How did we get into this situation in the first place?

[BeAChooser]

Obama asked in the debate, "how did we get into this situation in the first place?" Good question. Who really is responsible for getting us in this mortgage mess? Republicans or Democrats? McCain or Obama?

Obama claimed in the debate, as he did in his economics speech, that


Two years ago, I warned that, because of the subprime lending mess, because of the lax regulation, that we were potentially going to have a problem and tried to stop some of the abuses in mortgages that were taking place at the time.

Last year, I wrote to the secretary of the Treasury to make sure that he understood the magnitude of this problem and to call on him to bring all the stakeholders together to try to deal with it.


He wants voters to believe, as he said in his economics speech, that Bush, McCain and the Republicans did nothing while he and the democrats tried to address the problem. But Obama is a liar. Here is the cold, hard truth. Obama, the democrats and their constituents are the reason we now face this crisis.

The story begins with Jimmy Carter and the Community Reinvestment Act (CRA) of 1977 (http://en.wikipedia.org/wiki/Community_Reinvestment_Act ) which went after the practice of redlining and put pressure on banks to make home loans in "low- and moderate-income neighborhoods." Then things simmered until the late 1980s and early 1990's, when Obama entered the picture. As a "community organizer", he helped the radical Association of Community Organizations for Reform Now (ACORN) push for such things as an expansion of the scope of the CRA on the grounds of racial inequality. Everything to them/him was about race and fairness.

Then things really took off when, during the Clinton administration (which did indeed expand CRA in 1995), a 1993 study by liberals at the Boston Fed made the claim that minority mortgage applications were rejected at a higher rate because of racism. But was racism the real reason?

The answer is no, as an article in Forbes that same year proved: http://www.vdare.com/pb/050105_hiddenclue.htm . In fact, the Boston Fed senior vice president and research director had to admit to Forbes that they made a serious error in interpreting the data and that actually there was "no evidence" to support the racism charge. That didn't keep them from saying they still "believed" it to be true. :rolleyes:

The fact that Forbes completely debunked the Boston Fed's assertion didn't stop Obama and his fellow civil rights lawyers from claiming in 1995, in a court case known as Buycks-Roberson v. Citibank, that Citibank was making too few loans to black applicants due to racism. They cited the 1993 study as proof.

The liberal court lapped it up. Obama and his civil rights friends won the case, forcing banks to make loans that simply weren't financially sound. And once Obama helped open the flood gates, it was only a matter of time before the waters rose. http://isteve.blogspot.com/2007/08/trillion-here-trillion-there-pretty.html cites a slew of articles that show how it all snowballed. By 1999, news like the following was appearing in the press.


BOSTON, Oct. 13, 1999 (Reuters) - "The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership in underserved groups.

"'We need to push into these underserved markets as much as we can,' said David Glenn, president and chief operating officer of Freddie Mac.

... snip ...

"In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.

... snip ...

"The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.

"Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets."


And as that link shows, the warnings of problems ahead were there well before Bush ever took office ... warnings that would be consistently ignored by democrats for most of the next decade.


From Insight on the News back in 1999:

... snip ...

The easy flow of credit during the 1990s has helped to fuel a nationwide housing boom and spending spree that has kept the economy humming. But analysts say banks have lowered their lending standards, particularly to tap into the fast-growing minority markets, and have been under strong political pressure to do so despite studies showing minorities are more likely to default than whites. The result of this largess may be soaring levels of bankruptcy and default during the next recession.

... snip ...

Politicians have pushed for the lower standards out of a legitimate desire to spread today's prosperity to groups that previously were on the margin, says Latta. "Banks are under a great deal of pressure to lend in these communities," she says. "It is very political. But I still have reservations about whether you're really doing anyone a favor by letting them borrow 100 percent of the cost of a home. It makes it so easy for them to get in over their heads." If the economy turns sour and unemployment rises, minorities will be the first laid off -- paving the way for a wave of defaults.

Federal laws on fair lending and community reinvestment require bankers to reach out to minorities, notes David Lereah, chief economist with the Mortgage Bankers Association. ... snip ... "If the economy goes into a tailspin and experiences recession, then I do worry about some of the low down-payment loans," he says. "The borrowers don't have that much at stake, don't have that much equity in the homes. If they lose their jobs, they could walk away from the homes."

A recent study by Freddie Mac, the federally chartered Federal Home Loan Mortgage Corp. that buys mortgages from banks to resell to investors, documents the shaky financial standing of minorities. The study found that nearly half of black borrowers and a third of Hispanics have "bad" credit records -- that is, they have a record of delinquent loans or bankruptcy -- compared with a quarter of whites.


Keep in mind that during that time democrats kept assuring us that all was well. And getting big campaign contributions from Fannie and Freddie.

And what were those organizations doing to heed the warnings? Nothing. No, instead, they were making matters worse. And who led that effort? Well, a democrat, of course ... Clinton's ex-budget director Franklin Raines who became Chairman and CEO of Fannie Mae. Here's an excerpt from a year 2000 article cited at the above link:


Fannie Mae Bending Financial System to Create Homeowners, Says Raines

... snip ...

During the 1990s, Fannie Mae pledged $1 trillion in capital over seven years to boost home ownership among underserved populations. Last spring, said Raines, the commitment was completed ahead of schedule, and Fannie Mae pledged a further $2 trillion to assist 18 million families during the next decade.


Maybe Raines should have said "undeserved" populations. That would have been more accurate and to the point. And I hoped you all noticed the fact that Raines, who is now a big time Obama supporter and an advisor to Obama (although Obama in his usual pattern now denies that), quoted W.E.B. Du Bois, a communist, in that article. :D

Raines was the gift who kept giving ...


Fannie Mae to invest $700 billion in minority housing -
Business Jet, Oct 28, 2002

Fannie Mae, the nation's largest source for financing home mortgages, plans to invest at least $700 billion through 2009 to provide financing to 4.6 million minority households.

News of the breakthrough came during the New Orleans conference of the National Bankers Association (NBA).

Franklin D. Raines, Fannie Mae's chairman and chief executive officer, told the audience that the NBA was uniquely focused on lending to underserved, minority and immigrant families.

"Through this agreement," said Raines, "we hope to extend the benefits of the housing finance system to more Americans in underserved communities and boost minority home ownership rates closer to the national rate of 60 percent."


So you see, democrats clearly led the way towards this financial disaster.

And what ever happened to Raines before he became an Obama supporter?

In 2004, after a tip from a whistle blower, the Office of Federal Housing Enterprise Oversight issued a report finding that Fannie Mae (under Raines) had engaged in Enron-like accounting machinations that allowed Fannie to overstate its earnings and underestimate the risk the company faced. The accounting was designed so that Fannie could meet profit targets to maximize bonus payments to company executives ... like Clinton's deputy Attorney General Jamie Gorelick (who all told took home about $26 million) and ... you guessed it ... Franklin Raines (who took home $50 million). As a result of the investigations, Raines was forced out of Fannie Mae and although he claimed no wrong doing, agreed to settle the suit with the federal government and pay back a few million of what he stole.

And despite that sorbid history, Obama is apparently taking advice from Raines. An April story in The Washington Post (not exactly a right-wing paper) said Raines has "taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters." Reporter Anita Huslin says Raines told her that during an in-person interview. So you see, Obama is STUCK ON STUPID.

Next we have Obama's claim that 2 years ago he provided warning and authored legislation to address the mortgage issue. Obama is being deceptive again.

First, it wasn't 2 years ago that he introduced his bill on mortgages. He claimed in his economics speech it was in February 2006 but I proved (http://www.govtrack.us/congress/bill.xpd?bill=s110-1222 ) it was actually April 2007 when he did that. And would his legislation have addressed the current problem? No. Here is the description of the bill S.1222 Title: A bill to stop mortgage transactions which operate to promote fraud, risk, abuse and under-development:


Stopping Mortgage Transactions which Operate to Promote Fraud, Risk, Abuse and Underdevelopment Act, or the STOP FRAUD Act - Amends federal criminal law to make it unlawful for any mortgage professional to: (1) defraud any natural person or financial institution regarding an offer of consumer credit secured by an interest either in real property or in personal property used as a principal dwelling; or (2) falsely obtain money or property from a natural person in connection with an extension of consumer credit secured by an interest in such property. Subjects violations of this Act to civil and criminal penalties. Directs the Attorney General to establish: (1) a system for authorized mortgage professionals to receive updates from federal law enforcement agencies on suspicious activity trends in the mortgage industry and mortgage fraud-related convictions; (2) a Debarred or Censured Mortgage Professional Database that may be accessed to determine the federal and state bar status of mortgage professionals; and (3) grants to assist law enforcement agencies establish and improve mortgage fraud task forces. Grants whistleblower protection to personnel of a widely accepted private certification board. Amends the Housing and Urban Development Act of 1968 to authorize the Secretary of Housing and Urban Development (HUD) to provide tenants, homeowners, and other consumers with mortgage fraud counseling. Directs the Secretary to provide grants to state appraisal agencies to improve the monitoring and enforcement of housing appraisal regulations. Sets forth additional rights of borrowers in foreclosure proceedings.


Reading the above, it is evident that law wouldn't have done anything to stop the current sub-prime crisis because it wouldn't have prevented foolish people from taking out loans they couldn't pay back. It wouldn't have changed the democrat driven practice of the government forcing lenders to make such loans. These people weren't defrauded by lenders. What they did is get greedy and sign up for loans with terms they eventually couldn't meet just because they wanted outrageously low interest rates ... something for nothing. And it wouldn't have done anything to make sure the lending institutions are financially sound.

Next we have his assertion that Bush, McCain and Republicans are responsible for the mess because, unlike him, they did nothing to prevent it. Here, Obama is again proven a LIAR.

As I've already pointed on this forum, in 2003, President Bush warned that Fannie and Freddie where facing a crisis and proposed a new agency to oversee regulatory reforms of them. http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B 63&sec=&spon=&pagewanted=print The new agency would have had the authority, that still rests with Congress today, to set one of the two capital reserve requirements for the companies. And it would have determined whether the two were adequately managing the risks of their portfolios. But guess who was against it? Democrats, of course.

Now in 2005, Republicans introduced a bill that McCain co-sponsored which would have set up an agency like Bush proposed ... the "Federal Housing Enterprise Regulatory Reform Act of 2005". Had it passed (it didn't because democrats and a few RINOs opposed it), it would have (http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary ) amended "the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which" would "have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board." It would have set "forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting." Read that, and you'll see it would have directly addressed the problem.

And unlike Obama, McCain actually did issue a warning. Here is a speech that McCain gave the Senate in 2006 in support of the above bill: http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190#sMonofilemx003Ammx002Fmmx002Fmmx002Fmhomemx002 Fmgovtrackmx002Fmdatamx002Fmusmx002Fm109mx002Fmcrm x002Fms20060525-16.xmlElementm0m0m0m . In it he warned "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole." What prescience he had.

But again, democrats prevented that bill from passing. Democrat after democrat got up and spoke, claiming no reform was needed and that all was well. Here are their words. Representative Barney Frank said "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt said "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing." Senator Charles Schumer said "I think Fannie and Freddie over the years have done an incredibly good job ... snip ... if you look over the last 20 or whatever years, they've done a very, very good job." And many other democrats joined them in denial.

And guess what? In 2007, this bill was reintroduced. And what happened? Again, nothing. The now democrat led banking committee chaired by Chris Dodd (who was a big recipient of Fannie and Freddie campaign contributions) has yet to even review it. The problem was identified but again democrats prevented a solution.

So there is no question that Obama and the democrats are the ones who got us where we are today ... in a financial mess. And they are the reason there is still no bailout bill this evening. Because instead of working to solve the problem they decided to play politics. Which is why Obama refused when McCain suggested they put the campaigns on pause and solve this problem. Which is why Obama didn't even make any calls to try and get the bailout legislation passed (McCain did and the number of republicans who voted for it went up dramatically over the weekend). Which is why democrats tried to slip in the laundering of bailout money through corrupt, partisan organizations like ACORN (which has ties to Obama). Which is why Nancy Pelosi before the vote today gave a highly partisan, dishonest and insulting speech. As in most matters, it is clear that democrats have decided to put Party Over Country. They are the reason the markets crashed yesterday. And there is no question that Obama has outright LIED in speeches and in the debate when he claims that McCain/Bush had done nothing about problems in the mortgage industry and that he and his party did. And I see no attempt by the Obama supporters on this forum to challenge these facts with anymore than hand waving, more dishonesty and distortions. Should that surprise any of us? What is surprising is all the people going to vote for him knowing this. :D

[Oliver]

To keep it short: No.

[boloboffin]

30 years ago, Obama was 17.

I will give you a dollar if you can fail harder than you did here.

[Darat]

Also despite a lot of words there is still no evidence that any company was forced to make bad loans.

[Dymanic]

Obama has pointed to the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (introduced by Phil Gramm, key economic advisor to McCain, and strongly supported by Senate Republicans including McCain himself) as being instrumental in creating this mess. Do you agree with that? In 500 words or less, why or why not?

[Giggywig]

I like how the word "liberal" is used as an insult. i don't know who will win in November, but either way I know I'll enjoy watching a lot of people frothing at the mouth for 4 years.

[Darat]

Of course liberal is an insult - how couldn't a patriotic American be insulted when they are lumped in with that treacherous bunch - The Founding Fathers!?

[chipmunk stew]

Of course liberal is an insult - how couldn't a patriotic American be insulted when they are lumped in with that treacherous bunch - The Founding Fathers!?
Now you've gone and done it. How could you say that about the Founding Fathers?

-That they were treacherous?

No. Liberal!

[corplinx]

This is just partisan smearing. Everyone knows that lifting regulations that let normal banks take on riskier investments to compete with foreign banks is what caused the crisis. That and the whole spirit of de-regulation. The actual idea of de-regulation made banks fail. It wasn't even necessary to de-regulate them. The idea is so powerful that it just makes institutions fail.

The problem I have with the blame game over Freddie/Fannie is that the GOP didn't act after they finally got a regulator to expose what was going on. They were still in charge. The buck stopped with them.

But yes, the causes of the current meltdown are currently far and wide. The evidence for the many causes is starting to pile up. And no, it wasn't a simple answer that can be summarized in sound bites.

[Cleon]

But yes, the causes of the current meltdown are currently far and wide. The evidence for the many causes is starting to pile up. And no, it wasn't a simple answer that can be summarized in sound bites.

But whatever they happen to be, I'm sure BAC will let us know that it was the Democrats' fault. :D

[Giggywig]

But whatever they happen to be, I'm sure BAC will let us know that it was the Democrats' fault. :D

Not the Democrats. Liberal Obama and his radical friends.

[Whiplash]

While I think that BAC is way over the top, and I'll denounce him as not much better than those I am crusading against on this forum... I will also say that I am learning some strong /handwave techniques from you guys, the way you just ultimately ignore anything he ever has to say, substantive or not, and simply resort to ridicule and strawmen.

[Malerin]

I like how the word "liberal" is used as an insult. i don't know who will win in November, but either way I know I'll enjoy watching a lot of people frothing at the mouth for 4 years.

Remember Rush Limbaugh during the Clinton years? "Day 323 of America held hostage!" Oh, what sad and depressing times were those!

[Malerin]

BAC, the Rodney Dangerfield of posters.

[boloboffin]

Buycks-Roberson v. Citibank (http://clearinghouse.wustl.edu/detail.php?id=10112&search=source|general;caseCat|FH;orderby|caseName) was settled out of court in 1998. Nobody won it. And they didn't just cite the 1993 study. They got discovery in 1995 and had Citibank's own records.

Please try to fail harder.

[BeAChooser]

Obama has pointed to the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (introduced by Phil Gramm, key economic advisor to McCain, and strongly supported by Senate Republicans including McCain himself) as being instrumental in creating this mess. Do you agree with that? In 500 words or less, why or why not?

So I assume you aren't even going to try and challenge any of the facts I noted above. Does that mean you admit they are right?

To answer your question (because, unlike you, I try to respond to the points made by my opponents in debates), Obama's pointing fingers at the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 is misdirection more than anything else.

The problem wasn't letting financial and banking institutions merge, but making bad loans to people who shouldn't have been given loans for bogus liberal reasons in the first place.

The problem was liberals thinking that this area was ripe to promote their social engineering agenda and then lying to do it.

The problem was democrats in government organizations (like Congress) not properly monitoring what lending organizations were doing from a financial soundness point of view.

The problem was letting Fannie and Freddie become the largest lenders, handing out over 50% of all mortgages in recent years, yet be controlled by corrupt Clinton era democrats who weren't as much interested in the financial soundness of their loans as social engineering and padding their own pockets with millions of dollars.

The problem was democrat obstruction in Congress of ANY effort to monitor or regulate Fannie and Freddie, and democrat efforts to force the other lenders to give loans to folks who shouldn't have gotten loans.

The problem is democrats not understanding that the borrowers who've defaulted share a large portion of the blame in this matter and shouldn't be rewarded by being given homes they couldn't afford in the first place.

The problem is democrats want socialism ... not capitalism.

And for the record, only 64 members of Congress voted against Gramm-Leach-Bliley while 195 democrats voted for it. And Bill Clinton signed it into law. Hardly a partisan effort.

As for Obama, keep in mind that some of his current economic advisors, like Robert Rubin , were key players in the passage of the Act. It only became law because then Treasury Secretary Robert Rubin urge President Clinton to sign it, and Rubin within days of it's passage was rewarded with a job paying more than $15 million a year by Citibank, one of the chief beneficiaries of the Act.

And not only is Obama one of the largest recipients of campaign donations from Fannie and Freddie, but he chose Jim Johnson to help vet his VP choices. I assume you know who Jim Johnson was in relation to Fannie Mae? Now he was forced to resign from the vetting committee when his underhanded actions at Fannie became public, but that hasn't stopped him from becoming one of Obama's best campaign donation bundlers. :D

Now I don't know if the above is under 500 words (I don't intend to count it), but if you can't take the trouble to read it and respond, that will only say something about you.

But at least YOU had something substantive as an argument to add to this thread. I can't help but notice that all the rest of the posters haven't added a thing. They are just showing the depth of their own de-nile and partisanship. :D

[Meadmaker]

The problem I have with the blame game over Freddie/Fannie is that the GOP didn't act after they finally got a regulator to expose what was going on. They were still in charge. The buck stopped with them.


That's my attitude as well. Yes, you could point to misguided policies that tried to make homes accessible by allowing people to borrow more money than they could afford. Undoubtedly, that was a contributing factor. However, this train wreck was easy to see coming, and no one blew the whistle until one day some guy came to Congress and said, "WE NEED 700 BILLION TODAY!"

I'll even give McCain credit where credit is due. He did indeed introduce legislation to the (GOP controlled) Congress about Fannie and Freddie, and if it had passed, we would be better off than we are today. However, it didn't pass, and the executive branch should have been blowing the whistle a lot harder. That's what executives are for.

When I vote for Obama, I won't really be voting for Obama. I won't even be voting against McCain. I will be voting against the GOP, because they were in charge when they could have done something about it, and they didn't.

