.

Restrictions on exec pay.

New capital stress tests.

A few execs still walked with bonuses in hand, but many more got walking papers. That "bust" made honest workers at those banks lose their jobs as well.

A bit of hyperbole, maybe, but they're still relatively 'business as usual' while I  believe most other businesses would have folded many times over. 

I don't know enough to argue over the nuances, but as a general perception - unscathed.

[finehoe]

Banks unscathed?

Hardly.

When toxic assets threatened the operations of the banks, bailout funds provided them liquidity. The total amount lent at below market interest rates was well over $10 trillion; although most of the loans were relatively short-term. These subsidized loans enabled the financial sector to return to its pre-recession profit levels by 2009. In contrast, American households are still recovering from income shocks, unemployment stints and wealth shocks.

So yes, unscathed.

[spuwho]

Curious, what would be classified as "scathed" in your personal measurements on the banks?

[mtraininjax]

Banks unscathed?

Hardly. Over a hundred billion in legal claims made post meltdown.

Loss of dividends.

Restrictions on exec pay.

New capital stress tests.

A few execs still walked with bonuses in hand, but many more got walking papers. That "bust" made honest workers at those banks lose their jobs as well.

Name one of the Bank Execs who ever went to jail over the bundling of toxic assets with good assets.........nuff said. Bankers are greedy despicable people, they rank up there with Lawyers as gum on the bottom of a shoe.

[finehoe]

Curious, what would be classified as "scathed" in your personal measurements on the banks?

If they had been broken up and sold off, their executives sent to jail, and their stockholders left with worthless pieces of paper.  As it turned out, they are bigger, richer and more powerful than they were before the taxpayers bailed them out; not scathed at all. 
[Note to any dimbulbs reading this:  I'm not talking about every single bank.  I'm referring to the "Too Big To Fail" institutions that deliberately gambled with their assets and then had Henry Paulson et. al. tell President Bush and Congressional leaders that we would have tanks in the streets if they didn't get their $700 Billion in TARP bailout funds.]

[spuwho]

Per Quartz:

$260 BILLION DOWN...
Good news! Big banks only have $65 billion in legal fines left to pay

Burning money.   (Reuters/Stephanie Keith)
Seven years and $260 billion later, big banks are nearing the end of their long legal nightmare. From dodgy mortgages to duff insurance, rigged rates to skirted sanctions, lenders have been paying the price for a wide range of misdeeds, as regulators dig deeper into their activities both before and after the financial crisis.
Analysts at Morgan Stanley estimate that the 25 largest banks in the US and Europe have taken some $260 billion in litigation-related charges since 2009. Over the next two years, they face around $65 billion in additional penalties, the analysts reckon in a recent research note.
Mortgage malpractice is the biggest source of legal trouble for the banks, both in the past ($94 billion in fines and provisions) and the future ($13 billion more to come). British banks have paid more than $40 billion for peddling a misleading form of personal insurance, the second-largest source of fines. The rest of the charges come from a mix of interest-rate manipulation, sanctions violations, tax evasion, and other transgressions.

Although Bank of America and JPMorgan are far ahead of the pack in terms of costs already incurred, the UK's Royal Bank of Scotland faces the biggest bill to come—nearly $11 billion between now and 2017, the bulk related to US mortgage misdeeds. The charges are worth more than RBS's estimated operating profit in 2017; a dividend won't likely be paid until 2018, a decade after long-suffering shareholders last received one from the bailed-out bank.
Given banks' seemingly endless capacity for bad behavior, putting a price tag on future legal trouble is guesswork, the analysts admit, as some of their forecasts include "general provisions for issues not yet identified, given the ongoing focus of regulators on a broad spectrum of historic issues."
Things seem to be moving in the right direction, the analysts note. Across the industry, executive pay has fallen by around 30% since 2006, with more emphasis on long-term incentives and non-financial targets. Banks are also hiring compliance and risk-management staff like crazy—compliance headcount has more than doubled at banks like JPMorgan and HSBC over the past few years.
But changing dysfunctional corporate cultures doesn't happen overnight: dealing with past transgressions is one thing, but are banks better prepared to stamp out wrongdoing in the future?

