Yes. I recognize unenforced regulation as not being regulation.
If regulations were unenforced, why were banks bothering to meet capitalization requirements at all? Why invest in MBS at all rather than something with higher returns? And if capitalization regulations were unenforced, why bother selling your own loans and purchasing an MBS of loans from some other bank (paying a chunk to loan packagers in the process)? And why bother buying wasting money getting a AAA rating from the government specified ratings agency?
What regulation do you believe was not enforced?
Also, the implicit guarantee of a bailout wasn't a known or accepted feature of our financial system prior to TARP.
Again: if high-risk crap wasn't rated AAA and being sold to institutional investors, then much less of it would exist, exposing the banks to much less risk.
This is not in dispute. Also not in dispute: if regulations didn't demand that banks own lots of AAA rated securities, they wouldn't have bought as much.
You may be able to, with the benefit of hindsight, pinpoint some specific regulation that might have prevented the bubble. But lack of that particular regulation is not the same thing as an unregulated market.
Interesting that you waste so much "productive time" that you claim you value so much arguing about those things on HN. It's not like HN exactly attracts the crowd that will write next banking regulations, is it? Then what's the point of having these arguments here? If it's about getting more karma, then it's obvious you'll get plenty from extremely libertarian tech crowd here, but it's not like your 12000 karma is convertible into real dollars?
Another observation is that many times you come in with an argument you seem to purposefully derail it into something that more suits you. The original argument was:
Similarly with nonexistent regulation of derivatives and the ratings thereof during the real-estate bubble.
instead of addressing those two issues you go into government involvement in housing market and Basel requirements. Those are important issues not unrelated to housing bubble, but that wasn't original point!
Of course housing market was heavily regulated and influenced by government. But market for housing securities wasn't! It is basic knowledge now that pretty much everyone could structure, rate, insure and sell pretty much anything to pretty much everyone. I don't understand how you could argue with that?
And finally, back to the topic, is it not indicative of something that SecondMarket is now the marketplace for both the toxic housing junk and hi-fly tech start-ups?
If regulations were unenforced, why were banks bothering to meet capitalization requirements at all? Why invest in MBS at all rather than something with higher returns? And if capitalization regulations were unenforced, why bother selling your own loans and purchasing an MBS of loans from some other bank (paying a chunk to loan packagers in the process)? And why bother buying wasting money getting a AAA rating from the government specified ratings agency?
What regulation do you believe was not enforced?
Also, the implicit guarantee of a bailout wasn't a known or accepted feature of our financial system prior to TARP.
You have no idea what you are talking about.
http://en.wikipedia.org/wiki/Savings_and_loan_crisis
http://en.wikipedia.org/wiki/Long-Term_Capital_Management#19...
http://en.wikipedia.org/wiki/Government-sponsored_enterprise...
Again: if high-risk crap wasn't rated AAA and being sold to institutional investors, then much less of it would exist, exposing the banks to much less risk.
This is not in dispute. Also not in dispute: if regulations didn't demand that banks own lots of AAA rated securities, they wouldn't have bought as much.
You may be able to, with the benefit of hindsight, pinpoint some specific regulation that might have prevented the bubble. But lack of that particular regulation is not the same thing as an unregulated market.