[Giggywig]

While I think that BAC is way over the top, and I'll denounce him as not much better than those I am crusading against on this forum... I will also say that I am learning some strong /handwave techniques from you guys, the way you just ultimately ignore anything he ever has to say, substantive or not, and simply resort to ridicule and strawmen.

Why don't you respond to it? I tried reading parts of it but my eyes just glazed over everything being the Democrats' fault. For instance:
Now in 2005, Republicans introduced a bill that McCain co-sponsored which would have set up an agency like Bush proposed ... the "Federal Housing Enterprise Regulatory Reform Act of 2005". Had it passed (it didn't because democrats and a few RINOs opposed it)...
So McCain, Bush and the True Republicans (TM) (as opposed to the RINOs) would have saved us form the Abyss if is wasn't for those meddling kids and their dog! Who controlled both Houses of Congress and the Presidency in 2005? They could have passed the "Democrats are Doodooheads Act of 2005" if they wanted to.

[corplinx]

Blaming Gramm-Leach-Bliley for the crisis is like blaming the government for your kid getting killed in car wreck because they allowed the road to be built. Its just anti-capitalist propaganda.

I'm willing to wager that Obama and all of the other head nodding de-regulation sycophants use combined bank-services companies like Gramm-Leach-Bliley allows. I have a feeling most people who try to point to this act don't actually understand it except thats its DEREGULATION.

[Meadmaker]

Meanwhile, there's another thread of thought in BAC's post, which I hear passed around the water coolers at work. It's the whole idea that the various laws and policies encouraging low income loans caused the crisis. Like every BIG LIE, there's some truth to it, but is it really true?

If you look at where the foreclosures are, I'm willing to bet that they aren't primarily in low income neighborhoods. The bubble really didn't happen within the City of Detroit. It was more in the suburbs. You had two income families with two professionals buying homes for $300,000. One of them loses that professional income when the economy slows down, and they suddenly can't make payments. Do that a few times, and there are plenty of foreclosures on some very expensive properties, and then the property values start plummeting. So, sure, there are some foreclosures in poor neighborhoods, but no more so than in rich neighborhoods. Which one causes the bank to lose more money?

However, it makes a much better story around the water cooler to say, "This all happened because them darned libruls made the banks loan money to a bunch of Breach of Rule 10 removed.."

[corplinx]

I think that was a bit unnecessary near the end.

[Tailgater]

Meanwhile, there's another thread of thought in BAC's post, which I hear passed around the water coolers at work. It's the whole idea that the various laws and policies encouraging low income loans caused the crisis. Like every BIG LIE, there's some truth to it, but is it really true?

If you look at where the foreclosures are, I'm willing to bet that they aren't primarily in low income neighborhoods. The bubble really didn't happen within the City of Detroit. It was more in the suburbs. You had two income families with two professionals buying homes for $300,000. One of them loses that professional income when the economy slows down, and they suddenly can't make payments. Do that a few times, and there are plenty of foreclosures on some very expensive properties, and then the property values start plummeting. So, sure, there are some foreclosures in poor neighborhoods, but no more so than in rich neighborhoods. Which one causes the bank to lose more money?

However, it makes a much better story around the water cooler to say, "This all happened because them darned libruls made the banks loan money to a bunch of Breach of Rule 10 removed.."

This is the perfect storm of failures on all sides. Great for blind partisan blabbering everywhere.

[boloboffin]

Sigh (http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm).

Oh, no (http://www.whitehouse.gov/news/releases/2004/08/20040809-9.html).

Yeah, Mead. You forgot to include "and illegulls" at the end of that sentence.

[Meadmaker]

Yeah, Mead. You forgot to include "and illegulls" at the end of that sentence.

My mistake.

And was it "a bit unnecessary"? It's a quote. I must admit I embellished it slightly. I added "them darned".

[Dymanic]

So I assume you aren't even going to try and challenge any of the facts I noted above. Does that mean you admit they are right?Not necessarily, but a more thorough consideration of the points you've made is going to have to wait until I have a little more time available than I do now, because I'm just on my way out the door. Just seemed like a rather glaring omission, if a comprehensive discussion of the issue was your intent. This is a pretty complex affair, and I'm still in the process of forming my conclusions.

Tentatively, it looks as though there is plenty of blame to go around.

[Meadmaker]

Oh, and one more thing. Who really killed McCain's bill? It didn't make it out of a GOP controlled committee. I'll let BAC do the research on this one. He seems pretty motivated. He has asserted it was Democrats with a few Republican defectors. OK. Let's see the evidence for that. Was it ever voted on? Why not? Who made public statements of support for it?

[dudalb]

I like how the word "liberal" is used as an insult. i don't know who will win in November, but either way I know I'll enjoy watching a lot of people frothing at the mouth for 4 years.

People on the left use the word "Conservative" as an insult so it evens out.

[dudalb]

This is the perfect storm of failures on all sides. Great for blind partisan blabbering everywhere.


And we are getting plenty of it here.

[Giggywig]

People on the left use the word "Conservative" as an insult so it evens out.
Oh, you're absolutely right. Which is why people like me, who have no say on the matter and are not aligned to either side, get entertainment either way. I must say though, after 8 years of the left frothing over Bush, I'd like to see the right frothing over Obama. Makes for a nice change of pace. Plus the added entertainment of the racists going batguano crazy over Obama being in the White House.

[chipmunk stew]

People on the left use the word "Conservative" as an insult so it evens out.
It doesn't even out. There was barely a mention of "conservatives" at the Dem convention, while the Repubs continuously railed against "liberals" as though "liberals" ran Washington. There are still plenty of proud conservatives. It's only recently that liberals have started proudly referring to themselves as such again, rather than "progressives" or "moderates" or whatever.

Conservative has never been a dirty word in the mainstream. (At least, not since Goldwater...)

[BenBurch]

On the OP; What a pack of absolute lies.

[Upchurch]

It doesn't even out. There was barely a mention of "conservatives" at the Dem convention, while the Repubs continuously railed against "liberals" as though "liberals" ran Washington. There are still plenty of proud conservatives. It's only recently that liberals have started proudly referring to themselves as such again, rather than "progressives" or "moderates" or whatever.

Conservative has never been a dirty word in the mainstream. (At least, not since Goldwater...)
Just as a fun experiment, search Amazon.com for the following words:

Conservative (http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=Conservative&x=0&y=0) & Liberal (http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=Liberal&x=0&y=0)

How many items do you find that use the term in a derogatory fashion?

[gdnp]

So I assume you aren't even going to try and challenge any of the facts I noted above. Does that mean you admit they are right?

Challenge them? I'm not going to even attempt to read them. ;)

Carry on.

[BeAChooser]

However, this train wreck was easy to see coming, and no one blew the whistle until one day some guy came to Congress and said, "WE NEED 700 BILLION TODAY!"

That's not true and I proved it above. Many people, including Bush and McCain (but not Obama or Reid or Pelosi), did indeed blow the whistle, starting back in the 90s. But hardly a democrat would listen to those warnings. They were too busy giving unsound mortgages to begging constituencies.

I'll even give McCain credit where credit is due. He did indeed introduce legislation to the (GOP controlled) Congress about Fannie and Freddie, and if it had passed, we would be better off than we are today.

Good for you.

However, it didn't pass, and the executive branch should have been blowing the whistle a lot harder.

It didn't pass because democrats were overwhelmingly against it, all spinning aside. You act like Bush and the republicans didn't give speeches. They did. Then democrats got up and gave speeches saying everything was fine while calling republicans racist and uncaring. Then the liberal media focused on the latter.

I will be voting against the GOP, because they were in charge when they could have done something about it, and they didn't.

What a load of garbage. For the record, all it took to scuttle the legislation that Bush and the republicans proposed was a few RINOs (those are democrats pretending to be republicans in order to get elected in the districts they *represent*) to say no. Meanwhile almost every democrat voted no. Now whose fault was it really? The party that got 99% of its members to vote yes or the part that had 99% of its members vote no? :rolleyes:

[Tricky]

Everyone knows that lifting regulations that let normal banks take on riskier investments to compete with foreign banks is what caused the crisis. That and the whole spirit of de-regulation. The actual idea of de-regulation made banks fail. It wasn't even necessary to de-regulate
This suggests that the root of the problem is that US banks cannot compete with foreign banks. Considering how the US has fallen behind the rest of the world in so many other endeavors, I don't find this to be unlikely at all.

Though I know it is not the same thing exactly, the "bailout" could also be viewed as a form of protectionism. I'm guessing they would not bail out any foreign banks, regardless of their woes.

And the next question would be, what do US banks have to do to compete successfully with foreign banks? Cut their profit margin? Shave some executive salaries. Reduce dividends?

[Dymanic]

The problem wasn't letting financial and banking institutions merge, but making bad loans to people who shouldn't have been given loans for bogus liberal reasons in the first place. This seems to be the central thrust of your argument, and the point I see as most in need of better support is the assumption that those loans were made for any other reason than a desire on the part of the lending institutions to make money in the process. How do you respond to the argument that approximately half of the subprime loans were made by independent mortgage companies that were not regulated by the CRA and thus had no government obligation to offer credit to minorities -- or that a third of the major subprime lenders were regulated but had very little CRA involvement?

I also question this:

The problem was democrats in government organizations (like Congress) not properly monitoring what lending organizations were doing from a financial soundness point of view.Is it really the job of Congress to do that? How much "monitoring" would you consider appropriate?

[dudalb]

Let's cut to the chase: The GOP loved Deregulation because it fit in with their free market ideology, and the Dems bought in because they loved the idea of cheap home loans for their consituents. People in both parties bought into a really,really,bad idea for different reason. More then enough blame for everybody..although you will never get the blind partisans on both sides to admit it.

[Cleon]

Let's cut to the chase: The GOP loved Deregulation because it fit in with their free market ideology, and the Dems bought in because they loved the idea of cheap home loans for their consituents. People in both parties bought into a really,really,bad idea for different reason. More then enough blame for everybody..although you will never get the blind partisans on both sides to admit it.

QFT

[dudalb]

QFT?

[chipmunk stew]

Let's cut to the chase: The GOP loved Deregulation because it fit in with their free market ideology, and the Dems bought in because they loved the idea of cheap home loans for their consituents. People in both parties bought into a really,really,bad idea for different reason. More then enough blame for everybody..although you will never get the blind partisans on both sides to admit it.
Incentivizing bad home loans without oversight falls on both parties' shoulders, for sure (although you could argue that the GOP was in a much better position to fix it, given their twelve-year dominance in Congress, with six years of it overlapping with a GOP president) but that's only part of the problem. (A crucial part, to be sure. But the bursting of the housing bubble didn't have to threaten the entire financial system.) When investment banks started leveraging the bad loans at thirty and forty times their actual value and investing in all sorts of bizarre derivatives and exotic products that no one really understood, that's when things started to get really hairy. The SEC was hamstrung from regulating these weird transactions by a dogmatic resistance, led mainly by the dominant GOP, to any limits on free trade.

[Cleon]

QFT?

Quoted For Truth. A short-hand way of saying "what he said."

[BeAChooser]

If you look at where the foreclosures are, I'm willing to bet that they aren't primarily in low income neighborhoods. The bubble really didn't happen within the City of Detroit. It was more in the suburbs. You had two income families with two professionals buying homes for $300,000.

First of all, the claim isn't that they are primarily in low income neighborhoods (although they often are) but they are loans to low or moderate income people who bought a house beyond their means wherever they happened to buy it ... because democrats were encouraging that practice.

The following shows this was a big problem even back in 2003:

http://www.nhi.org/online/issues/127/homeownership.html

Federal programs insure more than a million loans a year to help home buyers with fewer funds available for a down payment, low incomes, or poor credit histories, mostly through the Federal Housing Administration. The secondary mortgage market, primarily Fannie Mae and Freddie Mac, purchases more than half of the loans originated by mortgage lenders, and is required to do a certain amount of business each year that benefits low-income and other underserved markets.

... snip ...

Loans to low-income homebuyers increased by 94 percent between 1993 and 1999. Mortgage volume in 2001 was higher than ever before, in no small part due to record low mortgage rates. More than $2 trillion was borrowed, 59 percent for refinancing. Subprime lending, which targets low-income and high-risk borrowers with high-interest loans, was expected to top $210 billion in 2002.
... snip ...

Defaults on loans in 2000 amounted to approximately one million households losing their homes to foreclosure, during the height of an unprecedented economic expansion. ... snip ... Foreclosures on FHA-backed loans to low-income households have risen the fastest, to a rate of nearly 3 percent, with an additional 12 percent behind in their payments in the second quarter of 2002.

... snip ...

Where fault lies, however, is in perpetuating the myth that homeownership is risk-free and appropriate for everyone. With mortgage delinquencies and foreclosures at record levels, particularly among low-income households, millions of poor families might have been better off today had they not chosen to purchase a home.


If we look at more recent sources ...

http://news.newamericamedia.org/news/view_article.html?article_id=1b33a9ec66b96536d3a1e 0ebddda875d


May 21, 2007

... snip ...

There were nearly 29,000 foreclosures in the Chicago region last year; the highest level of foreclosure in the last eight years, reports the Woodstock Institute, a nonprofit research organization that promotes community economic development.

And the fair-lending advocate organization, National Training and Information Center (NTIC), reported that foreclosures spiked in middle-class neighborhoods with three of the highest jumps occurring on the Near North Side (65% increase); Jefferson Park/Northwest Side (89% increase) and Bridgeport on the South Side, (113% increase).

Bob Palmer, policy director of Housing Action Illinois, contends that the plight of the middle class has put Illinois' staggering 55 percent foreclosure increase on the radar. ... snip ... There's no official, universal definition of "middle class," yet the U.S. Census Bureau estimates the average median income for Illinois residents is $48,008.


we see that few of these are professionals earning $300,000 a year. You either have a distorted view of what's happening out there or you are simply spinning in order to defend your chosen political party.

Here's are more sources with data that show you are wrong in your assertion:

http://www.nypost.com/seven/08032008/news/regionalnews/house_of_pain_as_city_foreclosures_soar__122814.ht m


Aug 3, 2008

... snip ...

New Yorkers can't beat the housing heat this summer - foreclosures in the city were up 67 percent in July compared to the same month last year as me loans and a cooling economy scalded homeowners.

... snip ...

Although foreclosures remain limited mainly to low-income areas, they're having a domino effect that has driving down prices citywide, said Saniford.

http://www.publicbroadcasting.net/wgvu/news.newsmain?action=article&ARTICLE_ID=1225288&sectionID=1


2008-02-08

... snip ...

GRAND RAPIDS, Mich. Home foreclosures have increased dramatically in the past four years, hitting several Kent County communities and Grand Rapids neighborhoods particularly hard. From 2004-2007, rates of foreclosure jumped 176 percent overall in Kent County, and 179 percent in the City of Grand Rapids.

... snip ...

Although foreclosure rates increased in nearly every part of the county, the report identifies several lower-income and African American neighborhoods in Grand Rapids with very high foreclosure rates. Five neighborhoods Baxter, Fuller Avenue, Madison Area, South East Community Association and Oakdale had foreclosure rates more than double the city average, with as many as 7 percent of neighborhood homes foreclosed in 2007 alone.


http://www.pww.org/article/articleview/12665/


SAN DIEGO, Calif.

... snip ...

Union leaders here noted that for many families, the crisis will be triggered by a “catastrophic” rate increase on an inappropriate “exploding” sub-prime adjustable rate mortgage loan. They said that, as devastating as foreclosures have been to date, the worst is yet to come. In 2007 home foreclosures increased by 75 percent to 2.2 million.

Foreclosures are expected to accelerate dramatically during 2008, when 2.5 million loans are scheduled for rate resets.

The union statement on the crisis noted that low income and minority homeowners are suffering disproportionately. Fifty five percent of mortgages obtained by African Americans are subprime and 46 percent of mortgages obtained by Latinos are subprime.


And that's just a sampling from pages and pages of hits.

Clearly, you don't know what you are talking about, Meadmaker.

So, sure, there are some foreclosures in poor neighborhoods, but no more so than in rich neighborhoods.

Are you so desperate to defend Obama that you now have to claim bogus *facts* like Obama has been doing? :D

"This all happened because them darned libruls made the banks loan money to a bunch of [Rule 10]"

I never used such language or even implied it. How curious that it is the word that comes to YOUR mind, however. ;)

[BeAChooser]

While I think that BAC is way over the top, and I'll denounce him as not much better than those I am crusading against on this forum...

Am I? Seems to me that all I did was quote some sourced facts and then draw the logical conclusion. That Obama LIED. Do you deny that? And unlike my opponents, at least *I* did use and source facts rather than just wave my hands. I hope you aren't one of those who thinks that if we treat democrats/liberals and the liberal media nice, and let them get away with their lies, they'll like us and behave. Nothing could be more delusional. :)

[BeAChooser]

Sigh (http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm).

Oh, no (http://www.whitehouse.gov/news/releases/2004/08/20040809-9.html).


Unfortunately, George Bush has been one of those republicans who seems to think that if you are nice to democrats and go along with their agenda (on this, education, illegal immigration, etc), they will like him and become better persons. In that, Bush is delusional. But I'll grant you that Bush shares some of the blame for this current mess ... at least starting in 2004. But then, he's not running for President.

And I think any clear headed person can see that most of this mess is clearly the fault of democrats and their agenda ... starting back in the 90s. And that contrary to what Obama claimed, republicans tried to pass legislation that would have curtailed or greatly ameliorated this crisis. Which means that Obama LIED in his economics speech and during the debate. And you can't logically deny that.

:D

[BeAChooser]

Who really killed McCain's bill? It didn't make it out of a GOP controlled committee. ... snip ... He has asserted it was Democrats with a few Republican defectors. OK. Let's see the evidence for that.

You demand evidence from me? When I'm virtually the ONLY one on this thread who has been posting links to back up what I claim? What? Don't you trust me, democrat? :rolleyes:

For the record, republicans had *control* of this committee in the sense that 11 were republicans while 9 were democrats. I'll leave it to you to prove me wrong. Here is your chance. :D

But I will admit that on second reading of the links I've already provided and those below, it appears that the bill did make it out of the GOP *controlled* committee. It awaited a floor vote.

Was it ever voted on? Why not?

The answer to your question appears to be here: http://www.govtrack.us/users/questions.xpd?topic=bill:s109-190


What Does "Ordered to be reported with an amendment in the nature of a substitute favorably." mean?

A1: This was just a way for S.190 to be delayed through amendment. It then died at the conclusion of the 109th Congress when the 110 Session began in January of 2007. Shortly after, a similar bill (S. 1100) was reintroduced with the amendments in the 110th session of Congress where it remains pending.


The fact that it was reported "favorably" means that the majority of those on the committee recommended that the bill be passed.


A7: McCain's appeal for more Senate co-sponsors was an attempt to garner enough support to force a floor vote. Apparently, to no avail. It remained stalled until it expired.


So it looks like McCain did more than just wait for something to happen. He tried to make something happen. But since democrats could filibuster, nothing did. Filibuster, you say?


I'm assuming (correctly I hope) that in '05 the Republican's controlled Congress. How was this bill (heavily favored by Republicans) blocked on voting by Democrats?

A1: Strange but true - neither party has true 'control' of the Senate.

