I am using the term regulation in the sense of enacting and enforcing legislation specific to a particular industry. Explicit collusion is already illegal in the United States and isn't going to require some new government entity. The Internet is not owned by the people and should not be treated as a public service, and if the government is dictating how a private company should run it's business with no regard to profitability then it will be a self fulfilling prophecy. You will have nobody to complain to when the government starts prioritizing traffic on behalf of special interest groups.
The entire American financial system is far from a free market. My original argument was that the financial crisis is not due to an unregulated free market. No objective postmortem will ever come to the conclusion that free market capitalism caused this crisis because it is a purely academic argument.
There is a disconnect between risk and consequences across America. You used to have to invest significant capital in property up front, and a downturn in housing prices was unlikely to wipe out the equity already built into your house. Government regulation obviously did not prevent institutions from making subprime loans, and when housing prices started to decline people had no incentive to honor their debts. The statement "most CRA loans were responsibly made" means nothing and is not backed up by any kind of number. The whole purpose of the CRA is to force a bank to give loans it otherwise would not give due to credit concerns. You think these people are still paying their mortgages when their principle is more than the value of the house?
When the government starts dictating how institutions should behave you have a bunch of crooked politicians in Washington imposing their will in domains they have absolutely no knowledge of. There was no risk management over at Fannie and Freddie, and why would there be when the government gave them an implicit guarantee against their risk? They were free to focus on cooking their books to make shareholders happy. You cannot downplay their involvement in the crisis regardless of when they got involved. When institutions don't worry about their counter party risk then they should be allowed to fold and the shareholders get stuck with the bill. When Enron went down their executives were burned at the stake. Why hasn't this happened with Freddie and Fannie? The consequences of their failure are much more severe.
You have done nothing to debunk those Republican talking points other than to quote a Clinton Administrator, a member of the Fed, and a CRA compliance counsel, three parties that would love to distance themselves from this crisis as much as possible. Neither you nor I could lay out step by step how we got in this mess, so it is a waste of time to keep discussing it. If you think the root cause is "financial deregulation" why don't you go ahead and call up some free market think tanks, I'm sure they'd love someone to explain it to them.
As for net neutrality.. If these large backbones are subject to competition then consumers themselves would have the power to make sure they play nice. Nobody is going to pay for access or advertise to half of the internet. As long as the government prevented collusion and promoted competition then regulation would not be necessary. Again, this is another issue that is not going to be solved on slashdot, so to state that regulation is the only true solution is rather naive.
In the future you should consider a more composed response when you are participating in a rational debate. Attempting to belittle my argument by chalking it up as a conservative talking point or assuming I wouldn't bother reading a link brings nothing to the discussion. It was also not safe to assume I had any idea who you were or that I had previously read your official opinion on the CRA, so the attitude was unnecessary.
That being said, your original argument made an off hand comment laying the blame for our financial crisis on private industry. My argument was that the government should not be involved in the private market. That they turned to Fannie and Freddie for stability only strengthens that argument. Nobody reading the comments on this thread (myself included) truly has a grasp on the machinations of our shadow banking system, and to somehow compare the financial crisis to net neutrality is nonsensical.
The reason net neutrality is even an issue is because broadband providers have virtually no competition, and,as someone already stated in other posts on this thread, that is due to the high barrier of entry. Since our horribly inefficient government is going to be allocating our tax dollars towards this issue, perhaps they should be trying to solve the problem rather than regulating it.
You mean the fact that Fannie and Freddie were allowed to socialize their risk while privatizing their profit had nothing to do with our current situation? How about the fact that Clinton forced the Gramm-Leach-Bliley Act to include a provision strengthening the Community Reinvestment Act? So our government passed a bill that perpetuated the very policy that caused banks to make these bad loans in the first place while simultaneously allowing commercial banks to invest in these bad loans. A recurring theme here is government involvement in supposedly free markets. Our current financial crisis can be traced far beyond the GLBA.
What happened in the financial markets is a result of government interference with free market capitalism, not a failure of self regulating private industry.
Ideally we would have more choices for broadband providers, in which case regulation would not be needed because competition would keep the providers honest and the consumer would win.
