that the same company can both provide a loan and then insure that same loan
Give me a source, please. That isn't legal -- when Enron did it, after Glass-Steagal was ended, they got in a lot of trouble. In fact, Enron and the monolines are the only example I can think of where this applies. Which other companies were doing it?
But the problem is when they don't market the insurance to market (or when they mark different kinds of insurance to different market prices). Work it out with an example: let's say a bank owns a $100 loan. The borrower gets into trouble, and the loan must be written down to $90. So the bank reports a $10 loss. Whereas, if the bank insures the loan, and it gets written down to $90 -- their insurance liability gets written up to $10, leading to the same loss. The only thing that would make a difference would be fraud, which I don't believe has been legalized.
The article gave an example of a company at the time (Citigroup) that would have had to split their insurance underwriting by law, which arguably would've created a more accountable and less entangled situation than having it all under one roof.
Now you're just getting tautological: Glass-Steagal creates accountability and reduces entanglement because repealing Glass-Steagal reduces accountability and increases entangelemnt.
So what did the less ethical banks do with these troubled assets, since I'm sure somebody in the top ranks had to know what they were getting into?
So they, um, sold things? That is the super serious criminal accusation? That they bought stuff, and they sold it to people who overpaid? Pretty sure investment banks could already do that. And that's only possible if people are overpaying for assets.
Your argument appears to consist of 1) fallacies, 2) fabrications, and 3) statements that can only be true if you accept my argument from elsewhere in the thread -- that this bubble was made possible only by government regulations.
Give me a source, please. That isn't legal -- when Enron did it, after Glass-Steagal was ended, they got in a lot of trouble. In fact, Enron and the monolines are the only example I can think of where this applies. Which other companies were doing it?
But the problem is when they don't market the insurance to market (or when they mark different kinds of insurance to different market prices). Work it out with an example: let's say a bank owns a $100 loan. The borrower gets into trouble, and the loan must be written down to $90. So the bank reports a $10 loss. Whereas, if the bank insures the loan, and it gets written down to $90 -- their insurance liability gets written up to $10, leading to the same loss. The only thing that would make a difference would be fraud, which I don't believe has been legalized.
The article gave an example of a company at the time (Citigroup) that would have had to split their insurance underwriting by law, which arguably would've created a more accountable and less entangled situation than having it all under one roof.
Now you're just getting tautological: Glass-Steagal creates accountability and reduces entanglement because repealing Glass-Steagal reduces accountability and increases entangelemnt.
So what did the less ethical banks do with these troubled assets, since I'm sure somebody in the top ranks had to know what they were getting into?
So they, um, sold things? That is the super serious criminal accusation? That they bought stuff, and they sold it to people who overpaid? Pretty sure investment banks could already do that. And that's only possible if people are overpaying for assets.
Your argument appears to consist of 1) fallacies, 2) fabrications, and 3) statements that can only be true if you accept my argument from elsewhere in the thread -- that this bubble was made possible only by government regulations.