A simple majority is not 'control' because neither party has the 60-votes req'd to break "filibuster". A minority party can block a measure (i.e. filibuster) until either the measure is withdrawn or the filibuster is broken by a 60-votes.

http://www.congresslink.org/print_basics_senaterules.htm#filibusters

"almost any motion that does not have the support of [60-votes in] the Senate effectively fails"

http://en.wikipedia.org/wiki/United_States_Senate [Answer submitted on Sep 28, 2008 6:28 PM]

A2: It was never allowed to be brought to the floor for a vote because Schumer and Dodd, primarily, are on record as having said Fannie and Freddie are just fine. Since I am going by the clips of the floor comments and articles that were written at the time quoting the Republican's begging Dodd to allow it on the floor for a vote, I presume there was a filibuster by the Dems. It came up again in 2006, but at that point the Dems were in control of both Houses of Congress. [Answer submitted on Sep 29, 2008 12:30 AM]


:D


A3: This link of a CSPAN video may help set the context

http://www.youtube.com/watch?v=_MGT_cSi7Rs


Indeed, that video clip does set the context. It shows democrats in 2004, like Waters, Franks and Schumer, defending Raines (who I discussed earlier) during the investigation into Fannie Mae and Freddie Mac, which ultimately led to Raines resigning and having to return millions of the some $50 million he essentially stole in an Enron-like operation.

Let me quote democrat Maxine Waters from it, since I haven't quoted her previously on this thread:

"Through nearly a dozen hearings where frankly we were trying to fix what wasn't broke. Mr Chairman, we do not have a crisis at Freddie Mac and particular at Fannie Mae. Under the OUTSTANDING leadership of Mr Frank Raines, everything in the 1992 act has worked just fine."


And democrat Representative Lacy Clay (who, btw, is black):


This hearing is about the political lynching of Franklin Raines


Outstanding leadership? Political lynching? ROTFLOL!

You can also hear a number of republicans, such as Representative Royce, calling for more regulation of Fannie Mae ... again proving that some of the posters on this thread are misinformed (giving them the benefit of the doubt) and that Obama LIED in his economics speech and during the debate.

If you are motivated to learn more, MM, have at it because I've already proven the point I wished to make ... that Obama LIED when he claimed McCain and republicans had done nothing for 8 years about the mortgage issue whereas he had introduced a bill 2 years ago related to the mortgage issue (which by the way didn't pass either and didn't have anything really to do with the current problem, unlike the bill McCain co-sponsored).

Who made public statements of support for it?

Well we know McCain did, contrary to what Obama claimed. I've already presented links to his speech. And he wasn't the only one to speak. I'm sure many of the other co-sponsors did. :D

Others have tried this argument before, MM ... that republican's were *in control*, so it's their fault. The truth is that from 2003 to 2005, Republicans had 51 seats in the senate to the democrat's 48. So all it would take is a few RINOs (and there were more than a few) for the group to vote with democrat *positions*. If only a few democrats had voted for change/reform, it would have passed. But none did. And that's why Bush's initial call for legislation fell flat, as well as the ones in 2005 and later. Yes, between 2005 and 2007, Republicans widened their majority but at the cost of electing even more RINOS. Here's a list of the top 10 in December of 2005. http://www.humanevents.com/article.php?id=11129 And even then, they weren't filibuster proof. So make no mistake. Far more democrats spoke and voted against fixing the problem of monitoring and regulating mortgage lenders than spoke and voted for fixing it. And far more republicans spoke and voted for a fix than against one. So the lack of oversight that led to this crisis and the failure to fix is clearly due to democrat actions and inaction over the past 8 years (or longer). And no amount of spinning will extract you from that simple fact, Meadmaker.

[ParanoidAndroid]

While I think that BAC is way over the top, and I'll denounce him as not much better than those I am crusading against on this forum... I will also say that I am learning some strong /handwave techniques from you guys, the way you just ultimately ignore anything he ever has to say, substantive or not, and simply resort to ridicule and strawmen.

(bolding by me)

Your cavalcade of questionable political correspondence, previously confounding, clears considerably having now comprehended a collusion of characteristics at the core of your compositions: confirmation bias and a compulsion to crusade.

Whiplash meet mirror; mirror...Whiplash.

[BeAChooser]

Who controlled both Houses of Congress and the Presidency in 2005? They could have passed the "Democrats are Doodooheads Act of 2005" if they wanted to.

Tell you what, Giggywig. Why don't you respond to what I noted about that claim in post #45. Now be sure to provide a link or two to back up what you claim. ;)

[BeAChooser]

On the OP; What a pack of absolute lies.

Specifics? You can provide specifics ... can't you, Ben? Can't you? :D

[Shalamar]

SO.. In a nutshell, Democrats are evil, right?

Democrats run all the banks and the mortgage brokers? Democrats forced them to give out risky loans?

I see the light!

[Meadmaker]

What a load of garbage. For the record, all it took to scuttle the legislation that Bush and the republicans proposed was a few RINOs (those are democrats pretending to be republicans in order to get elected in the districts they *represent*) to say no. Meanwhile almost every democrat voted no. Now whose fault was it really? The party that got 99% of its members to vote yes or the part that had 99% of its members vote no? :rolleyes:

I figured you would be easy to catch. It wasn't voted on, ever. Prove me wrong. (ETA: see below)

The thing that raised the red flag for me was your assertion that it was Democrats and a few RINOs. But who sponsored it? Chuck Hegel. You want a RINO, that's one. He was named as a possible Obama running mate. Who else sponsored it? John McCain. Google RINO + McCain. Lots of hits there. Despite Democratic efforts to tar McCain as a Bush clone, he never was. He is far, far, better than the current sitting President, whose support you will not find for this legislation.

Show me a speech, vote of support, or cosponsorship from Larry Craig, Kay Bailey Hutchison, Richard Shelby, (the chairman who wouldn't let it out of committee), Trent Lott, or anyone with impeccable conservative bona fides.


Meanwhile, you can sit back and say that those darned civil rights lawyers forced banks to loan money to..............low income people. Yeah, those civil rights lawyers are always trying to get equal rights for low income people. However, it's odd, but when that filters down to the rank and file, those words end up getting twisted, and they use words that are apparently violations of rule 10. When those guys were sitting around talking about who caused this mess, they didn't mention low income people, but they did use a different word, and that word meant exactly what you said in the opening post, just in a more vulgar manner.



ETA: Actually, the bill did get out of committee, sort of. It was ammended, reported favorably, and then died without ever getting to a floor vote. I can't find who voted on it or how in the committee, but perhaps BAC can supply us with this info. Grrr. That's what I get for reading the forum style commentary instead of the big words on the actual bill. Is there a smiley showing me kicking myself in the ....uhmmm nearly made another rule 10 violation there.

[Meadmaker]

I never used such language or even implied it. How curious that it is the word that comes to YOUR mind, however. ;)

I never said you did. I said I was quoting the water cooler conversation around my workplace, and I was, and it was a quote. Of course, it means exactly the same thing as what you wrote.

[Meadmaker]

It seems Hagel's bill, cosponsored by McCain, Sununu, and Dole, did in fact make it out of committee, ammended, on a straight party line vote. It's conceivable BAC could be right about this, though it pains me to say it.

Now, it's interesting what it actually did, though. I haven't had time to digest this site that discusses the bill.

http://www.realtor.org/GAPublic.nsf/pages/gsereformbills?OpenDocument

[dudalb]

I have noted if you criticise one candidate or party, a lot of the supporters of the party automatically assume you all on the other side.
I guess the idea that you be critical of both parties is alien to them.

[BeAChooser]

This seems to be the central thrust of your argument

No, the central thrust is that Obama LIED about who got us into this mess.

the point I see as most in need of better support is the assumption that those loans were made for any other reason than a desire on the part of the lending institutions to make money in the process.

It's not just an "assumption". I'd say the assumptions are on the other side of this debate since so far I'm the only one who has been providing links to back up assertions. In my posts and links above, I provided examples (and I could easily have provided more) where liberals forced lending institutions to make loans to people that previously were considered too risky to merit loans. I provided various sources (some quite liberal) that acknowledged lending institutions were indeed being pressured by the government to make loans to people who in an economic down turn would be in serious trouble. I provided quotes by a number of democrats in government who put on this pressure ... quotes proving they were not interested in financial soundness but in social engineering ... and quotes proving that those democrats are still not interested in financial soundness but social engineering and political power.

The passage of laws and regulations that forced/encouraged/enabled institutions to make loans to people without regard for risk bypassed any commendable desire on the part of the institutions to "make money" because they distorted the free market process with other agendas that were not necessarily compatible with the long term viability and survival of those institutions. And the assurances made to these institutions by the government that they could make these loans and that the government would stand behind them also distorted the free market process.

The goal of most businesses is not only to make money but survive the long haul. But in this case, both government interference (either motivated by naive compassion or by a desire to win votes regardless of the consequences) and greed by executives (such as those of Fannie Mae and Freddie Mac ... all democrats) distorted the system so long term viability was not insured. Distorted it so badly that even the biggest lenders couldn't survive even the current small non-recession. And even after some of the more criminal executives were caught in an Enron-like scandal where they were padding their pockets at the expense of the companies future, democrats continued to defend them and both continued to push their liberal agenda of free homes for all. Just read the links and quotes I provided. It's clear as day from what I've already sourced.

So I really don't think I have anything more to prove at this point, Dymanic. I proved that Obama LIED when he claimed republicans did nothing while he did something ... and that's all I set out to do. The rest was gravy. :D

How do you respond to the argument that approximately half of the subprime loans were made by independent mortgage companies that were not regulated by the CRA and thus had no government obligation to offer credit to minorities -- or that a third of the major subprime lenders were regulated but had very little CRA involvement?

Well first, I'd need some verification that's true. I suspect Robert Gordon was your source but Gordon isn't exactly a non-partisan. He's a outspoken democrat who is supporting Obama (and ignoring all Obama's lies in order to do it). With a straight face, Gordon writes (http://www.tnr.com/politics/story.html?id=d6a0064b-8ec7-4088-9981-989d7773a6be ) "And only months ago, Representative Barney Frank pressed for aggressive federal action to work out defaulting loans and stem the decline of foreclosures", as if Barney was hero in this mess.

Here's an article by an economist who doesn't think much of Gordon.

http://mises.org/story/2963


The CRA Scam and its Defenders

Daily Article by Thomas J. DiLorenzo | Posted on 4/30/2008


DiLorenzo says


Gordon believes in the following propositions:
1 runaway greed ("market failure") on the part of lenders is the cause of the subprime crisis;
2 these same greedy lenders routinely ignore billions of dollars in potential profits in lower-income communities because of their systemic racism, stupidity, or both — hence the need for the CRA; and
3 no government agency, especially not the Fed, had anything to do with either the creation or bursting of the housing market bubble and the subprime crisis.


and says this in response:


The first two propositions flatly contradict each other, whereas the third is unequivocally false. Fed policy — which is not even mentioned by Gordon in an article that is ostensibly about the cause of the subprime crisis — is the cause of the boom-and-bust cycle that has caused the housing bubble and its bursting. Not "market failure" but Fed policy.


He goes on to say


By ignoring the role of the Fed in creating the whole housing-market mess, Gordon's pronouncement that it is entirely a result of "market failure" is laughable on its face. He also flatly denies that CRA lending has had anything to do with why so many uncreditworthy borrowers have defaulted now that the Fed-generated housing bubble has burst. This, too, is an untenable position.


But let's assume Gordon is right (just for the sake of argument). Then I'd also point out that not all sub-prime mortgages were equal in terms of the risk accepted and terms. Can you show that independent mortgage company subprime loans were identical to the CRA controlled ones? Are foreclosures in mortgages sold by independent mortgage company as common as those from companies controlled by the CRA?

And I'd also note that the non-CRA companies still had *obligations* to offer credit to minorities forced on to them via private lawsuits ... such as the one that Obama helped file that I mentioned earlier. You can find many examples of such lawsuits even up into 2008 (we never learn). You and I both know that the verdict in race-issue lawsuits often has nothing to do with the facts and that race-issue lawsuits are often a form of extortion used against companies (by folks like Jessie Jackson). These are lawsuits that companies would often settle rather than fight simple because of the cost of actually fighting them ... plus the bad press. And this puts pressure even on those companies not sued. :D

Is it really the job of Congress to do that? How much "monitoring" would you consider appropriate?

And even better question at this point is this. Is it really the job of the government to bail out people who sold or purchased too risky of loans? Bankruptcy is the way free markets weed out those businesses whose owners fail to properly account for risk and other factors in the market place. And it seems to work rather well. Do we really want the government (that failed the test so badly here in creating this mess) artificially propping up the very people who failed the free market test so badly when they sold and purchased risky mortgages, by taking money away from people who did not fail the test of the free market and giving it to both of them? It's a recipe for an even bigger disaster down the road if you ask me. :D

[leftysergeant]

The only change in lending practices that liberals ever forced on the banks was an end to red-lining.

It was the financial sector that decided, once Gramm disabled the brakes, to push low-income earners into more expensive homes, to increase their own profit, even if it involved some risk.

But, in the long run, the decline in the earning power of the average white family is what really started the wave of mortgage defaults.

Snivelling about the end of red-lining is, at its core, racist.

[Meadmaker]

The plot thickens.

I was trying to find who voted for the legislation Hagel introduced, and McCain, Dole and Sununu cosponsored.

The correct answer is no one, and everyone. It was introduced into the committee. Shelby and his staff rewrote it, and voted for an ammended bill. Meanwhile, on the Democratic side of the committee, they also rewrote it, and voted for their ammended bill.

Meanwhile, over in the House, something vaguely similar happened, but their bill got out of committee on a bipartisan vote. Their bill appears to be similar to the Democratic version from the Senate committee.

Meanwhile, despite bills being passed by committees in both houses of Congress, neither one was ever voted on outside of the committees.

I have to conclude that this wasn't something the GOP Congressional leadership wanted all that much. They had the power to at least force a vote on their own version of the bill. Even if they were concerned about filibusters, they could have compromised with Democrats on a couple of provisions, and passed something very similar to the House bill.

I have to go back to my original conclusion. Republicans were in charge and could have done something about it, but didn't. As previously noted, Senator McCain does deserve credit. He did try, but was thwarted in his efforts, by both parties.

Meanwhile, the idea that the collapsing real estate bubble was caused by forcing banks to lend to those people represented by civil rights lawyers is a bunch of codswallop.

[boloboffin]

The problem wasn't driven by CRA at all (pdf) (http://www.house.gov/apps/list/hearing/financialsvcs_dem/barr021308.pdf):

More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts. Although reasonable people can disagree about how to interpret the evidence, my own judgment is that the worst and most widespread abuses occurred in the institutions with the least federal oversight.

Can BAC fail harder? Maybe so, but I kind of doubt it.

[Dymanic]

I provided quotes by a number of democrats in government who put on this pressure ... quotes proving they were not interested in financial soundness but in social engineering ... and quotes proving that those democrats are still not interested in financial soundness but social engineering and political power.I've never considered mined quotes to be quite the strongest form of evidence, but I'd be willing to concede that Democrats are, in general, perhaps more inclined toward social engineering than are Republicans -- if you'd concede that they are no more interested in political power than are Republicans.

Can you show that independent mortgage company subprime loans were identical to the CRA controlled ones? Are foreclosures in mortgages sold by independent mortgage company as common as those from companies controlled by the CRA?I'm not really attempting to "show" anything here. I'm just asking questions. But if it turns out that those foreclosure rates are similar, your entire argument pretty much goes down in flames. So if you, as the person who is trying to "show" something here, can show that they aren't, you might want to get on that.

Is it really the job of the government to bail out people who sold or purchased too risky of loans?Is it the job of government to bail out a failing system; one that is vital to the health of our economy?

[BeAChooser]

I figured you would be easy to catch. It wasn't voted on, ever. Prove me wrong.

I did, see above. Although I will admit that the vote was only in the committee and that it was apparently a positive vote sending it to the full body with a recommendation for passage. It was on the floor that it ran into trouble and went no further. Apparently because republicans couldn't get enough democrat support to bring it to a full floor vote. But make no mistake, Obama LIED when he claimed McCain did nothing about the mortgage situation prior to the current crisis.

The thing that raised the red flag for me was your assertion that it was Democrats and a few RINOs. But who sponsored it? Chuck Hegel. You want a RINO, that's one.

I suppose Hegel is a RINO where the War On Iraq is concerned. And I admitted, I initially misunderstood what they meant regarding the disposition of the bill. It turns out it did get out of committee so it looks like in this case Hagel voted like a Republican.

Despite Democratic efforts to tar McCain as a Bush clone, he never was. He is far, far, better than the current sitting President, whose support you will not find for this legislation.

Well I'm glad you agree that McCain is not a Bush clone. As for the rest, Bush isn't running for election and what I've posted already proves that Obama lied in his speeches. That's my point.

Meanwhile, you can sit back and say that those darned civil rights lawyers forced banks to loan money to..............low income people. Yeah, those civil rights lawyers are always trying to get equal rights for low income people. However, it's odd, but when that filters down to the rank and file, those words end up getting twisted, and they use words that are apparently violations of rule 10.

It's a fact that civil rights lawyers (including Obama) did force banks to loan money to people who weren't really qualified, financially, for a loan. It's what started this whole ball rolling. As to the rest of what you wrote, I have no idea what you mean or what point you are trying to make. :D

When those guys were sitting around talking about who caused this mess, they didn't mention low income people, but they did use a different word, and that word meant exactly what you said in the opening post, just in a more vulgar manner.

You claim to have listened to a conversation at a watercooler where they used that word. Of course, you admitted that you embellished what was said so who really knows. But let's not pretend otherwise, your reason for adding that comment to this thread in the first place was to try and link ME to those people when in fact there is no connection at all. Maybe what you should have done is confront THOSE people. You think the rascist label scares me, Meadmaker? I'm frankly tired of liberals waving it around as a tactic to bully people around. You need to understand that unlike many liberals, I have no guilt and no reason to feel guily where race is concerned. But maybe you do? ;)

[Meadmaker]

I did, see above. Although I will admit that the vote was only in the committee and that it was apparently a positive vote sending it to the full body with a recommendation for passage. It was on the floor that it ran into trouble and went no further. Apparently because republicans couldn't get enough democrat support to bring it to a full floor vote.

Do you think that's it? Keep in mind that every single member of the committee voted for this bill, in one version or another. All the Democrats voted for the bill. All the Republicans voted for the bill. So why didn't it pass? Why was it never voted on in the full Senate?

It's a common parliamentary tactic. When you don't want something, put up two versions of it, and everyone gets to claim they voted for it, and everyone gets to claim they voted against it, an no one has to take responsibility for it.

If the Senate leadership would have wanted this bill, they could have had it.

To his credit, McCain wanted this bill, and fought for it. Obama, apparently, didn't. If McCain can find a good way to present that in a sound bite, it should be a vote getter for him, although I can't imagine it getting many votes for him. Ultimately, voters are more likely to reward results than effort. The results aren't so good.


It's a fact that civil rights lawyers (including Obama) did force banks to loan money to people who weren't really qualified, financially, for a loan.


And it's a fact that most of those people were..........African Americans. The guy in the break room wasn't being racist. He was telling the truth, as he saw it, and he wasn't putting lipstick on the pig. That's how he talks. He was saying exactly the same thing you were saying. He just got straight to the point.