[Non-RedNeck Westsider]

Per Quartz:

$260 BILLION DOWN...
Good news! Big banks only have $65 billion in legal fines left to pay

Yay!  But where does the money go?

http://www.marketwatch.com/story/heres-where-all-the-bank-fines-go-2015-05-20

Checks will soon get sent to the Justice Department, Federal Reserve, Commodity Futures Trading Commission, New York State Department of Financial Services and the U.K.'s Financial Conduct Authority. But what does all that cash get used for?

For deficit reduction, mostly.

Wait a sec...  That money doesn't just sit under a mattress, does it?  Who holds all of that debt to begin with? 

C'mon.  You're smarter than that.

[spuwho]

Curious, what would be classified as "scathed" in your personal measurements on the banks?

If they had been broken up and sold off, their executives sent to jail, and their stockholders left with worthless pieces of paper.  As it turned out, they are bigger, richer and more powerful than they were before the taxpayers bailed them out; not scathed at all. 
[Note to any dimbulbs reading this:  I'm not talking about every single bank.  I'm referring to the "Too Big To Fail" institutions that deliberately gambled with their assets and then had Henry Paulson et. al. tell President Bush and Congressional leaders that we would have tanks in the streets if they didn't get their $700 Billion in TARP bailout funds.]

I would agree that some executives conducted in criminal behavior. Abuse was definite and many involved did not get adequate levels of prosecution sent their way.

There was a lot more to the US banking system involved here than what can be distilled into a blog bite. I have never agreed with the "too big to fail" mantra. But I do agree with the "too big to close".

[finehoe]

Another Recession in 2015?

Unlikely.

Economy grows at a robust 3.7% rate in second quarter

Te U.S. economy grew at a brisk pace during the spring quarter, an encouraging sign that economic momentum was building before the turmoil in financial markets.

The nation's output of goods and services expanded at a 3.7% annual rate in the second quarter, much faster than the 2.3% rate initially estimated last month by the Commerce Department.

An upward revision had been expected, but Thursday's report on the nation's gross domestic product was even better than what most economists had anticipated, thanks mostly to stronger business investments and the best percentage increase in state and local government expenditures in nearly 14 years.

http://www.latimes.com/business/la-fi-gdp-2qtr15-20150827-story.html

[fsquid]

GDP growth in the "recovery" part of the cycle should be north of 4.  Shows how stupid the stimulus was.

[finehoe]

GDP growth in the "recovery" part of the cycle should be north of 4.  Shows how stupid the stimulus was.

Says who?  There is no developed economy on the planet growing at 4+%.  Your stimulus comment is nonsensical.  The stimulus was designed (and succeeded in) providing growth during the depths of the recession, not adding points to GDP growth six years later.

[fsquid]

GDP growth in the "recovery" part of the cycle should be north of 4.  Shows how stupid the stimulus was.

Says who?  There is no developed economy on the planet growing at 4+%.  Your stimulus comment is nonsensical.  The stimulus was designed (and succeeded in) providing growth during the depths of the recession, not adding points to GDP growth six years later.

I said 4% in the recovery part of the economic cycle.  Not sustained.  Economies generally bounce back strongly after recessions, and the harder and deeper the recession, the stronger and faster the bounce back.

The two weakest recoveries in our history were the 1930s and now. Those are the two times that Keynesian "stimulus" have been tried on a massive scale. Draw your own conclusion.

[finehoe]

The two weakest recoveries in our history were the 1930s and now. Those are the two times that Keynesian "stimulus" have been tried on a massive scale.

You're wrong:  http://www.nytimes.com/interactive/2009/01/26/business/economy/20090126-recessions-graphic.html

Since the Great Depression, presidents have frequently experimented with Keynesian economics to combat recessions.