Slashdot Mirror
I am using the term regulation in the sense of enacting and enforcing legislation specific to a particular industry. Explicit collusion is already illegal in the United States and isn't going to require some new government entity. The Internet is not owned by the people and should not be treated as a public service, and if the government is dictating how a private company should run it's business with no regard to profitability then it will be a self fulfilling prophecy. You will have nobody to complain to when the government starts prioritizing traffic on behalf of special interest groups.
The entire American financial system is far from a free market. My original argument was that the financial crisis is not due to an unregulated free market. No objective postmortem will ever come to the conclusion that free market capitalism caused this crisis because it is a purely academic argument.
There is a disconnect between risk and consequences across America. You used to have to invest significant capital in property up front, and a downturn in housing prices was unlikely to wipe out the equity already built into your house. Government regulation obviously did not prevent institutions from making subprime loans, and when housing prices started to decline people had no incentive to honor their debts. The statement "most CRA loans were responsibly made" means nothing and is not backed up by any kind of number. The whole purpose of the CRA is to force a bank to give loans it otherwise would not give due to credit concerns. You think these people are still paying their mortgages when their principle is more than the value of the house?
When the government starts dictating how institutions should behave you have a bunch of crooked politicians in Washington imposing their will in domains they have absolutely no knowledge of. There was no risk management over at Fannie and Freddie, and why would there be when the government gave them an implicit guarantee against their risk? They were free to focus on cooking their books to make shareholders happy. You cannot downplay their involvement in the crisis regardless of when they got involved. When institutions don't worry about their counter party risk then they should be allowed to fold and the shareholders get stuck with the bill. When Enron went down their executives were burned at the stake. Why hasn't this happened with Freddie and Fannie? The consequences of their failure are much more severe.
And before you jump on it I did not mean a member of the Fed board
You have done nothing to debunk those Republican talking points other than to quote a Clinton Administrator, a member of the Fed, and a CRA compliance counsel, three parties that would love to distance themselves from this crisis as much as possible. Neither you nor I could lay out step by step how we got in this mess, so it is a waste of time to keep discussing it. If you think the root cause is "financial deregulation" why don't you go ahead and call up some free market think tanks, I'm sure they'd love someone to explain it to them.
As for net neutrality.. If these large backbones are subject to competition then consumers themselves would have the power to make sure they play nice. Nobody is going to pay for access or advertise to half of the internet. As long as the government prevented collusion and promoted competition then regulation would not be necessary. Again, this is another issue that is not going to be solved on slashdot, so to state that regulation is the only true solution is rather naive.
In the future you should consider a more composed response when you are participating in a rational debate. Attempting to belittle my argument by chalking it up as a conservative talking point or assuming I wouldn't bother reading a link brings nothing to the discussion. It was also not safe to assume I had any idea who you were or that I had previously read your official opinion on the CRA, so the attitude was unnecessary.
,as someone already stated in other posts on this thread, that is due to the high barrier of entry. Since our horribly inefficient government is going to be allocating our tax dollars towards this issue, perhaps they should be trying to solve the problem rather than regulating it.
That being said, your original argument made an off hand comment laying the blame for our financial crisis on private industry. My argument was that the government should not be involved in the private market. That they turned to Fannie and Freddie for stability only strengthens that argument. Nobody reading the comments on this thread (myself included) truly has a grasp on the machinations of our shadow banking system, and to somehow compare the financial crisis to net neutrality is nonsensical.
The reason net neutrality is even an issue is because broadband providers have virtually no competition, and
You mean the fact that Fannie and Freddie were allowed to socialize their risk while privatizing their profit had nothing to do with our current situation? How about the fact that Clinton forced the Gramm-Leach-Bliley Act to include a provision strengthening the Community Reinvestment Act? So our government passed a bill that perpetuated the very policy that caused banks to make these bad loans in the first place while simultaneously allowing commercial banks to invest in these bad loans. A recurring theme here is government involvement in supposedly free markets. Our current financial crisis can be traced far beyond the GLBA.
What happened in the financial markets is a result of government interference with free market capitalism, not a failure of self regulating private industry. Ideally we would have more choices for broadband providers, in which case regulation would not be needed because competition would keep the providers honest and the consumer would win.