The identification of race was not where he made his mistake, though. The thing is that a lot of factors conspired to send home prices throught the roof, and it was the middle class who bit off more than they could chew, leaving some really big bills. Sure, the people at the low income levels also got foreclosed sometimes but, in truth, not as often, and when they did they didn't leave the banks on the hook nearly as badly. The system could have easily weather a storm of foreclosures on poor black people, but when it hit middle class, generally white, people, it crashed.

It's a simple enough reason. The assumption that has been true for home lenders for over a century was that income levels rarely went down. If you were able to make the payments on day one, you could make the payments for years to come. Income almost always went up. That's not true anymore, and it bit the banks really hard. There are plenty of people at the low end of the middle class today, that used to be at the high end of the middle class, and they can't afford the homes they bought in better times.

Add to that a bubble in prices, a sudden shock of gas prices, and rising interest rates on adjustable rate mortgages, and you get the mess we have today.

I could also explain why the securities based on bundled low income mortgages barely lose any value, while securities based on bundled middle income mortgages lose a great deal more value, even at comparable default rates, but that's a bit of an advanced lesson.

[Meadmaker]

Aaron Pressman, a writer for Business Week and Bloomberg, among others, has some thoughts on the theory from the OP:


http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

He doesn't seem to think that the community reinvestment act or the efforts of civil rights lawyers played a significant role in this crisis.

[Dymanic]

Aaron Pressman, a writer for Business Week and Bloomberg, among others, has some thoughts on the theory from the OP:


http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

He doesn't seem to think that the community reinvestment act or the efforts of civil rights lawyers played a significant role in this crisis.I wondered why BAC, who had seemed so eager to discuss details, suddenly fell silent when encouraged to provide evidence that CRA-regulated loans were more likely to end in foreclosure. It now looks as though one possible explanation is that BAC reached the same conclusion as the authors of the study linked in that article:

"Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis."

[BeAChooser]

Snivelling about the end of red-lining is, at its core, racist.

So, lefty ... is Larry Elder a racist? Because here are his words:

http://www.reason.com/news/show/29891.html


Reason: So you don't think there is redlining in real estate and bank loans?

Elder: It's crap, nonsense. Does redlining exist in the sense that there are certain geographical areas where insurers are less likely to insure, or people are less likely to live or invest in? Yeah, but there are also economic reasons for that. When you burn down your neighborhood, that's going to make insurance companies a little skittish. When [Rep.] Maxine Waters [D-Calif.], having witnessed a conflagration, refers to it as an "uprising" or "rebellion," rather than as a riot, and I'm in an insurance company and I'm listening to this, I'm a little concerned.


http://74.125.45.104/search?q=cache:uyYQhY0weEcJ:www.cato.org/events/transcripts/000913et2.pdf+larry+elder+redlining&hl=en&ct=clnk&cd=38&gl=us


But the overall theme on the part of somebody like Jesse Jackson, Al Sharpton, Maxine Waters, is that if you can't get a loan at the bank, it is obviously because a racist lender refused to give you the money. If you live in an area where there is a lot of violence and a lot of crime and you can't get insurance, obviously, you are a victim of racist redlining.

If your kid doesn't do well on the SAT, well, the problem is not your kid and your kid's refusal to work harder and your refusal to put more pressure on the kid to work harder and the crappy school the kid goes to, it's because racist examiners decided to culturally bias tests. What does this say? It says that people like that are willing to accept the worst possible motive in the minds and hearts of white people; that white people really get up in the morning and want to oppress black people. Now, that is something that we call in the black community "racial profiling." And it is as offensive as when it is done to black people.


http://townhall.com/columnists/LarryElder/2008/05/01/the_wright_cost_of_anger


Here's the "victicrat" mindset: Kids having difficulty performing well on standardized tests? Blame "cultural bias." Get pulled over by a cop? DWB -- driving while black. A disproportionate number of blacks in prison? A racist criminal justice system that "targets" blacks for prosecution and imprisonment. Katrina? As Rep. Barney Frank, D-Mass., put it, "ethnic cleansing by inaction." Difficulty qualifying for a loan? Blame banks' devious plan to prevent blacks from getting "access to capital." Pay more for car insurance because you live in a high-crime neighborhood? Why, illegal "redlining," of course. High inner-city dropout rate? Bad teachers, unequal funding, racist teachers -- yada, blah, etc.


You a victicrat, lefty?

[BeAChooser]

I have to conclude that this wasn't something the GOP Congressional leadership wanted all that much. They had the power to at least force a vote on their own version of the bill.

Did they? You do know what a filibuster is, don't you?

But regardless, my thesis stands. Obama still LIED when he claimed McCain and Bush had done nothing to prevent or warn against trouble in the mortgage area. Is he a liar, Meadmaker? Can we at least agree on that ... since Bush lying seems to have been a big theme of democrats the last 8 years (although curiously it wasn't the previous 8 when the biggest liar of all inhabited the WhiteHouse). :D

I have to go back to my original conclusion. Republicans were in charge and could have done something about it, but didn't.

You've admitted that the vote in the committee was along party lines. Does that show ANY willingness on the part of democrats to compromise? ANY willingness to want to fix the problem that an investigation had exposed? There is only so much political capital to spend, MM. Sure, republicans could have beat their heads against a wall and tried to force a vote ... and failed. And how would the liberal media have played that? They'd have filled the airways with discussion of how cruel, uncaring and racist republicans were while quoting the statements of leading democrats (like I did above) to the max. Maybe that's what democrats wanted?

As previously noted, Senator McCain does deserve credit. He did try

Good. Then you'll agree that Obama LIED when he said this?


Senator McCain's approach was the same as the Bush administrations ... support ideological policies that made the crisis more likely, do nothing as the crisis hits, and then scramble as the whole thing unravels. Now, my approach has been to prevent ... to try to prevent this turmoil from occurring in the first place. In February of 2006, I introduced legislation to stop mortgage transactions that promoted fraud, risk or abuse. A year later, before the crisis hit, I warned Secretary Paulson at the Treasury and Chairman Bernanke at the FED about the risks of mounting foreclosures and urged them to bring together all the staples to find solutions to the sub-prime mortgage meltdown. Senator McCain did nothing."


:D

Meanwhile, the idea that the collapsing real estate bubble was caused by forcing banks to lend to those people represented by civil rights lawyers is a bunch of codswallop.

I'll stand by the quotes and links I've supplied on this thread. What are you standing by? Maxine Waters statement? :D

[BeAChooser]

I've never considered mined quotes to be quite the strongest form of evidence

Dymanic, do you think any of us do anything on this forum other than "mine quotes". The rules of JREF in fact prohibit anything else. But at least *I* am offering quotes and links to those quotes (so you can assure yourself that they aren't so much mined but summarize facts or a view) ... unlike so many others on this thread who merely handwave or claim to have heard things around the "watercooler". At least in my case you can assure yourself that I didn't take the quotes completely out of context as I proved Obama did many times in his speeches. Now there's a "quote miner" for you to criticize. :D

but I'd be willing to concede that Democrats are, in general, perhaps more inclined toward social engineering than are Republicans -- if you'd concede that they are no more interested in political power than are Republicans.

Not so fast. Just take the example of President Bush, who democrats have vilified in the vilest of terms the past 8 years. If he was just as interested in political power as democrats, then he wouldn't have carried through with the Iraq invasion and certainly wouldn't have stayed the course in Iraq through the dark years when things weren't looking great and the majority in polls were for cutting and running. There's an example where a Republican put doing what was RIGHT over party and his own self interest. Be honest ... half the votes democrats will get in this election are because of the war. And Bush has held plenty of positions on social issues that are on the whole unpopular with the public ... at least if you believe what the liberal leaning mainstream media claim. Again, he put what he believes is the right thing to do over party and mere "political power".

Interestingly enough, putting Right over Party was a major theme in McCain's acceptance speech. Do you suppose he might be on to something as opposed to Obama's acceptance speech which was more about continuing the agendas and approaches that got us into this financial mess than anything else? :D

And this is a case where democrats have championed "social engineering" to garner political power. Beggars and Choosers. They pandered to certain groups ... offered them freebies ... just to increase their political power. And ignored all warnings that what they were doing would ultimately collapse and hurt the country. Now I'm not suggesting that republicans didn't do any of that but they sure did a lot less. :D

I'm not really attempting to "show" anything here. I'm just asking questions. But if it turns out that those foreclosure rates are similar, your entire argument pretty much goes down in flames. So if you, as the person who is trying to "show" something here, can show that they aren't, you might want to get on that.

I could do that, and maybe I will, but that's not really the point of the OP anyway. Because like it or not, Obama lied to *you* in his economic speeches and the debate when he tried to make *you* believe that republicans had taken no action to prevent or warn against the impending mortgage crisis. For all the talk of *change* and *transparency*, Obama is no different than most of the other democrats of the past decade or two. Dishonest.

Is it the job of government to bail out a failing system; one that is vital to the health of our economy?

ROTFLOL! Oh, I see. You want to regurgitate that nonsense promoted by Obama that this event proves the absolute failure of capitalism, free enterprise and ownership? Time for socialism, government controlled economy and forced wealth redistribution? ;)

The "system" isn't failing, Dymanic. The "system" has a tool for punishing people who manage badly and completely ignore risk. They go bankrupt and someone buys what remains of the assets and builds from there.

Here, I think you should read the following article in its entirety very carefully:

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview


Commentary: Bankruptcy, not bailout, is the right answer

Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.


Get back to me when you have. THEN we can talk. :D

[Meadmaker]

Is he a liar, Meadmaker?


If you want to call him a liar based on that, then every single ad that either campaign has produced and mentions the other candidate is a lie. I haven't seen a single ad where one candidate talks about the other's record, and doesn't distort it. In some sense, then, both McCain and Obama are liars. In this thread, I won't try to quantify or make a determination of who is a bigger liar, but I suspect we would disagree on the conclusion.


You've admitted that the vote in the committee was along party lines. Does that show ANY willingness on the part of democrats to compromise?

Does anyone else find this question from BAC really, really, funny?

(For those who didn't follow, there were two versions of the bill. All the Democrats voted for one. All the Republicans voted for the other.)


What are you standing by? Maxine Waters statement? :D

What does Maxine Waters have to do with anything? Unless.....nah.

[Dymanic]

Dymanic, do you think any of us do anything on this forum other than "mine quotes".
Yes, I do. We consider things like logic, context, and the strength of the evidence that supports the positions represented in any quotes we might reference. Otherwise, it amounts to little more than setting one mined quote against another.

If [Bush] was just as interested in political power as democrats, then he wouldn't have carried through with the Iraq invasion and certainly wouldn't have stayed the course in Iraq through the dark years when things weren't looking great and the majority in polls were for cutting and running.I think you are confusing an interest in attaining political power with an interest in using political power already attained. I won't dispute that Bush probably has done "what he believes is the right thing to do", and while he clearly had a personal agenda that extended beyond his aspiration to become president and was willing to pursue that even at a cost in popularity, I don't doubt that he probably has felt all along that what he was doing was the "right thing" for his country as well. The problem is that he was obviously wrong about that. The Iraq debacle has come at an enormous cost in human lives and human suffering, and the half a trillion dollars we've spent can hardly be lightly cast aside either. But perhaps the greatest cost has been the standing of the United States in the international community. Bush's popularity is the least of it. But that's not really what we're talking about here, is it?

I could do that, and maybe I will, but that's not really the point of the OP anyway.In the OP, you specifically pointed to the CRA as the starting point for this whole thing, and you're charge against Obama rests almost entirely on that. It was your idea to introduce this line of argument, and I'd say that in doing so you have incurred an obligation, one that is hardly met by handing out reading assignments, unless they include data that might support your claim.

The "system" isn't failing, Dymanic. The "system" has a tool for punishing people who manage badly and completely ignore risk.You might also say that the laws of physics have tools for punishing those who drive recklessly on the freeway: they tend to crash. The fact remains that the freeway isn't going to be available for use by those who drive responsibly until someone clears away the wreckage.

[BeAChooser]

Keep in mind that every single member of the committee voted for this bill, in one version or another. All the Democrats voted for the bill.

Where do you get that? You just told us in post #52 that it made "it out of committee, ammended, on a straight party line vote." And your source confirms that. It states that S.190 in the Senate "was passed on a straight party line vote of 11-9." So ALL the democrats in the senate committee voted against it.

Now granted, the House version, again introduced and sponsored by republicans, passed out of committee 65-5 so a lot of democrats had to have voted for it. In fact, it passed the full House (http://www.realtor.org/GAPublic.nsf/Pages/gsepasseshouse?OpenDocument ) before the Senate democrats apparently again killed it. Now why would the bill pass in the House? Maybe the house version had some social engineering pork for democrat constituents? Let's see ...

"It also creates a new extremely-low- and low-income housing program, mostly to build rental housing, that is funded by five percent of the GSEs after-tax profits." And as your link said "This fund is in addition to historic low and moderate income housing goals for the GSEs"

Yep. :D

If the Senate leadership would have wanted this bill, they could have had it.

Sure Meadmaker. All they had to do was wave their magic wand and democrats would have voted for it. That's the way Congress historically works, right? Maybe republicans should have waved their magic wand during the trial of Clinton in the Senate. :rolleyes:

Quote:
It's a fact that civil rights lawyers (including Obama) did force banks to loan money to people who weren't really qualified, financially, for a loan.

And it's a fact that most of those people were..........African Americans.

So what? If they weren't qualified financially for the loan ... they weren't qualified financially, regardless of color. But at least you are tacitly admitting that democrats USED race as a reason to get people loans they couldn't afford and were likely to lose at the first downturn in the economy. :D

The guy in the break room wasn't being racist.

There you go, waving the race card. CLAIMING you heard something. I'm not buying it, Meadmaker. And I'm not buying your attempt to link my financial argument to racism.

He was telling the truth, as he saw it, and he wasn't putting lipstick on the pig.

Are you trying to link Palin to this too, Meadmaker. Do you have some evidence she's said such things around the *watercooler*? Is that how low your argument on this thread is going to go?

He was saying exactly the same thing you were saying. He just got straight to the point.

So you're calling me a racist? I frankly think you are the racist since you wave that flag at every opportunity. I think Bernard Goldberg is right when he says it has to do with YOUR GUILT. What are you feeling guilty about, MM? Did you do something that you have to make up for?

By the way, in case you haven't guessed, my discussion with you on this thread is over. I shall simply stand by what we've already posted and ignore you ... at least on this thread. If you can't be civil and argue verifiable facts, instead of "watercooler" claims while throwing the race card, there is absolutely no reason to debate you further. :D

[Gurdur]

Only 3 :D's in the last post, things are obviously calming down under the juggernaut of the inevitable Obama presidency.

[BeAChooser]

I wondered why BAC, who had seemed so eager to discuss details, suddenly fell silent when encouraged to provide evidence that CRA-regulated loans were more likely to end in foreclosure.

ROTFLOL! I love the impatience shown by you. Do you think posting to you folks is the only thing I have to do? Maybe you don't have a life? If you haven't noticed by now, I come and go from forum throughout the day. Sometimes I'm gone for days. Sometimes I stay for hours. Sometimes just for minutes. But I always start where I left off and I almost always respond to every substantive post made to me, and every comment made in those posts, in the order they are made. I tend not to read ahead either. And by the way, because of that, I'm probably having to post 3 times as much on this thread as any one of you. So give me a little slack if I don't get back to you the moment you post. If you demand an immediate response, I suggest you find a chat room. You'll be happier. :D

"Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis."

Would you like to scold Meadmaker for calling me a racist without even *quote mining* to back up his smear? Because unless you're willing to do that, I see no reason to continue a discussion with you either. We either all try to make this a civil debate or it won't be a debate at all. I'll talk about that study and what it says, when you do. If not, so be it. Besides, I've already proved what I wanted to prove on this thread. Obama is a LIAR. :D

[Dymanic]

I'll talk about that study and what it says, when you do.What more is there to talk about? You started the thread because you "wanted to prove" something, and argued that "Obama and his civil rights friends won the case, forcing banks to make loans that simply weren't financially sound." I became involved out of a desire to better understand the nature and cause of the present crisis, and when Meadmaker posted a link to an article which referenced an actual study (http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf) -- involving actual data -- I took a look, as you had not (yet) responded to my suggestion that your arguments might be made more compelling if they were better supported by evidence. As it turns out, that study not only fails to support your position, it strongly refutes it; CRA regulation may actually be an indicator that a loan was financially sound, rather than the opposite.

Do you question the methods used in that study? The conclusions of its authors? Would you like to argue that the study was biased? Would you like to present another analysis of the same data, or of some other data? If so, please do proceed (at your earliest convenience, of course).

If not, I think I'll have to dismiss most of what you say as mere assertion, and go with a preponderance of the evidence I've seen so far, which indicates that the CRA could not have had much to do with the present crisis -- and I doubt if I will have very much more to say to you on the matter. Like yourself, I have other things to do.

[Meadmaker]

Where do you get that? You just told us in post #52 that it made "it out of committee, ammended, on a straight party line vote."


The Democrats introduced an ammendment in the form of a substitute while the bill was in committee. From the one paragraph summary I read, that ammendment in the form of a substitute was very similar to the House bill, but that could be wrong. The Democratic ammendment was rejected by the committee on a straight party line vote.

So, all the Democrats voted for it, and all the Democrats voted against it. All the Republicans voted for it, and all the Republicans voted against it.

If I can find a reference to the Democratic ammendment within five minutes of googling, I will, but I won't spend more time than that on it.





There you go, waving the race card. CLAIMING you heard something. I'm not buying it, Meadmaker. And I'm not buying your attempt to link my financial argument to racism.

Bummer. What will I do now?



So you're calling me a racist?

Huh? Because you are saying the same thing as the guy who used the 'N' word? Is that racist?

Racism isn't some sort of binary switch with only on and off values. I don't think that guy in the break room (the metaphorical "water cooler") was especially racist. On the other hand, he had bought into the erroneous arguments that loans to black people were the cause of our current financial crisis. You did the same thing. You and he are saying the exact same thing, but he was using coarser language. He does that. He also says words that start with "f" and "s" a lot. If he was a racist, was it because of his use of a racial epithet? Is that what makes someone a racist?

You will have to decide whether or not you are a racist. I am suggesting that people who bring civil rights lawyers and Maxine Waters into credit related discussions are more likely to be labelled as racists, fairly or otherwise.

By the way, in case you haven't guessed, my discussion with you on this thread is over.

I'm not surprised in the least.

[BenBurch]

"Discussion" was over with the author of the OP long before he posted it, Meadmaker. I do not recall that I have ever have ever seen him be convinced of even one thing contrary to his stated views on any subject, and he rarely acknowledges factual errors when they are pointed out.

[Meadmaker]

Here's an article that referred to the Democratic ammendment I noted. A different article said that the Democratic ammendment was offered in the nature of a substitute, but I have not read the whole history, nor do I intend to.

http://www.allbusiness.com/government/532756-1.html

One relevant paragraph:

The committee also rejected an amendment by Sen. Jack Reed (D-Rhode Island) that would have directed the GSEs to contribute a percentage of their earnings to an affordable-housing trust fund. But the committee approved an amendment by Sen. Rick Santorum (R-Pennsylvania) to rewrite Fannie and Freddie's affordable-housing goals. Both measures were rejected and adopted, respectively, along party-line votes.

