"Years Of Silliness" Unwound Over Single Weekend

This is my favorite quote of the morning about what the bankers did this weekend:

“I’ve been on Wall Street for many years, and I’ve never seen a weekend like this one,” said Michael Holland, 64, chairman and founder of New York-based Holland & Co. “We are unwinding what has been years of silliness in the financial markets, and the silliness is being vaporized as we speak, unfortunately with the stock price of a number of companies involved in it.”

Oh, you frivolous fellows with your silly option-ARMs and silly derivatives and silly off-the-books assets and silly securitized mortgages. No more funny hats for you. Consider all funny hats atomized.

`Tectonic’ Shift on Wall Street as Lehman Fails, Merrill Sold [Bloomberg]

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  1. Moosehawk says:

    That Holland, he’s such a such a silly goose. The whole stock market is just full of a bunch of silly gooses.

  2. thebluepill says:

    Replace “silliness” with “mindless drunken greed” and you have a winner.

  3. NYGal81 says:

    Wow…what a way to trivialize and undercut the seriousness of all these financial goings-on.

  4. iMe2 says:

    I think “irreconcilable differences” should immediately be replaced by “years of silliness” in divorce proceedings.

    Any other good ones?

  5. moore850 says:

    years of silliness, yeah right. Silliness for you if you were at the banks raking in cash. Not so silly if you’re homeless at age 37 with a family thanks to some improperly explained loan, whose payment ballooned to an insane rate.

  6. SuffolkHouse says:

    Corporate whores now want welfare, when they’ve been preaching forever that welfare makes you lazy.

    So what does the GOP do?

    They bail them out. And the CEOs get their golden parachutes.

    I hope they all die.

  7. bologna_wallet says:

    This has certainly be a historical weekend that Wall St will look back upon, sort of a financial 9/11.

  8. Segador says:

    I really wish Ed Wynn was still alive to read this story. “Thuch Thilliness!”

  9. lightaugust says:

    Yeah, willing to be that the chairman of ‘Holland and Co.’ probably has enough left over at the end of the day to call it ‘silliness.’ As if one could just shake their head with a dismissive mutter and go home for dinner.

    I’ll call it selling out the future of the country for a quick buck despite years of warnings about the massive amounts of debt we were holding.

  10. lightaugust says:

    argh.. willing to BET

  11. Segador says:

    Hey now- don’t worry about all that debt- the Chinese are more than willing to smile and buy it all from under us!

  12. johnva says:

    I’ll try to leave the overt partisan politics out of it, but it has to be said: this type of thing is the direct result of a policy of deregulation and lack of enforcement of existing laws. Big capitalists simply will not behave themselves unless they are made to, because their greed always eventually overrides their common sense. Sure, a lot of them are losing their lunch money now, and that’s a good thing. But all of us are now collateral damage. We simply need our government to take more responsibility for protecting us from the pain caused by rampant, unchecked greed. And neither side of the aisle is blameless, although it’s obvious which side carries more of the blame due to being in power for most of the last 10 years.

    • everfade says:

      @johnva: It’s the American way baby! Keep the wealthy even wealthier while we make the those less fortunate even more unfortunate.

    • SuffolkHouse says:

      @johnva:

      Greed doesn’t override common sense in business.

      Greed IS the common sense of business.

      • johnva says:

        @SuffolkHouse: What I mean by “common sense” is “not endangering the long-term future of your own firm”. Short-term greed has indeed taken over from that sort of reasonable thinking. And I think a big part of this is that nothing bad happens to the people ultimately responsible for these failures. They might be more careful if their own asses were on the line.

    • selectman says:

      @johnva: While I don’t generally disagree with your point, the real root of the deregulation problem began not in the last 8 years but throughout the 90s. This stemmed largely from a Republican controlled House combined with a substantially laissez-faire President. If you’re looking for one particularly guilty party, look no further than Phil Graham. But a lot of these processes were set in motion before Bush 43.

      • johnva says:

        @selectman: I agree that there is plenty of blame to go around, and that it started during the Clinton years. But like I said on the other thread, lack of enforcement of the law has been a big problem. It was OBVIOUS this was coming several years before it did, and nothing was done, not even stepped-up enforcement.

