History of Business

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Main Lecture points

* Regulation began after the great depression
* Deregulation began in the late 1990’s
* Obama appointed Summers and Geithner who are against regulation, thus nothing has changed

The Great Recession (2008)

* golden age in banking industry in the late 1990’s
* lots of liquidity, lots of access to capital (all of what the bankers wanted) * Complexity permitted the financial markets to carry on for so long; it confused polices makers * 1930’s great depression happened when there was no social security net; made policies makers to create regulation to avoid it happening again * 1970’s and 1980’s deregulation begins; people forget what the 1930’s were like * people forget why governments tax them and begin to revolt against taxes because they don’t think they need the government supported things that taxes fund * new consensus formed that the government didn’t know what they were doing, thus wanted deregulation * Clinton, Bush and Obama are all the same in the big picture as they all thing big government are bad

Obama vs Romney

* Obama does not look like a good candidate Romney does (physical looks) * Obama won at the start of the 2008 recession, he was a breath of fresh air – people hated George Bush * Since Macain didn’t understand 2008 and everyone hated Bush, Obama had a relatively easy election * Romney is of the belief that there was no 2008 crisis and everything is fine * People view democrats as socialist

* Geithner was one of the key figures behind the deregulation in the late 1990’s * Obama appointed Geithner as secretary of the treasury, many people were confused, not really a democratic thing * Larry Summers was the secretary of treasury in the Clinton administration and was a huge proponent of deregulation * Larry summers was beneath Geithner in the Obama administration as the director of the national economic council * So Obama appointed two people that were huge on deregulation * Obama creates a health care plan, bailouts and no regulation * Lost opportunity immediately after crisis to create regulation; appointment of Geithner and Summers made it impossible

Lecture September 13th

Main Lecture Points
* 2008 financial crisis roots go back to the 1930’s
* American dream to own a house essentially caused the 2008 crisis * Issues began when Fannie Mae began purchasing non federally insured mortgages in the late 1960’s

Great Recession… continuation of September 11th lecture

* Henry Paulson, secretary of treasury in Bush administration, former CEO of Goldman Sachs * Paulson coordinated Bear Sterns JP Morgan deal in March 2008 * September 2008 Merrill Lynch forced to sell itself to Bank of America * September 15th 2008, Lehman Brothers fails, fourth largest investment bank, largest bankruptcy in American history ($600 billion) * In September 2008 AIG gets $182 billion dollar bailout by government * Americans in fear of depression

* Paulson purposes a comprehensive response to rescue the investment banks of wall street * October 2008, emergency economic stabilization act (the bail out) * Created the troubled asset relief program (TARP)

* American governments solution to the issue is to buy all the banks toxic assets * Bailout planed to be $700 billion; rejected first time, Paulson rewrote the bill and was passed October 2nd * Economic climate did not hurt Obama campaign

* Roots of the crisis go all the way back to the 1930’s * At its core, the 2008 crisis can be traced to the American desire to own a home and fulfill the American dream * This desire to own a home was taken advantage of by many corporations (mortgage companies, banks, etc) * National housing act (1934) creates federal housing administration, to insure mortgages * National Housing Act made banks willing to give mortgages because the...
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