The "also" above refers to a different ammendment offered by Paul Sarbanes, a Democrat.

[BeAChooser]

Ok, folks, I've taken a look at the source that Meadmaker announced "doesn't seem to think that the community reinvestment act or the efforts of civil rights lawyers played a significant role in this crisis." That would be a Mr. Aaron Pressman.

And who is Mr Pressman? Some guy who writes for BusinessWeek? Now and then? Or just this once? What are his credentials? A few years ago he was writing for Slate Magazine, on issues related to the internet. Such as "Civil Disobedience on the Web - By Aaron Pressman - Slate Magazine, July 29. 2000" where he reported on activists' plans to disrupt the Republican National Convention. And he wrote for the Washington Bureau of The Industry Standard. Again, something to do with the internet. Before that he worked for Reuters. Ah ... yes. Way back when, Pressman worked at several financial trade publications ... Bond Buyer and Investment Dealers Digest. Don't tell me he was one of those people pushing CRAs back then? Just kidding. ;)

Now Pressman leads off his defense of democrats by proclaiming "The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly." Of course this is a strawman and some of those who commented on that web page where Mr Pressman posted noted that. The argument is NOT that the 1977 law signed by Jimmy Carter caused the problem. That is silly. It was just the opening shot (as I pointed out in my own thread) in a social engineering agenda that was to carry forward and grow, especially in the 90's when democrat *community activist lawyers* like Obama decided to call mortgage lenders racists and encourage Bill Clinton to expand the CRA law further. I posted links earlier showing how much the mortgage market grew during that time, compared to 1970's and 1980s. It really took off. As noted in the comments on that web page, "the number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent." And the number of sub-prime mortgages (which are particularly problematic) went from "1% of all mortgages issued to 12% within THREE years of the Clinton Administration" strengthening the CRA law.

Now Pressman declared "the CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well." Did they perform well? Or did Clinton just luck out in that the 90's were a period of economic boom due to the previous administration's tax policies, the collapse of the Soviet Union, cuts in welfare and other funding forced on Clinton by Gingrich/republicans, and the internet boom. As the sources I noted said, the problem would come when a recession started.

And that is exactly what happened. A recession started just at the end of Clinton's term in office and then deepened due to 9/11 and WOT. And that's when foreclosures started climbing. Yet, during that whole period from 2000 to 2005, when Bush and other republicans were sounding the alarm and calling for reform of the mortgage industry to prevent disaster, democrats fought tooth and nail to keep things as they were, calling republicans racist and uncaring.

All this, of course is lost on Pressman.

Now Dymanic quoted a source that Pressman linked indicating it said "Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis." Here's the *study* that Dymanic quoted.

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

And who performed THIS study? The LAW FIRM of Traiger & Hinckley. If the contents of their website is any guide (http://www.traigerlaw.com/index.php ) they have quite a vested interest in seeing CRA continue. It's their bread and butter. :D

Now as to their study, what is not analyzed is the actual relationship between CRA banks and their foreclosure rates. It does not answer the question: Do CRA banks have a higher foreclosure rate?

What was looked at? The percentage of loans from CRA banks that foreclosed as compared to non-CRA banks? No. The study looks at 4 things ... the proportion of high cost loans, the pricing of high cost loans, the proportion of originated loans retained by the lender, and the relationship between foreclosure rates and concentration of bank branches. So it doesn't actually answer the specific question I raised.

Isn't it ironic, folks, that Fannie Mae singled out one bank as the role model in terms of its commitment to CRA lending? Countrywide. It was the nation's largest mortgage lender and had committed to $600 billion in low-income or "subprime" loans as of 2003. Countrywide essentially went bankrupt and was merged with Bank of America. This is discussed in an April 26 New York Post article on the CRA titled "The Real Scandal," by Professor Liebowitz (http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0 ). Oh sure ... CRAs had nothing to do with this crisis. Nothing at all. :rolleyes:

Did anyone notice who Traiger of T&H has given money to, over the years? See http://www.newsmeat.com/fec/bystate_detail.php?zip=10021&last=Traiger&first=Warren Answer: Democrats ... and most recently ... Obama.

But I will say this for T&H. They also did investigations on whether racial bias factored into mortgage loans and found it didn't ... contrary to what was being claimed by democrats. http://findarticles.com/p/articles/mi_m0EIN/is_/ai_n13787144 "Although HMDA data can never conclusively prove or disprove discrimination, the Traiger & Hinckley LLP study suggests that with regard to home purchase loans with rate spreads, lenders are treating minority and women homebuyers fairly." Looks like they are buttering both sides of the bread. :D

And finally, I wonder ... did Dymanic bother to read any of the other comments in that web page where Pressman posted ... because they rather successfully and thoroughly took Pressman's assertion apart. Probably didn't. Probably too busy "quote mining", to look at the facts and logic in those MANY posts. :rolleyes:

[Meadmaker]

And who is Mr Pressman? Some guy who writes for BusinessWeek? Now and then? Or just this once? What are his credentials?

You'd better let Business Week know about this. Those folks have let him publish 16 articles in their print magazine since 2005. Of course, he has a lot more BW online, and blog entries like the one cited in this thread.

And what is this Business Week magazine? Some liberal rag? How come I've never heard of them? Do they give money to Democrats?


Did they perform well? Or did Clinton just luck out in that the 90's were a period of economic boom due

Your two options don't seem to contradict each other.

Of course, it is well understood that all good things that happen when the other guy's party is in power were actually due to our guy's leftover policies, but all good things that happen when our guy is in power are due to our own policies. That's just simple logic.


And that's when foreclosures started climbing.

Oddly, many economic statistics don't reflect this trend, suggesting instead that foreclosures really started rising somewhat later.


All this, of course is lost on Pressman.


Indeed, I am sure that much of your analysis would be lost on Mr. Pressman.




And who performed THIS study? The LAW FIRM of Traiger & Hinckley.

What??? Lawyers?!?!?! How come nobody told me about this? If I had known they were lawyers I would have just ignored their statistics. Oh, man. This is so embarrassing. Lawyers. I can't believe I referred to lawyers.

low-income or "subprime" loans as of 2003.

I don't suppose you would care to clue us in on the definitions of the terms "low income" and "subprime". Hint: You have to give two definitions.

[Dymanic]

Now as to their study, what is not analyzed is the actual relationship between CRA banks and their foreclosure rates. It does not answer the question: Do CRA banks have a higher foreclosure rate? I agree. That is inferred, but not demonstrated. If I had started a thread based heavily on the premise that CRA banks had a lower foreclosure rate, you'd be justified in objecting that inference is not sufficient to make a case for that, even though the bases for that inference were clearly stated and reasonably compelling. As it is, you started this thread based on the opposite premise, and while it's a bit hard to tell where inference ends and bald assertion begins, it's pretty clear that you haven't made your case either.

And finally, I wonder ... did Dymanic bother to read any of the other comments in that web page where Pressman posted ... because they rather successfully and thoroughly took Pressman's assertion apart. Probably didn't. Probably too busy "quote mining", to look at the facts and logic in those MANY posts.Quite a lot has been written about this, and I don't claim to have read very much of it, and it is partly that I often am fairly busy -- heck, in six years on this forum, I haven't had time to rack up a post count like the one you've managed to achieve in a year and a half -- but you might note that the only quote I've contributed to the thread is the conclusion of that study.

Your objection on the basis of bias is reasonable enough. If the only material worth reading is that which originated with indisputably unbiased sources, that would probably cut the reading down quite a bit, so if you could provide a list of those sources, that would be very helpful. I'd venture to guess that you've redirected some portion of the time you might otherwise have dedicated to wading through "comments" on "web pages" toward looking for some data that might provide a more direct way of comparing foreclosure rates between CRA and non-CRA lenders, and haven't had any more luck than I have. Not that I've tried nearly as hard as I would were I in your position.

[Meadmaker]

The President of the Federal Reserve Bank of San Francisco doesn't seem to think very much of the premise from the OP either.


http://www.frbsf.org/news/speeches/2008/0331.html


Before I turn to potential interventions, I want to make one final point. There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans,16 and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households.17 We should not view the current foreclosure trends as justification to abandon the goal of expanding access to credit among low-income households, since access to credit, and the subsequent ability to buy a home, remains one of the most important mechanisms we have to help low-income families build wealth over the long term.18


Oh, wait. That's San Francisco. We can't take that seriously can we? Nancy Pelosi's home town? I'll bet that woman gives money to Democrats.

What about this guy?

http://www.communityinvestmentnetwork.org/nc/single-news-item-states/article/fed-chairman-bernanke-address-ncrc-conference-on-fostering-sustainable-home-ownership/?tx_ttnews%5BbackPid%5D=760&cHash=bac37f6710


The deterioration in underwriting standards that appears to have begun in late 2005 is another important factor underlying the current crisis. ...
Much of the weakening in underwriting standards appears to have happened outside of institutions regulated by the federal banking agencies.


One aside:


Over the past quarter century, advances in information technology, the development of credit-scoring techniques, and the emergence of a large secondary market, among other factors, have significantly increased access to mortgage credit. From 1994 to 2006, subprime lending increased from an estimated $35 billion, or 4.5 percent of all one-to-four family mortgage originations, to $600 billion, or 20 percent of originations (Inside Mortgage Finance, 2007).

I just wanted to note that the number Bernanke gives for the entire subprime market in 2006 is the number BAC quoted earlier for Countrywide in 2003. I know he'll want to correct the record, becing a stickler for facts as he is.

[GreyICE]

I knew it! It was all Bill Clinton's fault! :rolleyes:

[chipmunk stew]

I knew it! It was all Bill Clinton's fault! :rolleyes:
It's a BAC thread. Of course it's Bill Clinton's fault.

[boloboffin]

This has been another edition of "Why I Don't Have To Believe Anything A Liberal Tells Me," with your host, BeAChooser. Tune in again next week when BeAChooser's guests will be any liberal he can manage to get onto the set. Until then, remember: 50% of Americans aren't just wrong, they're openly collaborating with the enemy. Ta-ta!

[BeAChooser]

As it is, you started this thread based on the opposite premise, and while it's a bit hard to tell where inference ends and bald assertion begins, it's pretty clear that you haven't made your case either.

Yeah, but I'm not the one getting ready to put my hand in someone else's pocket and TAKE a trillion dollars from them, then hand it to the very people who created this mess. I think that gives me a little leeway in the standard of proof. :D

I'd venture to guess that you've redirected some portion of the time you might otherwise have dedicated to wading through "comments" on "web pages" toward looking for some data that might provide a more direct way of comparing foreclosure rates between CRA and non-CRA lenders, and haven't had any more luck than I have.


Actually I hadn't done that, since I really didn't think there was any question whether CRA was involved in this mess. But let's see what I can find after brief search.

Here's an article from 2000 by a very prescient author warning of the trouble CRA and the left's social engineering agenda was going to cause when a recession came. You really should read in it's entirety because it totally demolishes Pressman's and the left's assertions about CRA and it's *innocence*. I've quoted a few excerpts regarding foreclosure rates from it:

http://www.city-journal.org/html/10_1_the_trillion_dollar.html


The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities

... snip ...

There is no more important player in the CRA-inspired mortgage industry than the Boston-based Neighborhood Assistance Corporation of America. ... snip ... With "delegated underwriting authority" from the banks, NACA itself—not the banks—determines whether a mortgage applicant is qualified, and it closes sales right in its own offices. It expects to close 5,000 mortgages next year, earning a $2,000 origination fee on each. Its annual budget exceeds $10 million. ... snip ... This CRA-facilitated migration makes the mortgage terms of groups like NACA particularly troubling. In a September 1999 story, the Wall Street Journal reported, based on a review of court documents by Boston real estate analyst John Anderson, that the Fleet Bank initiated foreclosure proceedings against 4 percent of loans made for Fleet by NACA in 1994 and 1995—a rate four times the industry average.

... snip ...

NACA frankly admits that it is willing to run these risks. It emphasizes the virtues of the counselling programs it offers (like all CRA groups) to prepare its typical buyer—"a hotel worker with an income of $25K and probably some past credit problems," says a NACA spokesman—and it operates what it calls a "neighborhood stabilization fund" on which buyers who fall behind on payments can draw. But Bruce Marks says that he would consider a low foreclosure rate to be a problem. "If we had a foreclosure rate of 1 percent, that would just prove we were skimming," he says. Accordingly, in mid-1999, 8.2 percent of the mortgages NACA had arranged with the Fleet Bank were delinquent, compared with the national average of 1.9 percent. "Considering our clientele," Marks asserts, "nine out of ten would have to be considered a success."

... snip ...

Though bankers generally cheerlead for CRA out of fear of being branded racists if they do not, the CEO of one midsize bank grumbles that 20 percent of his institution's CRA-related mortgages, which required only $500 down payments, were delinquent in their very first year, and probably 7 percent will end in foreclosure. "The problem with CRA," says an executive with a major national financial-services firm, "is that banks will simply throw money at things because they want that CRA rating."

... snip ...

The Neighborhood Assistance Corporation of America's own success stories make you wonder how much CRA-related carnage will result when the economy cools. The group likes to promote, for instance, the story of Renea Swain-Price, grateful for NACA's negotiating on her behalf with Fleet Bank to prevent foreclosure when she fell behind on a $1,400 monthly mortgage payment on her three-family house in Dorchester. Yet NACA had no qualms about arranging the $137,500 mortgage in the first place, notwithstanding the fact that Swain-Price's husband was in prison, that she'd had previous credit problems, and that the monthly mortgage payment constituted more than half her monthly salary. The fact that NACA has arranged an agreement to forestall foreclosure does not inspire confidence that she will have the resources required to maintain her aging frame house: her new monthly payment, in recognition of previously missed payments, is $1,879.


Nope. No problem here. :rolleyes:

But of course, CRA's aren't the only thing used to increase home ownership in minority groups that otherwise lacked the financial means to own those homes. I never claimed they were. Sub-prime loans were used too. There are numerous articles noting that fact ... and the correlation with foreclosures.

For example, an April 13, 2007 article in the San Diego Voice by Kelly Bennett, “Foreclosure Wave Said to Hit Latinos Hard,” reported that this decade saw "a national push to increase homeownership among Latinos" and that "Latino mortgage and real estate professionals put forth aggressive outreach campaigns in the community, while lenders reached out to huge, untapped sections of the market by loosening qualifying standards." “Because a widened lending gate allowed many more Latinos and other minorities into the housing market than had entered previously, lawmakers and special interest groups championed the lenders’ efforts to extend homeownership to those groups.”

Now here's an interesting case. Milwaukee. Here's what's happening now:

http://www.jsonline.com/story/index.aspx?id=797224


Loans came easily, then fell apart

Cluster of foreclosures in four Milwaukee neighborhoods serves as microcosm of nation’s mortgage meltdown

... snip ...

Sept. 21, 2008


While earning a salary of $21,000 a year, Leesa Robinson landed on top of the real estate world in 2006, overseeing nearly $1 million in property.

... snip ...

Lenders from across the country wrote more than $800,000 in home loans in 2005 and 2006 so Robinson could buy eight north side rental properties, half of which she purchased with no money down. All but one of the loans came with high-interest, adjustable rates. Today, her credit is shot. She lost all eight houses. She went bankrupt.


Yeah, no problem there. Continuing ...


... snip ...

Robinson's situation came to light when the Journal Sentinel analyzed 2007 housing data to understand the local impact of the subprime mortgage crisis. The investigation focused on the four inner city neighborhoods with the highest percentage of foreclosed homes that were set to be sold by Milwaukee County.

The 48 properties in these four small neighborhoods - all in or near Metcalfe Park and Sherman Park - serve as a microcosm of the nation's mortgage meltdown, which is costing taxpayers hundreds of billions of dollars.

... snip ...

Three of the four neighborhoods analyzed by the Journal Sentinel had a median household income of less than $25,000 - roughly half the state's overall figure, according to the U.S. Census Bureau's 2000 statistics.

The highest income level was in a Sherman Park neighborhood - bordered by W. Locust, W. Clarke, N. 41st and N. 44th streets - which had a median income of $32,908, census figures show.

... snip ...

Three-fourths of the mortgages written in the city's poorest neighborhoods were subprime or high-interest loans, the mayor's office said.

... snip ...

In fact, in the four hardest-hit neighborhoods, about one-third of the borrowers put no money down when they bought their properties.

"Why were they making these loans?" Doyle asked. "They were just deficient from the very beginning."

... snip ...

In a letter to the Department of Housing and Urban Development, Barrett warned that Milwaukee County foreclosure filings through July were up 28% from the first seven months of last year.

In addition, the mayor said, more than $1 billion in subprime loans were written here in 2005, and interest-rate increases on many of those adjustable-rate mortgages are just now kicking in. He predicted an upcoming surge in defaults and foreclosures.


Note that the mayor of Milwaukee, democrat Tom Barrett, is complaining ... now. But what was he saying a few years ago regarding minority home ownership, CRA and sub-prime mortgages?

Well, you need to know he was in the US Congress ... the House of Representatives ... from the early 1990's to the early 2000's. He was on the Banking Committee. It turns out that he was part of the problem ... helping to force laws against redlining and encouraging lenders to increase homeownership regardless of risk. In fact, he wanted to make CRA even bigger and more inclusive than it already is ...

http://www.nhi.org/online/issues/128/CRAat25.html


The Community Reinvestment Modernization Act of 2001 (HR 865) introduced by Rep. Tom Barrett (D-WI) and Luis Gutierrez (D-IL) broadens application of CRA beyond federally chartered depository institutions, increases data disclosure requirements and strengthens oversight responsibilities of appropriate authorities.

... snip ...

And the Community Reinvestment Modernization Act would likely not have been produced if it were not for the advocacy efforts of the National Community Reinvestment Coalition, ACORN, the National Training and Information Center and community organizations around the country.


So it turns out Barrett, whose city is now struggling with bad mortgages made to low income minority people, introduced a bill in 2001 that would have expanded CRAs to independent mortgage banks and created comparable obligations for insurance companies, securities firms and other financial services. And his act ties back to Obama's good friend, ACORN. You know, the group caught by republicans committing voter fraud in Milwaukee this year (http://www.jsonline.com/story/index.aspx?id=802043 ). And by the way, Barrett is an Obama supporter and contributor, along with ... you guessed it ... the National Low Income Housing Coalition. And of course, he's for the bailout.

He also has had strong tries to Fannie and Freddie.

For example,

http://www.historicgranville.com/pressReleaseFannieMae.htm


April 15, 2002

... snip ...

MILWAUKEE, WI -- For the first time in Milwaukee, a $1 million flexible mortgage pilot has been tailored specifically for a rebounding neighborhood's landmark condominium complex, mostly occupied by renters, to encourage homeownership.

... snip ...

"For as little as a $900 down payment, hard-working health care workers and others can own a $30,000 home and earn the keys to the American dream of homeownership," said Rep. Kleczka.

... snip ...

"This innovative housing ownership program will help people buy into an affordable neighborhood that's really on the upswing," said Mayor Norquist.