        • jwinston2 says:

          @selectman:

          This is not really correct. This can be traced back to both parties in 1999 when they allowed passage of the Gramm-Leach-Bliley Act ([en.wikipedia.org]). The bills were passed along party lines with Republican support in the Senate and with bipartisan support in the House of Representatives. It was signed into law by President Bill Clinton. This repealed some key regulations in the Glass-Steagall Act.

          Now this alone would not have caused the problems you see today if the United States Senate Committee on Banking, Housing, and Urban Affairs had done their job and actually regulated the industry but when you have the committee chairman, Christopher Dodd, receive a special loan from Countrywide oddly enough the committee failed on one of their primary jobs. This is not to say others were not on the take in the past, as I am sure they were.

          On top of all this you have the feds keep rates at ridiculously low levels, thanks Greenspan.

          In some ways this was like a perfect storm, repeal of key legislation, lack of senate committee over site and Federal Reserve policies basically handing money out to any Joe on the street. What could have gone wrong?

          • ARP says:

            @jwinston2: I don’t think Dodd had much to do with it. He might have gotten a preferred loan, but he didn’t take over until 2007ish.

            There are regulation in place that could have mitigated (probably not stopped) this. But its up to the DOJ, SEC, and Office of Thrifts and other banking regulators to actually regulate. The problem is that the current administration doesn’t like regulations and simply fails to enforce them (see environment, food safety, drug safety, mine safety, etc.).

            Note, Phil Gramm, the primary author of GLB that allowed much of this mess to happen is McCain’s top campaign financial advisor. He’s the one that said we’re a “bunch of whiners” when it came the economy. Many say he’s a shoe-in for a top position at the Department of Commerce if McCain get elected.

    • jeff303 says:

      @johnva: While not in terms of time in power, the Clinton administration carries the most blame for repealing the Glass-Steagall act in 1999.

      [en.wikipedia.org]

      -your friendly non-party-affiliated commenter

      • johnva says:

        @jeff303: It was a Republican Congress and a Democratic president, actually. The Congress repeals legislation, and the president signs or vetoes the repeal. I agree that that event was an important part of this problem. Plenty of blame to go around, as I’ve said repeatedly. I’m perfectly willing to be intellectually honest about this.

        @jwinston2: Congress failed in its oversight duties, definitely. Although, it’s actually the job of the executive branch to enforce the existing law, and they just didn’t. The Congress should have been forcing the issue on the DoJ, etc through oversight, but the Republican Congress carried out virtually no oversight of the Bush Administration from 2001-2006, and precious little even after the Democratic takeover in 2006. Also, I think it’s a little unfair to single Chris Dodd out for the mess, considering that he wasn’t even the committee chair until the beginning of 2007 (Richard Shelby, Republican Senator from Alabama, was the chairman through most of the period with no oversight). The seeds of destruction had long since been sewn by 2007.

        • jwinston2 says:

          @johnva:
          @ARP:

          Dodd was singled out for being involved with special kickbacks on the very industry he was suppose to regulate. Furthermore I know your not naive enough to believe he has not been on the committee before be was placed as chairman. During the 109th Congress he was the highest ranking democrat behind Paul S. Sarbanes ([www.sourcewatch.org]). However it should be noted I was not laying blame on one side, both Democrat and Republican can be attributed for this mess.

          It is Congress’s responsibility to regulate the housing industry through passage of laws, in fact the Senate Committee on Banking, Housing, and Urban Affairs is stated as having “jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes, currency and coinage, public and private housing, urban development and mass transit, and government contracts.”

          The Executive Branch can not pass laws but rather only enforce them; in this case no laws were being broken due to the lack of foresight by the legislative branch. If the committee that had oversight had done the job they were responsible for they should have passed a new law preventing the type of loans that has led the country into this current mess, the president’s hands are tied however when no such law exist.

          • ARP says:

            @jwinston2: I don’t know that we’re that far off. My primary complaint is the Bush, Inc. failed to create and enforce existing regulations that could have mitigated this. Once Congress passes a law, the executive branch often creates regulations to implement that law. The Bush adminstration has been taking an extreme view of those laws for regulation purposes (see: definition of torture or endangered species act) so that they would never regulate and interpreted existing laws in such a way as to allow the banks/investment banks to pretty much do what they wanted.

          • pal003 says:

            @jwinston2: “the president’s hands are tied however when no such law exist.”

            O-kay. I guess you have never heard of the Executive controlled govt Depts like the DOJ (supposed to investigate mortgage fraud),SEC (verify bank financials), Treasury Dept- OCC, HUD (which was grossly mis-managed by bush-crony Alphonso Jackson). Nothing was done by any of these depts until it was too late.

            The OCC = Office of the Comptroller of the Currency report to Treasury dept. “In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative.”

            That’s right the Bush admin used an 1863 law to prevent States from enforcing predatory-lending and mortgage fraud laws. I think that means that Bush “tied the hands” of State AGs to protect consumers.

            You must have forgotten “sarcasm” at the end of your comment.

            • johnva says:

              @jwinston2: Are you kidding that you think no existing laws were broken in this mess? You can’t be serious. A lot of these mortgages were based on FRAUD (sometimes involving both the the mortgage lender or broker and the consumer). And obviously a lot of banks were using some shady accounting to hide losses and poor quality loans (whether this was actually illegal is a very complex issue). The Administration (DoJ) definitely should have been enforcing existing laws a lot more vigorously.

    • Trai_Dep says:

      @johnva: Then you’ll love this quote from the NYT financial blog:

      Mr. Paulson blamed past actions for the problems, pointing to a depression era regulatory system. But he ducked an opportunity to address whether decisions made in Washington during the Bush administration played a role.

      Yup, according to the GOP, it’s all FDR’s fault. Damn traitor to his class.
      Four more years of eight more years, baby. WHAT can go wrong?

      @Nighthawke: Tee hee: the same Jim Kramer that said people were FOOLS – *%&$ FOOLS! – for selling Bear Sterns. Whatta clown.

  13. dopplerd says:

    In the case of Lehman I don’t think there will be any golden parachutes. Bankruptcy will demand that creditors to the company receive any company assets first.

    • SuffolkHouse says:

      @dopplerd:

      WRONG! Their severance packages are liabilities. The company OWES this money just like it does to any creditor.

      • dopplerd says:

        @SuffolkHouse: Employees are unsecured debtors and are in line behind most of the $600 billion dollars Lehman owes to its secured creditors. In the unlikely event that there is money left for unsecured creditors the maximum payment is $10,000 per employee.

        For the full statue on the bankruptcy creditor priorities visit this website:
        [www.law.cornell.edu]

  14. Nighthawke says:

    I can hear Jim Cramer ripping into them pretty good for being fools with their charges and funds.
    He lit into the fed so righteously when the credit crisis came to a head.

  15. Will someone take this “silliness” seriously?

  16. metsarethe... says:

    What an idiot

  17. wjamny says:

    The really scary part here is that there will more than likely be continuing bad news as we have yet to see the collaspe of the credit card industry. Let’s not forget that the banks securitize those debts as well, and late payments, defaults, and bankruptcies are all rapidly increasing.

  18. dopplerd says:

    Correction” “Employees are unsecured CREDITORS”

  19. KlausKinsky says:

    No one referenced Monty Python yet?

    what is this world coming to????

  20. DeepFriar says:

    and somewhere, former Merrill CEO Joshua David Stein is laughing himself to sleep on piles of severance money

  21. pal003 says:

    History repeats itself. see [en.wikipedia.org]
    1980-91 failure of 747 S & L
    causes:
    - S & L Deregulation in early 80s
    - Imprudent real estate lending
    - lack of net worth regulation

    If we knew this all happened before – why did it happen again? Lack of accountability and regulation.

    If you want to make this a political argument – then who is the party best known for “free markets – no regulation?”

  22. cluberti says:

    So were presidents named Carter, Reagan, and Clinton. One could say it started with Carter’s administration relaxing the rules, and Clinton’s administration relaxing the rules that caused this crisis. And I think that would probably not be entirely relevant either, because there was ample opportunity by all administrations during both periods to clean things up, and they did not. As usual, foist it on the taxpayer.

  23. Hmm, the only thing I’ve ever vaporized is pot. I wonder how silliness tastes.

  24. Brontide says:

    The best quote I’ve seen during the meltdown…

    “With assets like these, who needs liabilities?”