... snip ...

"This initiative celebrates important links between homeownership and stable neighborhoods, quality, affordable housing, and employee retention and satisfaction," U.S. Representative Tom Barrett (D-WI) said in a statement. "The collaborative efforts of Fannie Mae, St. Francis Bank, Select Milwaukee, MGIC, and neighborhood residents demonstrate just how successful these types of partnerships can be in revitalizing urban communities." Barrett, who in 1998 led efforts that brought the first statewide Fannie Mae office to Wisconsin, added ...



I tell you what ... let's give Barrett a stack of money ... YOUR MONEY ... to distribute to his low-income constituents to make up for the mess he helped create. No hard feelings. Right Dynamix? (sarcasm)

[BeAChooser]

I just wanted to note that the number Bernanke gives for the entire subprime market in 2006 is the number BAC quoted earlier for Countrywide in 2003. I know he'll want to correct the record, becing a stickler for facts as he is.

Now I'm not responding to MM. Just correcting a misperception.

First of all, I never said that the $600 billion was in just subprime loans. I said low income OR subprime. I used Stan Liebowit, a professor of Economics in the Business School at the University of Texas at Dallas, as a source (which I linked) for what I wrote above:

http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0


Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. Who was that virtuous lender? Why - Countrywide, the nation's largest mortgage lender, recently in the headlines as it hurtled toward bankruptcy.


Now it turns out that Countrywide did service more than $600 billion in mortgages in 2003.

http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/706761-1.html


Countrywide tops $600 billion servicing mark.


But if that $600 billion is what Liebowit is talking about, then I'll grant it was incorrect for him to characterize all those mortgages as low-income since Countrywide loaned to other income brackets as well in that total.

But even then, a large percentage of those loans clearly had to have been made to folks who couldn't afford them, otherwise Countrywide probably wouldn't have collapsed as it did. I hope MM will at least admit that the reason Countrywide failed are low income and subprime loans. Afterall, way back in June of 2007, almost a quarter of Countrywides subprime loans were deliquent with 10% over 3 months late. And in 2007, nearly half of Countrywide's loans carried adjustable rates. Those are the kind of loans that appeal to folks with lower earnings. By some accounts, Countrywide had become a business based 70% on subprime and other marginal loans.

On the other hand, Liebowit may have been talking about something other than the current portfolio value when he used the word "commitment". Keep in mind that in 2003 (http://www.forbes.com/2004/04/16/cx_aw_0416cfc.html ) Countrywide "churned out $434 billion in new loans". They sold $252 billion in new loans in 2002. Add up all 11 years and they sold a lot more than $600 billion in loans so its not inconceivable that $600 billion refers to the total value of low income and subprime loans countrywide sold between 1992 and 2003. Afterall, in 2003, it's subprime loan business alone was running at over $4 billion A MONTH. Even if the average over those 11 years was only a quarter that, the total would be nearly $130 billion. And we all know that the subprime business was smaller than the low income portion being pushed by CRA during those earlier years.

Here's another article

http://www.hispanicbusiness.com/pr_newswire/2004/10/13/countrywide_home_loans_becomes_nations_1.htm


Countrywide Home Loans Becomes Nation's #1 Mortgage Lender in Emerging Markets

CALABASAS, Calif., Oct. 13 /PRNewswire/ -- As a result of its ongoing effort to increase homeownership in low-income and minority communities, Countrywide Home Loans, Inc., a national leader in residential finance, today announced it has become the nation's leading mortgage lender to emerging markets communities, which include African American, Hispanic, Asian/Pacific Islander and American Indian/Alaskan Native homeowners.

... snip ...

According to the 2003 HMDA data, Countrywide Home Loans' achievements include:

- Providing $74.7 billion in loans to African American, Asian, Hispanic and American Indian homebuyers nationwide

... snip ...

Chief among the new products is Countrywide's Optimum Loan(SM) program with features specifically designed to assist the many creditworthy individuals who have little or no funds for down payments and closing costs -- one of the biggest obstacles to homeownership. The program requires a cash contribution of the lesser of one percent of the home's sale price or $500.


So clearly a lot of low income and sub-prime loans were flowing through Countrywide on a yearly basis. But there may have been another basis for Liebowit's statement. One that MM would have found if he'd just browsed a bit farther. From 2003:

http://goliath.ecnext.com/coms2/summary_0199-2577988_ITM


Countrywide extends commitment to low-income and minority homebuyers

Publication Date: 01-MAR-03

CALABASAS, ALIFORNIA--BASED COUNTRYWIDE Financial Corporation has extended its previous One Hundred Billion Dollar Challenge, begun two years ago, to increase homeownership among low-income and minority homebuyers. The extended commitment will fund $600 billion in home loans to previously underserved Americans through the end of the decade.


Yes, that's definitely what Professor Liebowit was referring to when he used the word "commitment".

Now if Meadmaker could just commit to using his browser the way it was intended. So he too could be a stickler for facts. :D

[Dymanic]

Yeah, but I'm not the one getting ready to put my hand in someone else's pocket and TAKE a trillion dollars from them, then hand it to the very people who created this mess. I think that gives me a little leeway in the standard of proof. You don't appear to have "proven" your case to anyone here but yourself. As far as proving it to yourself goes, you may of course use any standard of proof you like, but as the whole exercise seems to be about reaffirming the conclusion you started out with, I'm not sure I see the point. I'm not any more in love with the bailout idea than anyone else is, but a better understanding of the causes of the current mess seems critical to avoiding this sort of thing in the future.

Here's an article from 2000 by a very prescient author warning of the trouble CRA and the left's social engineering agenda was going to cause when a recession came.Yeah. Like I said, I didn't have any luck either. Lots of people have opinions on this, some of them rather strong opinions -- but skeptics in general tend to be more easily persuaded by facts than by opinions. Want to persuade me? Present the data that show a higher foreclosure rate for CRA-regulated loans.

[Crowlogic]

Remember Rush Limbaugh during the Clinton years? "Day 323 of America held hostage!" Oh, what sad and depressing times were those!

Ahh yes good Ol' Rush Limbaugh. Good Ol' Rush "that fat junkie hypocrite" Limbaugh.

[Meadmaker]

But even then, a large percentage of those loans clearly had to have been made to folks who couldn't afford them, otherwise Countrywide probably wouldn't have collapsed as it did. I hope MM will at least admit that the reason Countrywide failed are low income and subprime loans.

Certainly. No one disputes that. The questions that have to be asked is which loans failed, why did those loans fail, and which loans failing caused ripple effects that led to large scale failures, especially AIG, Lehman, and IndyMac, and from there to the credit crisis that resulted in the 700 billion dollar bailout.

In your OP you fingered loans that were made in order to comply with the CRA. In doing so, you were agreeing with the watercooler conversation, and particularly the one gentleman who uttered the thought that liberals forced banks to make bad loans to melanin rich individuals in our society.

Does this analysis hold up? I can't see how it does, for several reasons. First, CRA loans were generally not subprime loans. Second, the risk for such loans was well understood. Why does that matter? You have to look at the anatomy of the failure.

The problem was not, specifically, that the loans failed. Loans fail. No biggie. Happens all the time. The problem was that in this case, those loans were sold in the form of mortgaged back securities. If the risk of foreclosure and loss is accurately assessed, as it would be for banks that are heavily regulated and attempting to comply with the CRA, this isn't a problem for the purchasers of the securities. The securities sell at a discount, because they are expected to have a lower return.

What caused the breakdown was that loans that weren't supposed to fail...failed. People were buying homes and not putting enough money down. These were poor people, middle class people, even rich people. Bernanke noted that around 2005, the risk assessment procedure broke down. High risk loans were sold as low risk loans. The securities they were bundled into weren't properly discounted, and so when those loans started failing, the securities lost oodles of money. The loan originators, frequently mortgage brokers, not banks, walked away with the bread, and left bondholders holding the bag. AIG failed in large part because it insured those "low risk" loans.

So, fundamentally, the problem was a breakdown of the risk assessment system, and that had absolutely nothing to do with the CRA.

Now, you took umbrage at my suggestion that you were racist. I'm not going to say that this was all in your imagination, but I never called you a racist. What I will say is that there are people who put this argument forward, knowing that it is just plain false, and knowing that they will find a willing audience who is perfectly happy to blame either the black people, or the left wing (so called liberal. I think they are unworthy of the term) politicians who pander to the black community. There are lots of such people, including my break room colleague, and you. You really are in full agreement with him, whether or not you like to admit it. That doesn't make you a racist. That doesn't make the N word user a racist. However, I stand by my assertion. Let me repeat it, rephrased slightly, for clarity.

There are people who put forward the argument that you made, knowing that it is false, but knowing that it will be repeated by people who are very willing to believe it, because it plays to their prejudices.

In your case, I don't think it's your prejudice against black people. I think it's your prejudice against liberals. They know that if they say rotten things about liberals, you will blindly repeat those things.

There's another thought from the OP. That has to do with Senator McCain's efforts to rein in one element of this crisis. I agree with Senator McCain on this one, and I think he tried to do the right thing. I think that, once again, there are people who are perfectly willing to let you believe that they were on his side, when in fact they were not. I will say again that if the Republican leadership in the Senate had wanted this bill, they would have gotten it.

Finally, there's the question of whether or not Obama lied about the issue. If distorting your opponent's record is lying, then Obama, McCain, Palin, and Biden, are all first class liars.

ETA: If you want to know what went wrong with the subprime crisis, ask Ben Bernanke. He's not a bad source. He knows a thing or two about it. He does take issue with some CRA based practices, but doesn't blame the CRA for this crisis.

[BeAChooser]

I'm not any more in love with the bailout idea than anyone else is, but a better understanding of the causes of the current mess seems critical to avoiding this sort of thing in the future.

On the contrary. A lot of people are very much in love with the bailout idea. Otherwise they'd entertain some other option. And I asked the question in the OP to get a better understanding of the causes. The data points to democrats and their efforts at social engineering regardless of risk. The data points to democrats not listening to republicans back in the 2000 to 2005 timeframe who sounded the warning and tried to get more regulation of the industry. The data points to criminal democrats, like Raines and Johnson, who just happen to be advisors to Obama.

Present the data that show a higher foreclosure rate for CRA-regulated loans.

"8.2 percent of the mortgages NACA had arranged with the Fleet Bank were delinquent, compared with the national average of 1.9 percent."

"the CEO of one midsize bank grumbles that 20 percent of his institution's CRA-related mortgages, which required only $500 down payments, were delinquent in their very first year, and probably 7 percent will end in foreclosure." ... compared with that national average of 1.9 percent.

[Dymanic]

A lot of people are very much in love with the bailout idea.
Name one.

Otherwise they'd entertain some other option.The House entertained one other option: do nothing. The market responded immediately, and the same constituents who had been calling for the measure's rejection only a day earlier suddenly began insisting that their Representatives "do something". The success of the plan seems to depend a lot on the Fed being able to do what nobody else has been able to do, which is to place values on those mortgages. It will be interesting to see how they do that, but I don't see any reason to be particularly optimistic that the thing will work, beyond perhaps buying us a little time. If we use that time to come up with better options, maybe that will be enough to justify calling it a success. If you have entertained any other options, maybe we could look at those.

"8.2 percent of the mortgages NACA had arranged with the Fleet Bank were delinquent, compared with the national average of 1.9 percent."

"the CEO of one midsize bank grumbles that 20 percent of his institution's CRA-related mortgages, which required only $500 down payments, were delinquent in their very first year, and probably 7 percent will end in foreclosure." ... compared with that national average of 1.9 percent.
I see what you mean. About the standard of proof.

Anecdotes are nearly as plentiful as opinions on this. We already know that half of the subprime loans weren't CRA. What I'd like to know is: of all (ALL) the ones that were, how many ended in foreclosure?

[BeAChooser]

Originally Posted by BeAChooser
A lot of people are very much in love with the bailout idea.

Name one.

The folks who created the problem (get's them out of a jam). Like the democrat Mayor of Milwaukee, Tom Barrett. They'd no sooner passed the bailout in the house and he congratulated them.

The House entertained one other option: do nothing. The market responded immediately

It went down and then went back up the next market day before anything else happened. So what's that prove? The day the House passed the bill, the market went down ... almost 200 points. Why didn't it go up if market response is your indication of what's the right or wrong thing to do? Why are we so quick to not let the market economy take care of the problem when the market is what got us to a 13 trillion dollar economy in the first place? Why are we so quick to hand a trillion dollars to the very people who created the problem? When has government successfully fixed ANYTHING in an efficient and lasting manner ... or at all? The problem isn' that the market can't evaluate the value of these mortgages, the problem is that we haven't let it. And I'll bet you the government does a terrible job and soon comes back to put their hands in our pockets again.

[gdnp]

The problem isn' that the market can't evaluate the value of these mortgages, the problem is that we haven't let it. And I'll bet you the government does a terrible job and soon comes back to put their hands in our pockets again.

The market has had plenty of time to evaluate the value of these mortgages and they can't, the degree of uncertainty is too great. Their value depends on the default rate over the next 30 years or so, which will depend on economic conditions. If there is a robust recovery next year and the default rate is low the securities are worth near face value. If we go into a decade long depression and the default rate is 50% they become worthless. Thus the institutions that hold the debt want near face value, and those who might be willing to buy the debt will only offer pennies on the dollar. The market has thus seized up. Worse than that, if the banks that hold the debt are forced to value it at what they can sell it for (near zero), then they become insolvent. Since no one knows who is insolvent, no one wants to lend anyone any money. So the credit markets have seized up as well.

Only the government has deep enough pockets to possibly head off a collapse of the financial system. I am not sure this is the best way to do it, but the private sector has tried and failed.

[Dymanic]

The problem isn't that the market can't evaluate the value of these mortgages, the problem is that we haven't let it. As gdnp has just pointed out, the market is presently evaluating those mortgages as essentially worthless. That's the problem -- that is, it is the start of a whole new set of problems. There is tremendous potential for self-fullfilling prophesy here.

I'll bet you the government does a terrible job and soon comes back to put their hands in our pockets again.We may have found something we can agree on. I'm also very concerned about the ability of the Fed to responsibly administer this medicine.

[BeAChooser]

The market has had plenty of time to evaluate the value of these mortgages and they can't

FALSE. The government started talking about intervention before the market had a chance to react. That *promise* interferred with the process.

Their value depends on the default rate over the next 30 years or so, which will depend on economic conditions. If there is a robust recovery next year and the default rate is low the securities are worth near face value. If we go into a decade long depression and the default rate is 50% they become worthless.

And why is that my problem? Let the companies that made or bought worthless loans go bankrupt. They probably shouldn't be in the business. Let the people who bought mortgages they couldn't possibly have afforded pay for their mistake by losing their investment. Maybe next time they'll be more cautious or less greedy. Let the corporate executives that acted criminally be prosecuted and go to jail. Let the court and bankruptcy system do what it was intended to do ... be a way for those who suffered losses find satisfaction ... IF THEY DESERVE IT. Let the politicians who for decades led us down this path suffer the consequences at election time. But don't reach into the pocket of those who did none of the above to STEAL a trillion dollars and give it to the people who caused the problem, and then call that fair, smart or sound economics. It isn't. It's theft.

The market has thus seized up.

No, the market and credit have seized up because the government interfered ... held out the promise of a massive bailout at taxpayer expense ... and thus caused those who should already be bankrupt from declaring it and letting the system work as it would have worked had the government not interferred. The government caused buyers and sellers to wait to see what happens ... buyers who would have bought whatever assets remained at whatever value THEY assessed (right or wrong) for those assets. But that's the market system. Sometimes you guess right, sometimes you don't. And government interference has also caused the courts to not do their job. You folks never seem to learn.

Only the government has deep enough pockets to possibly head off a collapse of the financial system.

GARBAGE. The government has no pockets at all. The government is going to STEAL a trillion dollars from OUR POCKETS and give to a lot of people who don't deserve it. And the fact that you can't see that is half the problem here.

[gdnp]

FALSE. The government started talking about intervention before the market had a chance to react. That *promise* interferred with the process.
Bear Stearns failed in March. Why? subprime mortgage securities. How much time do you think the markets need to value these assets? That was 7 months ago. Do you see the market now doing a better job valuing these securities than they were then?

And why is that my problem? Let the companies that made or bought worthless loans go bankrupt. They probably shouldn't be in the business. Let the people who bought mortgages they couldn't possibly have afforded pay for their mistake by losing their investment. Maybe next time they'll be more cautious or less greedy. Let the corporate executives that acted criminally be prosecuted and go to jail. Let the court and bankruptcy system do what it was intended to do ... be a way for those who suffered losses find satisfaction ... IF THEY DESERVE IT. Let the politicians who for decades led us down this path suffer the consequences at election time. But don't reach into the pocket of those who did none of the above to STEAL a trillion dollars and give it to the people who caused the problem, and then call that fair, smart or sound economics. It isn't. It's theft.

Because when the banks all fail the FDIC will have to bail out the depositors anyway. People won't be able to get car loans and the automakers will loose billions, leading to more layoffs. Because if the chinese and the middle eastern sovereign wealth funds stop lending us back the dollars that we've spent with them then a lot of farmers and small businesses that depend on credit will fail as well. When those business's employees also default on their mortgages the housing market will plummet still further, pushing more banks into bankruptcy. Tax revenues will fall and governments will default on debt. Massive inflation will ensue as the government tries vainly to prop up the economy with monetary stimulus, pushing those on fixed income and dependent on retirement plans invested in falling stocks and bonds to slip into poverty. Those companies still in business will cut back on benefits and hire temps, leading to more and more people without health insurance. Policemen, firemen, and teachers will be laid off. Bridge and road maintenance will be deferred. Once prosperous neighborhoods will become ghettos. Crime will increase, food banks will run out of food, people will die because they can't afford heat in the winter or air conditioning in the summer, and disaffected unemployed inner city youth will riot. Military spending will be cut because we can't afford it, and our enemies will be emboldened to further attack American interests as we are too preoccupied with our domestic problems to deal with foreign adventures.



No, the market and credit have seized up because the government interfered ... held out the promise of a massive bailout at taxpayer expense ... and thus caused those who should already be bankrupt from declaring it and letting the system work as it would have worked had the government not interferred. The government caused buyers and sellers to wait to see what happens ... buyers who would have bought whatever assets remained at whatever value THEY assessed (right or wrong) for those assets. But that's the market system. Sometimes you guess right, sometimes you don't. And government interference has also caused the courts to not do their job. You folks never seem to learn.
Yours is the system that the Japanese tried after their real estate bubble burst. They now refer to that period in Japan as the "lost decade".


GARBAGE. The government has no pockets at all. The government is going to STEAL a trillion dollars from OUR POCKETS and give to a lot of people who don't deserve it. And the fact that you can't see that is half the problem here.
BAC, what part of "worst financial crisis since the great depression" don't you understand? Two of the top four investment banks have already failed and the other two have converted to bank holding companies and are being propped up by new infusions of billions in capital. Countrywide, the largest mortgage company failed. Fanny and Freddy, who provided most of the liquidity in the mortgage market, failed. AIG, the largest insurance company, failed. Wachovia, the 4th largest bank holding company, is being sold off before it fails. Washington Mutual, the largest S&L, failed. Have I left anyone out? Who will be the next domino? Would you rather wait until we are reduced to a barter economy before realizing that your wingnut libertarian principles are just not going to fix this?

[gdnp]

From Roubini's blog (http://www.rgemonitor.com/roubini-monitor/253853/financial_and_corporate_system_is_in_cardiac_arres t_the_risk_of_the_mother_of_all_bank_runs) yesterday:

It is now clear that the US financial system - and now even the system of financing of the corporate sector - is now in cardiac arrest and at a risk of a systemic financial meltdown. I don’t use these words lightly but at this point we have reached the final 12th step of my February paper on “The Risk of a Systemic Financial Meltdown: 12 Steps to a Financial Disaster” (Step 9 or the collapse of the major broker dealers has already widely occurred).

This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely.

This credit crisis is both a crisis of confidence and illiquidity and a crisis of credit and solvency. But while the insolvent institutions should go bust we have now reached a point where many financial institutions and now non financial firms may become insolvent because of pure illiquidity; and this would lead to an extremely severe economic contraction similar to an economic depression rather than a mild recession. At this point the US, the advanced economies (and now likely even some emerging market economies) will experience an ugly recession and an ugly financial and banking crisis regardless of what we do from now on. What radical policy action can only do is preventing what will now be an ugly and nasty two-year recession and financial crisis from turning into a systemic meltdown and a decade long economic depression. The financial and economic conditions are extreme; thus extreme policy action is needed now to save the global economy from an ugly depression.
You can argue with the solution chosen by the fed and the congress, but "letting the financial markets sort themselves out" does not appear to be a viable option.

[BenBurch]

gdnp;

Worst *since* eh? I think worst *ever* would be most accurate.

Back when the Great Depression hit most Americans were still on farms and could feed themselves without a whole lot of help from the economy. That has all changed. And we no longer have the factory jobs OR THE FACTORIES to put people back to work in.

We killed the goose that laid the golden eggs.

-Ben

[corplinx]

You can argue with the solution chosen by the fed and the congress, but "letting the financial markets sort themselves out" does not appear to be a viable option.

I don't see why the finance markets should have to sort it out since they didn't cause it. Doesn't the government have a duty (in light of the constant stream of discoveries about Mae/Mac and the congress) to step in?

My only problem is, accountability. Nobody in congress is going to resign over helping Mae/Mac underwrite these toxic loans and crashing the investment banks who bought the debt and turned them into MBS/COM.

[gdnp]

On the other hand, we have social safety nets in place that did not exist in the 20's. People at least should not starve.

I wonder what Ayn Rand had to say about depressions? Probably that they were caused by government interference and that if the capitalist system were just allowed to operate without interference they wouldn't happen. And free enterprise would somehow fund the soup kitchens.

[BenBurch]

I believe the Randites (and I used to be one) think that recovery would have actually been FASTER from the Great Depression without government intervention. They see it as a failure of intervention as opposed to a failure of capitalism.

[Meadmaker]

Reading blogs like Roubini's is enough to keep one awake at night.

[gdnp]

Reading blogs like Roubini's is enough to keep one awake at night.

A friend referred to his 12 steps to Systemic Financial Meltdown in early march. He was predicting a trillion in real estate losses while others were predicting much less. That trillion is now considered an underestimate. He predicted one or 2 investment bank failing. They did. He predicted the spread to fanny and freddy, with a government takeover because of the implicit guarantee and their position as "too big to fail". He predicted the insurance companies that insured the mortgage backed securities would fail, thus threatening the markets of the other bonds they insure, including municipal bonds. AIG failed. He predicted a liquidity crisis and runs on banks. We are seeing that now.

As was brought up in the VP debate when discussing global warming, when you don't know the cause it's hard to come up with solutions. Roubini at least seems to understand the cause, or at least understood the cause well enough to predict the unraveling of the financial system. I thus trust him more than others when he suggests possible solutions.

[corplinx]

I wonder what Ayn Rand had to say about depressions? Probably that they were caused by government interference and that if the capitalist system were just allowed to operate without interference they wouldn't happen. And free enterprise would somehow fund the soup kitchens.

Aren't most soup kitchens run by charities?

[BenBurch]

Aren't most soup kitchens run by charities?

You know who is often credited with having invented the whole concept, right?

Alphonse Capone.

Seriously.

[GreyICE]

I believe the Randites (and I used to be one) think that recovery would have actually been FASTER from the Great Depression without government intervention. They see it as a failure of intervention as opposed to a failure of capitalism. Well yes. The Randroids, however, are deeply insane. This point really cannot be overstated when attempting to wade through their nonsense.

All copies of Atlas Shrugged should come bundled with Beggars in Spain.

[corplinx]

To be fair, not every New Deal regulation sped up recovery. I think a reasonable person should be able to analyze what worked and what did not and come up without either being called a socialist for pointing out what did or a crazy Randroid for pointing out which did not.

[BenBurch]

Well yes. The Randroids, however, are deeply insane. This point really cannot be overstated when attempting to wade through their nonsense.

All copies of Atlas Shrugged should come bundled with Beggars in Spain.

Problem is that SOME things she was correct about, and that sucks people in. But they insist on taking her whole catechism as a "seamless garment."

[BeAChooser]

As gdnp has just pointed out, the market is presently evaluating those mortgages as essentially worthless.

The only reason the market is saying that is because it is waiting to see what the government does. The market has built in mechanisms for assessing value, if you let it operate as it can if left alone. Competition between potential buyers will be factor and help in properly doing that. The government actually has no such mechanisms for assessing value and eliminates competition in that process. The market would value each item individually ... but I read that the government bailout may entail lumping assets together at so many cents on the dollar and it being done arbitrarily by Paulson depending on how he feels at a given moment. Politics wouldn't figure much into a market solution but you can be sure it will play a major role in the government's bailout. As a result favoritism will enter the picture. We've already seen hints of that with some of Paulson's shenanigans. And the government bailout will also do nothing about the poor policies that created the problem in the first place. It won't change the underlying defect. A market solution would because it would put new people in charge and they would enact different policies.

[Dymanic]

The only reason the market is saying that is because it is waiting to see what the government does. Partly, but not the only reason. It depends on what a lot of things do. The unemployment rate. The price of oil. Some of the people who took those loans will be able to keep up with the payments; some of them won't. For those who are just barely keeping up now, the next spike in the price of food or gas or heating oil might be the straw that breaks the camel's back. The worse things get, the worse they'll get -- and if they get bad enough, it won't be just the marginal borrowers having trouble keeping up.

For now, the market has to assume that a lot of those loans will fail, and because it isn't easy to tell which ones they'll be, securities based on them must be regarded as highly suspect at best and essentially worthless at worst. As has been noted, it is partly a "crisis of confidence". The market is waiting to see what the market will do. Once a certain tipping point is reached, the whole thing becomes viciously self-perpetuating. The bailout is an attempt to break that cycle before it gets so much momentum that nothing could stop it. I hope it works, but I have to say that the phrase "Hail Mary pass" comes to mind.

[not_so_new]

The only reason the market is saying that is because it is waiting to see what the government does. The market has built in mechanisms for assessing value, if you let it operate as it can if left alone. Competition between potential buyers will be factor and help in properly doing that. The government actually has no such mechanisms for assessing value and eliminates competition in that process. The market would value each item individually ... but I read that the government bailout may entail lumping assets together at so many cents on the dollar and it being done arbitrarily by Paulson depending on how he feels at a given moment. Politics wouldn't figure much into a market solution but you can be sure it will play a major role in the government's bailout. As a result favoritism will enter the picture. We've already seen hints of that with some of Paulson's shenanigans. And the government bailout will also do nothing about the poor policies that created the problem in the first place. It won't change the underlying defect. A market solution would because it would put new people in charge and they would enact different policies.


Look.. here is the deal.

This is beyond politics, this is beyond finger pointing. This is SERIOUS.

There are people in the world of economics who say we have no idea what to expect because we are heading into uncharted waters. They don't know what the best course of action is and that leads me to believe that YOU don't know what is the best course of action either.

Is the bailout the solution? I don't know, no one does but I am willing to risk a little long term hurt in exchange for a GREAT BIG SMOKING hole in the head hurt that awaits us right around the corner if the credit markets don't start to loosen up and soon.

As Paulson said something like (not a direct quote) taxpayers will be paying for this mess regardless. The only question is whether we want to pay for it with fiscal spending (the Paulson plan) or lost revenue (a second Great Depression).

I for one don't want to risk just letting a little "market correction" take place. I am a tax payer and I am PO'ed about this mess but I want my tax dollars to go toward fixing it for the betterment of MY wallet and the nation.

As Warren Buffett said, "Well, I don’t think it’s perfect, but I don’t know that I could draw one that’s perfect. I’d rather be approximately right than precisely wrong, and it would be precisely wrong to turn it down."

[BeAChooser]

Bear Stearns failed in March. Why? subprime mortgage securities. How much time do you think the markets need to value these assets? That was 7 months ago.

What's your point? Bear Stearns failed because it engaged in foolish practices. Why's that my problem? In fact, Bear Stearns just proves my point. They were so stupid that they refused to sell out to larger firms when they got into trouble early on. Because the bad management wanted to stay in power, pulling in those great salaries. And when they failed, what happened? The government immediately stepped in, interferring with the process of determining asset values. IN MARCH the Fed agreed to fund $30 billion in Bear Stearn assets, rather than let the market deal with the problem itself. What changes took place in Bear Stearn's management and policies? Can you tell us? And apparently, that effort didn't really do much to stabilize the situation ... did it. Here we are being asked to hand over $700 billion more now. How much will they ask for next year, when again the basic problem isn't solved and the same people are still in control?

Because when the banks all fail the FDIC will have to bail out the depositors anyway.

And what makes you think banks are ALL going to fail if we let firms that made bad investments go bankrupt? Your fear? And who is promoting that fear? Or are you using that fear to try and promote an agenda ... making government bigger? Even if all the banks in the US collapsed and we decided to bail out depositors for everything they had in them (including the uninsured deposits), it still wouldn't cost us much more than the 700 billion dollars you folks want to steal from us now. Compare that to the total assets of US households in 2005 of 62.5 trillion dollars (according to wikipedia). And of course that isn't going to happen. It's just baseless fear.

Yours is the system that the Japanese tried after their real estate bubble burst.

WRONG.

http://www.cnbc.com/id/26441422


Bailout Plan Will Be Drag On Fragile US Economy

... snip ...

Hanke and other economists see some similarities with Japan’s decade-long economic malaise – combination of real estate asset bubble, banking crisis and misguided and expensive government intervention.

... snip ...

Most economists say the Japanese government made the mistake of extending the country’s financial problems by one form of intervention or the other – corporate aid packages, repeated stimulus packages with one-off tax rebates that consumers didn’t spend and ever lower interest rates. The stock market sank and then languished for years.


http://www.realclearpolitics.com/articles/2008/10/financial_bailout_would_impose.html


Why the Bailout is Bad for America

By Daniel Mitchell

The proposed bailout of the financial system is a misguided scheme that will hurt the U.S. economy in the short run and long run. The economy currently is stumbling as a consequence of a government-created housing bubble, but a bailout of companies, executives, and shareholders that made unwise decisions would, at best, extend the economy's adjustment process. More likely, the bailout would impose considerable additional economic damage because political factors would at least partially supplant market forces in determining the allocation of resources.

... snip ...

Japanese politicians made many of the same mistakes in the 1990s that American politicians today are considering, and the Nikkei suffered a lengthy period of decline - and remains today far below its peak level.

... snip ...

[b]The bailout repeats the mistakes Japan made in the 1990s. There are several historical episodes that indicate the dangers of government intervention to prop up a bubble. Japan faced a similar situation at the end of the 1980s, with real estate prices rising to absurd levels. The bubble then burst, but rather than let market forces operate, Japanese politicians sought to prop up both insolvent institution and asset prices. This interfered with the orderly reallocation of labor and capital, created considerable uncertainty, and contributed to a "lost decade" of economic stagnation.


Here's what your approach may do, gdnp:

http://finance.yahoo.com/tech-ticker/article/83221/Bailout-a-Done-Deal-So-What-Happens-Now?tickers=jpm,wfc,c,bac,gs,ms,^gspc


So What Happens After the Bailout?

... snip ...

October 1, 2008

... snip ...

- Hank Paulson & Co. survey the banking industry and decide who will stay and who will go. ... snip ...

- Within a month or two, Paulson buys $250 billion of worthless assets. ... snip ...

- Confidence improves modestly, but banks continue to hoard capital and credit markets stay tight. ... snip ...

- The credit crunch filters through to consumers ... snip ...

- The economic news continues to get worse ... snip ...

- The global economy continues to weaken: Europe, Asia, and, eventually, emerging markets ... snip ...

- The stock market continues to fall, as corporate earnings come under increasing pressure and hope for an early 2009 recovery fades ... snip ...

- The government enacts further measures to try to stop the fall in asset prices (stocks, houses)–including an expansion of the bailout plan–but these don’t work ... snip ...

- A new round of white-collar prosecutions send a new posse of corporate villains to jail. Some will be guilty ... snip ...

- The government announces a new New Deal ... snip ...

- Eventually, asset prices will bottom: Housing down 40% in real terms, the stock market down at least 50% ... snip ...

- Unlike Japan, we finally force our banks to write down assets as far as they need to be written down…and then recapitalize them ... snip ...

- We gradually begin a long-term economic recovery ... snip ...

- The stock market finally begins a new, long-term bull market ... snip ...


:D

BAC, what part of "worst financial crisis since the great depression" don't you understand?

gdnp, what part of Roosevelt's government intervention prolonged recovery in the Great Depression don't you understand?

http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409


FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate

http://www.usnews.com/articles/business/economy/2008/04/11/did-the-new-deal-work.html


In 1995, economist Robert Whaples of Wake Forest University published a survey of academic economists that asked them if they agreed with the statement, "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression." Fifty-one percent disagreed, and 49 percent agreed. Whaples today says that the New Deal remains a thorny issue for economists because it's so difficult to measure the effects it had on the country. "You need a credible model of the economy, and not everyone is going to agree on what that model should be," he says.

Yet most economists, including defenders of the New Deal, do agree that Roosevelt's policies were far from perfect. The National Industrial Recovery Act of 1933, in particular, gets a lot of blame. It created the National Recovery Administration, a federal bureaucracy that limited competition in various industries by setting prices and wages above market levels. The ensuing upward pressure on the price of goods and unemployment may have turned a bad situation worse.

... snip ...

One explanation is that in addition to the harm done by the restrictions imposed by the NRA, the "soak the rich" rhetoric coming from the Roosevelt administration had a chilling effect on economic growth by making people fear for their property rights. Who knows, maybe Uncle Sam would just start wholesale confiscation of the fortunes of America's wealthy or the nationalization of industries—Americans were already observing that going on across the pond with the rise of communism in Russia and fascism in Europe. This uncertainty, along with a jump in the top federal income tax rate from 25 percent in 1931 to 79 percent in 1936, may have deterred investment.


Does that last sound familiar, gdnp? It should, if you've been paying attention to the rhetoric coming from the Obama camp. Maybe the worst thing we could do is add Obama's agenda to this already dire situation. :D

[BeAChooser]

Here's the real crisis in confidence, gdnp:

http://www.youtube.com/watch?v=NU6fuFrdCJY "Burning Down The House: What Caused Our Economic Crisis? V2"

:D

[BeAChooser]

My only problem is, accountability.

Speaking of which, I notice not one of you had a thing to say on this thread:

http://forums.randi.org/showthread.php?t=125511

Why am I skeptical that you folks really have a problem with lack of "accountability"? :rolleyes:

[Matteo Martini]

Obama asked in the debate, "how did we get into this situation in the first place?" Good question. Who really is responsible for getting us in this mortgage mess? Republicans or Democrats? McCain or Obama? [..]

Both.
America spends too much money in their military, this is why their economy is not going well.
China is not spending much on the military, so their economy is growing 10% a year

[BeAChooser]

As has been noted, it is partly a "crisis of confidence".

See post #110.

The market is waiting to see what the market will do.

No, the market is waiting to see what the government will do. If the government had stated from the beginning there'd be no bailouts, we'd already be a long way down the road to eventual recovery. Commercial entities would be stepping in to buy those assets with any value. The way it is now, it sounds like even you ... the advocates of this government bailout ... have your fingers crossed over a hail mary pass ... that in all likelihood won't work. We KNOW the market can deal with bankruptcies and risk and asset evaluation in an efficient manner. I see few examples where government has accomplished what it said it would do in an efficient manner and without all sorts of unintended consequences. Do you?

[BeAChooser]

This is beyond politics, this is beyond finger pointing.

Of course you'd say that since democrats and their constituents are the people who mostly caused this problem.

There are people in the world of economics who say we have no idea what to expect because we are heading into uncharted waters.

But the market dealing with bankruptcies is not uncharted water. It has happened every day for hundreds of years. What is uncharted is the government bailout. You are right. The government does NOT know how to handle a problem like this since it has no time tested mechanisms for doing it. And most examples in the past of government interference have only made matters worse. The government (mostly democrats) assured us 45 years ago that they were going to solve the problem of poverty in the US. More than 10 trillion dollars later, the problem is still with us and just as many people are called poor now as were called poor then. The government assured us it would solve the problem of drugs decades ago. They didn't did they and it could even be argued that they've only made matters worse. And in the 1990's the government assured us they were going to solve the problem of home ownership for the poor and minorities. And look where we are now. Why do ANY of you have ANY confidence that government is now the answer ... especially since government interference in the market caused this problem in the first place? Are you just stuck on stupid? Watch that video clip on burning down the house that I linked above and then try to convince me government and democrat interference in the housing market is not what created this mess. And you are ok with giving a trillion dollars to the very people who did it, hoping they will now fix the mess. I have a bridge to sell you. :D

Is the bailout the solution? I don't know

Wow! And yet you want us to hand a trillion dollars to the people who created this problem in the first place. You must think us idiots.

I am willing to risk a little long term hurt

As long as it's not the people who caused this problem (mostly democrats) doing the hurting? How generous of you.

if the credit markets don't start to loosen up and soon.

And why hasn't the credit market loosened up? Because of government interference. Because of fear promoted by democrats in an election year.

As Paulson said something like (not a direct quote) taxpayers will be paying for this mess regardless.

That does not give Paulson the right to put his hand in my pocket. *I* am willing to take my chances and pay later IF NEED BE. What Paulson is doing is EXTORTING money from us ... at gunpoint (called the IRS). Paulson is part of the problem and his own corruption is evident in some of things he's been doing.

or lost revenue (a second Great Depression)

You are just playing on our fears. I thought you democrats objected to Bush and the Republicans playing on the publics fears? The Great Depression and this event are not similar. There wasn't 65 trillion dollars in household assets in America back then. There is now. :D

I for one don't want to risk just letting a little "market correction" take place.

See? It's like I've said all along. You folks don't believe in the free market or private property or capitalism. You just give those things lip service. That's now obvious. You believe in socialism. Or communism. You believe you can TAKE money from me to keep someone else from paying for their mistakes and bad judgement. Tell me, are you going to ensure that NO bankruptcies occur in the US? Because the majority of small businesses, which form the backbone of America, go bankrupt. Oh the pain that causes. Seems to me you should be equally compassionate to those people as you are to the people who got us into this mess.

I am a tax payer and I am PO'ed about this mess but I want my tax dollars to go toward fixing it for the betterment of MY wallet and the nation.

Obviously you aren't that PO'ed because I think you know as well as I do that in all likelihood government will NOT fix this problem. They'll only delay its actual resolution and probably make it worse. Let me ask you this. Are you willing to eliminate the activities that caused this to occur in the first place? Social engineering to promote home ownership amongst people who did not have the financial basis to own a home? Are you willing to punish those people who abused the system ... like Raines? Are you willing to throw the people who ignored this problem until it was critical (like Barney Frank and Maxine Waters) out of office? Let's test how PO'ed you really are. :D

[BeAChooser]

China is not spending much on the military

http://en.wikipedia.org/wiki/Military_budget_of_the_United_States


The United States spends 3.7% of its GDP on its military, less than China's 11%, more than France's 2.6% and less than Saudi Arabia's 10%.[8] This is historically low for the United States since it peaked in 1944 at 37.8% of GDP (it reached the lowest point of 3.0% in 1999-2001). Even during the peak of the Vietnam War the percentage reached a high of 9.4% in 1968.[9]

[Meadmaker]

Google is such an amazing thing. I got to wondering about the role of FHA loans in this mess. I was always suspicious of a program that made it easier for people to buy houses when they couldn’t afford a downpayment. I was a 20% down sort of guy myself.

Anyway, I stumbled upon this particular liberal initiative:

http://www.whitehouse.gov/news/releases/2003/12/20031216-9.html

So, here was this big liberal at the White House, surrounded by other liberals like Jim Leach and Katharine Harris, all touting their plans to increase minority home ownership. This was 2003, just as the loans were about to be issued that would cause us so much grief today.

I really know very little about this legislation. Was it bipartisan? There were no Democrats whose names I recognized at the signing ceremony.

Here’s an analysis with one paragraph that really caught my eye:


http://iarnuocon.newsvine.com/_news/2008/10/01/1940028-the-republican-roots-of-the-subprime-crisis


President Bush's "America's Home Ownership Challenge" pushed the private lending sector (as well as Fannie Mae and Freddie Mac) to make more than 5.5 million new minority and low income mortgage loans. To meet his challenge to the private lending industry, twenty four of our largest banking and lending companies pledged to make 1.1 trillion dollars in low income and minority loans. Bush's "America's Home Ownership Challenge" pushed private lenders to "create more creative" loan products, and encouraged them to "loosen underwriting standards."

What caught my eye was were the quoted sections about “more creative” loan products, which I had seen referenced elsewhere, and also “loosen underwriting standards”.

Creative load products with loose underwriting standards were indeed the cause of this problem. Did the Republican sponsored and signed bill create, encourage, or expand these practices. Did Democrats support or oppose this legislation? I don’t know. Is the opinion piece quoted above even accurate? Again, I don’t know.

Google On! I will report back results.

[Meadmaker]

duplicate post removed.

[Dymanic]

The way it is now, it sounds like even you ... the advocates of this government bailout ... have your fingers crossed over a hail mary pass ... that in all likelihood won't work.That seems like a fairly reasonable assessment. As I've said, I don't see anyone really being in love with this thing. I'm not sure I'm ready to be counted as an "advocate" of the bailout -- I'm an opponent of doing nothing. The most I'm hoping for is that it may buy some time.

We KNOW the market can deal with bankruptcies and risk and asset evaluation in an efficient manner.
When a hurricane makes landfall somewhere on the US coast, we can deal with that in an efficient manner (for some values of "efficient"). If every major city in the country were hit by a hurricane on the same day, that would be an entirely different matter. If our credit system fails, WE KNOW the market can't deal with that. Help won't be coming from anywhere, because everybody will be dealing with their own problems.

[boloboffin]

Well. Barney Frank in 2003 said that Fannie Mae and Freddie Mac weren't in a crisis. He did this when the Republican Treasury Secretary John Snow was proposing new regulation of the two GSEs.

As in, switching regulation from HUD to Treasury.

And the thing is (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_house_hearings&docid=f:92231.wais), John Snow agreed with Frank.

Mr. Frank. I agree, Mr. Secretary, but here is my point. I think Treasury is going to be the big brother here, and if one set of goals is in Treasury and the other set is in HUD, I worry about an institutional disadvantage for the set of goals that are important to me.

Let me, with that, turn to the Secretary of the Treasury, because what I am struck by here is what is not in here; and I am glad it is not in here. We have heard descriptions of the situation regarding GSEs as a great crisis and an imminent threat to financial stability. This does not change the essential relationship of the GSEs legally. I am not for changing that, but I think we ought to note that this is not a document put forth by people who think that the sky is about to fall or that we are going to have serious damage; and I am struck by that moderate quality.

Let me ask you, Mr. Secretary -- and again I appreciate that there is not a lot of rhetoric in here about how terrible these are. I appreciate that you think we should enhance the regulation, but I get the impression that you were talking more about guarding against potential future problems developing, rather than feeling that there is an urgent need to stave off some crisis.

Are we in a crisis now with these entities?

Secretary Snow. No, that is a fair characterization, Congressman Frank, of our position. We are not putting this proposal before you because of some concern over some imminent danger to the financial system for housing; far from it. Rather what we are saying is, since 1992, or whenever it was that OFHEO was established by statute, over a decade ago, these housing markets have developed.

Mr. Frank. Getting bigger.

Secretary Snow. Huge. Hugely. And those entities have grown and become now very large players on the whole financial landscape of the United States. We just feel it is time to----

Mr. Frank. Good. I think it is important to have that, to make it clear that that is the context.

[Meadmaker]

I really know very little about this legislation. Was it bipartisan?

Answer: It passed by unanimous vote in both houses.

One problem with google is that it is great for search for obscure information, or for not so obscure, but non controversial, information, where there is likely to be a wikipedia article.

In this case, it was hard to get past the opinion pieces.

What I was looking for was exactly where the President, as part of his "America's Home Ownership Challenge", actually changed regulations, initiated legislation, or really did anything at all beyond give lip service to the issue. I found a few things, like the above legislation, that were aimed at making homes more affordable among low income, especially low income minorities.

I found something called the single family home ownership tax credit, but to be honest, the articles all talked about the "proposed" tax credit. I couldn't tell if it ever passed. It gave tax credits to home builders building 1 to four unit buildings in distressed neighborhoods. Targeted tax credits are, apparently, part of the "free market".

One specific modification, made in 2004, was to eliminate the debt to asset ratio required for investment banks. That seems like a collossally bad idea, and it doesn't seem to have worked out so well.

What I was really looking for was something to substantiate the charge that deregulation caused the subprime mess. I found lots to confirm what everyone already knew. The subprime mess was caused when lots of people borrowed lots of money they couldn't afford to pay back. This happened at all levels of income and housing prices. Suddenly, people started making loans without the traditional requirements of down payments and income verification. The President supported at least the initiatives to lower down payment requirements, eliminating the 3% downpayment minimum for an FHA insured loan. That strikes me as another awful idea, but I doubt the Democrats complained about it

I found one reference, but no specifics, about Bush loosening the oversight of the credit default swap market. That's what brought AIG down.

Meanwhile, issuance of mortgage backed securities started buying these toxic loans, while previously they had avoided them.

So, why did it happen during this decade, when previously, it hadn't? Did the Bush administration repeal existing regulations? Did it fail to enforce existing regulations? Did it fail to react when new institutions sprang up, that skirted existing regulations? Or was it just sudden changes in market psychology?

At any rate, the train wreck was easy to see coming, and the engineers were asleep at the switch.

[BeAChooser]

ROTFLOL! Meadmaker "stumbles" upon the "American Dream Downpayment Act" and wonders if it was bipartisan. And apparently doesn't know what it was all about. He's just thinks he has a "gotcha". But he doesn't.

First of all, this Act was small potatoes. The Act authorized up to $200 million annually for fiscal years 2004 - 2007 (http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/ ). Barely half a billion dollars over 4 years. Meanwhile, corrupt democrats like Franklin Raines and Jamie Gorelick stole almost $100 million out of the system at Fannie Mae while cooking the books and selling hundreds of billions of dollars in mortgages that would never have been sold (because they were sure to fail at the first downturn in the economy) had the democrats gone along with the various bills that republicans submitted calling for increased oversight and regulation of Fannie and Freddie.

Furthermore, this Act didn't authorize the giveaway of houses to poor and minorities with zero down payment, which is essentially what the democrats were routinely doing to buy votes. Nor was it intended to help greedy people (like the woman I noted earlier) who were buying multiple homes or flipping houses in risky get-rich quick schemes. As the above link states: "ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. ... snip ... The amount of ADDI assistance provided may not exceed $10,000 or six percent of the purchase price of the home, whichever is greater." And some of this assistance was also aimed at rehabilitation of properties to remove lead paint and other home health hazards. The Act actually sounds like admirable legislation ... not a *gotcha*.

Which is why it passed unanimously in both houses.

[BeAChooser]

So, why did it happen during this decade, when previously, it hadn't?

As noted before, this decade saw a sharp downturn in the economy whereas that didn't happen in the previous decade. Meadmaker is right in that a number of people saw it coming around 2000-2005. Mostly republicans. And democrats mostly refused to listen then. So the answer to the OP is contained therein. :D

[Meadmaker]

ROTFLOL! Meadmaker "stumbles" upon the "American Dream Downpayment Act" and wonders if it was bipartisan. And apparently doesn't know what it was all about. He's just thinks he has a "gotcha". But he doesn't.



I want you to reexamine your worldview for just a moment, and consider the possiblity that sometimes, a person asks a question because he wants to know the answer. This may take some time to wrap your mind around, but it has been known to happen.

This legislation was part of "America's Home Ownership Challenge", and if the White House press releases related to it are to be believed, it was anything but small potatoes. President Bush's goals were 5.5 million new homeowners and 1.1 trillion dollars in new loans. (I don't know exactly how that was measured. I remember the figure of 1.1 trillion from a White House press release.)

My question is what did he do to accomplish that. Legislation like the ADDI is indeed "small potatoes", so what was he doing to achieve the goals?

[Meadmaker]

Meadmaker is right in that a number of people saw it coming around 2000-2005. Mostly republicans. And democrats mostly refused to listen then. So the answer to the OP is contained therein. :D

In the press release for the signing of ADDI, President Bush was bragging about the 2.5 trillion dollars in new equity Americans had achieved. Apparently, President Bush wasn't one of the people who saw this coming. He thought it was just great.

[BeAChooser]

Mr. Frank. ... snip ... Are we in a crisis now with these entities?

Secretary Snow. No, that is a fair characterization, Congressman Frank, of our position. We are not putting this proposal before you because of some concern over some imminent danger to the financial system for housing; far from it.


Well obviously, there wasn't an imminent crisis (i.e., GSEs weren't going to fail in the next day or month) but that doesn't mean Secretary Snow was wrong about the need for the legislation. History has proven him absolutely right and Frank absolutely wrong. Had that legislation been passed, we probably wouldn't be in the mess we are right now and almost certainly Fannie and Freddie would not have collapsed.

And isn't it ironic that democrats, who chastised Bush for Iraq saying it was not an imminent threat (which, by the way, Bush never did claim), are here trying to make excuses for Barney Franks (who did indeed profit from GSEs) by using a statement from Secretary Snow's saying this crisis wasn't imminent. Now if Secretary Snow could be right about the need to do something about GSE's because of concerns about where we'd be a few years down the road, then why couldn't Bush have been right about the need to do something about Saddam because of concerns of where we'd be if we didn't a few years down the road? :D

[BeAChooser]

Maybe Bush just thought he could play nice with the democrats and minorities and they'd like him. Maybe Bush decided to trade supporting a democrat agenda (CRA) for his own (Iraq and the WOT). Or maybe Bush was just as dumb as you democrats have claimed for 8 years. But what was Obama's excuse? Since we're told he's soooooooo smart. :D

[Darat]

Interesting to see even on a forum like this how the support for Bush has fallen away as he is consigned to the past.

[boloboffin]

BeAChooser, is it at all possible that this (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html) had something more to do with this crisis than what you're exercised about?

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

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. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Eliot Spitzer published that in the Washington Post the day after he visited the prostitute in Washington, the one that drug down his administration. How about that?

[BeAChooser]

BeAChooser, is it at all possible that this (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html) had something more to do with this crisis than what you're exercised about?

Boloboffin, I'm not here to defend the actions of the Bush administration. I'm sure they have ties to special interests in the banking and housing areas. All politicians do. And Bush isn't running for President.

I'm here to point out that Obama LIED when he said McCain and republicans had done nothing before this latest crisis to deal with the problems that led to the collapse of Fannie and Freddie and other lenders. They did, as I clearly showed. Many experts agree that if the legislation they proposed back in 2003 through 2006 had been passed, Fannie and Freddie would probably not have collapsed and we wouldn't be in the mess we are right now. Now do you have anything to indicate that McCain was involved in this scandal that Spitzer alleges?

But as always, when dealing with a democrat, there are two sides to a story. Here's the other side. :D

http://www.occ.gov/ftp/release/2008-16.htm


Comptroller of the Currency John C. Dugan issued the following statement today, responding to comments from New York Governor Eliot Spitzer:

Almost everyone who has paid attention to the subprime lending crisis has concluded that OCC-regulated national banks were not the problem. Instead, the worst abuses came from loans originated by state-licensed mortgage brokers and lenders that are exclusively the responsibility of state regulators.

However, comments from today assert that the OCC and national bank preemption have prevented the states from taking action against predatory or abusive lenders. That’s just plain wrong.

The OCC extensively regulates the activities of national banks, including mortgage lending. The OCC established strong protections against predatory lending practices years ago, and has applied those standards through examinations of every national bank. As a result, predatory mortgage lenders have avoided national banks like the plague. The abuses consumers have complained about most — such as loan flipping and equity stripping — are not tolerated in the national banking system. And the looser lending practices of the subprime market simply have not gravitated to national banks: They originated just 10% of subprime loans in 2006, when underwriting standards were weakest, and delinquency rates on those loans are well below the national average.

Nothing the OCC has done has prevented the states from regulating and preventing abuses among the lenders that they license – lenders that are the source of most of today’s problems. The states have ample authority – as well as clear responsibility – to set standards for these lenders and enforce them. It defies logic to argue that preemption was an impediment. National banks are bound to obey the strict standards enforced by the OCC everywhere they operate – even in states that had far less rigorous standards. The states should have applied equally rigorous standards to the non-bank lenders that were responsible for the bulk of the problems.



:D

[Meadmaker]

So I've been doing some research, and I stumbled on some stuff. I was trying to figure out whether deregulation caused this mess. If so, there would have be examples of regulation that was repealed.

There weren't many such regulations. On the other hand, there seems to have been an absence of effective regulatory changes to reflect changes in the market. Also, a few regulatory changes seem to have been key.

In particular, the bailout of AIG was prompted when it collapsed, which collapse was caused largely through a huge loss in "credit default swaps", which were basically a means of insuring against losses in mortgage backed securities. Phil Gramm et. al. had managed to push through a bill, signed by President Clinton in the final days of his administration, that specifically prohibited regulation of credit default swaps.

That struck me as odd. A bill that specifically prohibited future regulation? Something didn't smell right. I can understand why you might not want regulation, but to actively prohibit future regulation seemed like something a bit odd for a legislative action. What was the deal with these things, that would make them outside the realm of future regulation.

Some research led me to the concept of "market discipline". That's just a term that meant that the market would punish bad business decisions. Run you business badly, and your stock goes down. However, this crowd seems to have gone farther than that. It seems there is a great deal of academic theory, some of which seems to have crept into regulatory agencies and legislative agendas, that says that market discipline can actually be a substitute for regulation.

Here's how it works. Suppose a company issues a bond. They'll want that bond to be high priced. The value of a bond will be based on its coupon, plus a factor based on a risk of default. When investors think the company may default, the bond price goes down. So, the theory goes, there's no need for a regulator to go in and audit the company, such as a bank, to see if it might fail. The "free market" is already doing that. Bond traders will wisely make sure they are accurately pricing the bonds issued by the bank, and the yield on the bonds will be a sure signal to investors that there is a risk of default. Furthermore, the bank will do anything in their power to prevent that.

Credit default swaps were another place where "market discipline" was supposed to work. If it was costly to insure your bonds against failure, there must be something wrong with your bonds. If the feds were to impose regulation on the issuance of credit default swaps, that would interfere with the operation of the free market in imposing market discipline.

I learned a lot in this investigation. Try to work through what "subordinated debt" is, it's role as a tool in "market discpline", and why it was allowed to be counted as capital. You'll learn a lot, too.

So there's no need to regulate banks, or securities, because the free market will provide all the regulation necessary.

How's that theory working out?

[Darat]

...snip....

So there's no need to regulate banks, or securities, because the free market will provide all the regulation necessary.

How's that theory working out?

Actually I think it would work very well if the various governments didn't keep trying to meddle with it. Very quickly many banks and financial companies and institutions worldwide would go under, a few would pick up some very cheap assets and then sit on them.

Of course that might mean most people lose all their savings and so on but hey that's the free-market working!

Quite seriously what we are seeing is the one thing that "free market" fanatics (note I do not mean people like me that think that a free market approach can often be the optimal if not the best way, but those that want a totally unfettered, unregulated free market for everything) blithely ignore - the human cost of the free market - the free market does not value people in the way we like to be valued!

[GreyICE]

It's interesting that the OCC says that their standards are so much more stringent when the 2003 change prevented states from applying their laws to the national banks. If their rules were so much more stringent, what was the problem?

[Meadmaker]

Actually I think it would work very well if the various governments didn't keep trying to meddle with it. Very quickly many banks and financial companies and institutions worldwide would go under, a few would pick up some very cheap assets and then sit on them.

Of course that might mean most people lose all their savings and so on but hey that's the free-market working!

Quite seriously what we are seeing is the one thing that "free market" fanatics (note I do not mean people like me that think that a free market approach can often be the optimal if not the best way, but those that want a totally unfettered, unregulated free market for everything) blithely ignore - the human cost of the free market - the free market does not value people in the way we like to be valued!

You had me going there with your first paragraph.

That is indeed the whole problem of the free market. It's all very well to say that your neighbor's bankruptcy is the fault of poor decisions, and just a natural consequence of the free market at work, but it makes for a lousy neighborhood. And if your neighbor happens to be 72 years old when she makes the bad decisions, saying "too bad for you" just doesn't seem to be an adequate response.

[BeAChooser]

That is indeed the whole problem of the free market.

Well at least the liberals here aren't pretending to believe in the free market system any longer. At least Obama's run has gotten them to be honest about that. They must be confident he's going to win. And maybe he will given that the media is clearly on his side and how foolish/gullible Americans seem. Wonder what that portends for the future, folks. Utopia? I sort of doubt it, looking at history. I rather think it will be a bad case of Beggars and Choosers with the Beggars in charge. Sweet nightmares. :D

[Meadmaker]

Well at least the liberals here aren't pretending to believe in the free market system any longer. :rolleyes: