40 Years of Class Warfare in One Chart.

[Dad2three]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

Let me just clarify.... I don't want to imply you are saying something that you are not.

FDsys - Browse Code of Federal Regulations Annual Edition

This web site is the Federal Code of Regulations, for the year 2000.

If you scroll down to Title 12, Banks and Banking, you will discover that the regulations come in a 6 Volume set. If you download all 6 volumes, (as I have done), you will discovered over 4,000 pages of regulations on virtually all aspects of banking.

In addition, you will discovered several government bodies created to monitor banks, including Federal Financing Bank, Federal Housing Finance Board, Department of the Treasury which has it's own regulations, FDIC which has it's own regulations, and lastly Comptroller of the Currency which has it's own regulations.

But wait! There's more!

Moving down to Title 17, you'll find a three volume set, containing over 2,400 pages exclusively to regulation on securities.
Then moving to Title 24, you'll find another three volumes, of just under 1500 pages, and while they are not all related to mortgage securities, some are, such as Government National Mortgage Association, Office of Assistant Secretary for Housing, and Office of Housing and Office of Multifamily Housing Assistance Restructuring, each with their own various regulations that must be followed.

And of course, if you wish to claim that the roughly 8,000 pages of regulations that existed back in 2000, regulating and over-seeing every aspect of banks was just far too limited and modest.....

Lawriter - ORC - Title 11 XI FINANCIAL INSTITUTIONS

Let us add in State Level banking regulations as well. Ohio Revised Code, Title 11, contains no less than 80 Chapters regulating banks. That's just Ohio Revised Code. Many states have more regulations than Ohio.


Now.... Allow me to ask again.... Are you saying that the banks and mortgage backed securities were not regulated?

Can you say wall street, the five investment banks that lead this?

 

[Dad2three]

Try to show how much better F/F performed from my links George, keep up the fight against the low informed and liars!

I suspect the short-term prospects for success in the fight you mentioned depend on whether or not it is accurate to say Fannie and Freddie were/are themselves credit rating agencies or did the GSEs depend on private for-profit institutions like S&P?

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Read the article again. Freddie Mac securitized the sub-prime mortgages BEFORE they ever gave the securities to rating agencies to be rated.

This is completely backwards of how mortgage backed securities worked to that point. Normally, you come up with a mortgage backed security, have it rated first, and then *IF* the rating is good, then you guarantee it.

Freddie Mac guaranteed these things first.

Now let me ask you.... if you have a mortgage backed security that ALREADY is guaranteed by Freddie Mac, which is the Federal Government.... what rating do you think it has? AAA. The Government guaranteed it. You can't lose money on that.

See, once Freddie Mac guaranteed the sub-prime loans, it was no longer about the credit worthiness of the loans, but rather the credit worthiness of Freddie Mac. It's the same as co-signing on a loan for your teenage daughter, who's never worked a steady job in her life. They are not rating her ability to pay... even though she's getting the money. They are rating YOUR ability to pay.

So, why didn't they notice that F/F were not credit worthy?

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Check out John Allison's book. He details how F/F misled the rating agencies.

Conservatives Can’t Escape Blame for the Financial Crisis

The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation. As the crisis quickly spiraled out of control, it quickly became apparent that the massive credit bubble of the mid-2000s, followed by the inevitable bust that culminated with the financial markets freeze in the fall of 2008, occurred predominantly among those parts of the financial system that were least regulated, or where regulations existed but were largely unenforced.

Predictably, many conservatives sought to blame the bogeymen they always blamed. In March of 2008, Sen. Jon Kyl (R-AZ) blamed loans “to the minorities, to the poor, to the young” as causing foreclosures. Not long after, conservative commentator Michele Malkin went so far as to claim that illegal immigration caused the crisis.

This tendency to shift blame to minorities and poor people for the financial crisis soon developed into a well-honed narrative on the right.


Politics Most Blatant Center for American Progress


Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse

FACTS on Dubya s great recession US Message Board - Political Discussion Forum

 

[kiwiman127]

Using productivity as a barometer really can't be taken seriously with all the advancements in technology/automation; etc.
But it is still a fact that wages have been flat in Real Dollars (after inflation) for the working class. It's a fact that the working classes share of the National Income has been at record lows, while the uber-wealthy have seen their percentage of the National Income increase to record levels.
It's also a fact that many chuckling about flat wages claim don't realize that they too have been seeing flat wages, their problem is that they look a nominal dollars instead of Real Dollars, thus they are fooling themselves into thinking that the long-term flat wage phenomenon doesn't include them. So they jump on the bandwagon on those who defend those who are profiting greatly by flat wages.
I have a clue for those folks. Go back and look at your wages over the years. Then go use the CPI to figure where you are today verses a decade or better 2 decades and if you have guts, go back to the 80's.
This link will help you out.
How to Use the Consumer Price Index for Escalation

 

[EdwardBaiamonte]

Bush’s logic of abandoning the free market to

too stupid you should love Bush's logic since he was a liberal!! FDR was another huge liberal who thought the same way.

" How FDR saved capitalism in eight days. By David Greenberg"

Feel silly yet??

 

[EdwardBaiamonte]

occurred predominantly among those parts of the financial system that were least regulated,

of course thats idiotic and liberal since there were 132 govt programs to get people into homes the Republican free market said they could not afford, and that is not to mention the liberal Fed printing the money without which there would have been no money to buy and bid up prices making the bubble.

Simple but way way over a liberal's tiny brain.

 

[georgephillip]

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Who gave them a AAA rating?
Private rating agencies paid by investment banks?
Do you have any links?

 

[georgephillip]

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

"The #1 Wall Street Journal Bestseller

“Required reading. . . . Shows how our economic crisis was a failure, not of the free market, but of government.”
—Charles Koch, Chairman and CEO, Koch Industries, Inc.

“The Financial Crisis and the Free Market Cure is a sophisticated yet accessible analysis of the causes and solutions to America’s financial meltdown.”
—Ed Crane, President Emeritus of the Cato Institute"

Who lied?

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

 

[georgephillip]

Yes, I'm beginning to see that I have over-estimated many things on this thread, and people. My apologies.

 

[Andylusion]

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Who gave them a AAA rating?
Private rating agencies paid by investment banks?
Do you have any links?

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

By the way, did you notice which two banks signed this deal with Freddie Mac to guarantee sub-prime mortgage backed securities?
Bear Stearns..... shocking.... and First Union, which was bought out by.... Wachovia. Interesting? If the mortgages by the GSEs were safe.... odd how the first two banks to sign up for the Freddie Fannie plan, were in the first few big failures.

Now you did bring up the point that rating agencies are paid by the person providing the security, rather than the person who is buying the security.

That's true.

Again, if you read the book:
http://www.amazon.com/Financial-Crisis-Free-Market-Cure/dp/0071806776&tag=ff0d01-20

One of the historical details he covers is that issue. Because in the beginning of rating agencies, banks and sellers never paid to have their securities rated. Buyers did, because buyers are who cared.

So how did this change? Regulation. You knew that was coming.

See in the 1970s, government decided to create laws controlling how specifically pension funds worked. The funds could no longer buy securities off the market, unless they were rated.

It was actually the government, and union, and railroad pension funds themselves, that demanded the change. Why? Because this forced the sellers of securities to pay for their own rating. Why did it force them? Because without a rating, they could not be purchased by the biggest buyers of securities.... pension funds.

Now that seems counter intuitive. But there is a logic behind it. If all the securities are rated, at the cost of the sellers... guess who doesn't have to cough up the money? The pension funds The Union Funds, Government Funds, and Railroad Funds, didn't want to have to pay rating agencies for ratings. So they had the law written to force sellers of securities, to pay to rate their own securities.

Also, have you ever wondered why there are only three big rating agencies? The law required that pension funds not only buy rated securities, but rated by Government approved agencies. There used to be dozens of rating agencies, but government only approved a few, and the first three were...... S&P, Moody's, and Fitch.

Again, it's amazing how it all circles back around to government.

 

[Andylusion]

Yes, I'm beginning to see that I have over-estimated many things on this thread, and people. My apologies.

Are you seriously showing that's what is on your computer screen, and you don't know what to do?

 

[Andylusion]

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

"The #1 Wall Street Journal Bestseller

“Required reading. . . . Shows how our economic crisis was a failure, not of the free market, but of government.”
—Charles Koch, Chairman and CEO, Koch Industries, Inc.

“The Financial Crisis and the Free Market Cure is a sophisticated yet accessible analysis of the causes and solutions to America’s financial meltdown.”
—Ed Crane, President Emeritus of the Cato Institute"

Who lied?

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Freddie and Fannie. You just cited some of the data that shows this.

 

[Dad2three]

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Who gave them a AAA rating?
Private rating agencies paid by investment banks?
Do you have any links?

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

By the way, did you notice which two banks signed this deal with Freddie Mac to guarantee sub-prime mortgage backed securities?
Bear Stearns..... shocking.... and First Union, which was bought out by.... Wachovia. Interesting? If the mortgages by the GSEs were safe.... odd how the first two banks to sign up for the Freddie Fannie plan, were in the first few big failures.

Now you did bring up the point that rating agencies are paid by the person providing the security, rather than the person who is buying the security.

That's true.

Again, if you read the book:
The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

One of the historical details he covers is that issue. Because in the beginning of rating agencies, banks and sellers never paid to have their securities rated. Buyers did, because buyers are who cared.

So how did this change? Regulation. You knew that was coming.

See in the 1970s, government decided to create laws controlling how specifically pension funds worked. The funds could no longer buy securities off the market, unless they were rated.

It was actually the government, and union, and railroad pension funds themselves, that demanded the change. Why? Because this forced the sellers of securities to pay for their own rating. Why did it force them? Because without a rating, they could not be purchased by the biggest buyers of securities.... pension funds.

Now that seems counter intuitive. But there is a logic behind it. If all the securities are rated, at the cost of the sellers... guess who doesn't have to cough up the money? The pension funds The Union Funds, Government Funds, and Railroad Funds, didn't want to have to pay rating agencies for ratings. So they had the law written to force sellers of securities, to pay to rate their own securities.

Also, have you ever wondered why there are only three big rating agencies? The law required that pension funds not only buy rated securities, but rated by Government approved agencies. There used to be dozens of rating agencies, but government only approved a few, and the first three were...... S&P, Moody's, and Fitch.

Again, it's amazing how it all circles back around to government.

Why would we believe your link from the free market apologists who created the MYTH that it was Gov't involvement in a WORLD WIDE CREDIT BUBBLE AND BUST? One cheered on by Dubya in the US?

Jun 16, 2005


The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops



NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.

The global housing boom In come the waves The Economist




What caused the financial crisis? The Big Lie goes viral

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

What caused the financial crisis The Big Lie goes viral - The Washington Post

Examining the big lie: How the facts of the economic crisis stack up

The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”


Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.

Private lenders not subject to congressional regulations collapsed lending standards.

Examining the big lie How the facts of the economic crisis stack up - The Washington Post

 

[Dad2three]

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Who gave them a AAA rating?
Private rating agencies paid by investment banks?
Do you have any links?

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

By the way, did you notice which two banks signed this deal with Freddie Mac to guarantee sub-prime mortgage backed securities?
Bear Stearns..... shocking.... and First Union, which was bought out by.... Wachovia. Interesting? If the mortgages by the GSEs were safe.... odd how the first two banks to sign up for the Freddie Fannie plan, were in the first few big failures.

Now you did bring up the point that rating agencies are paid by the person providing the security, rather than the person who is buying the security.

That's true.

Again, if you read the book:
http://www.amazon.com/Financial-Crisis-Free-Market-Cure/dp/0071806776&tag=ff0d01-20

One of the historical details he covers is that issue. Because in the beginning of rating agencies, banks and sellers never paid to have their securities rated. Buyers did, because buyers are who cared.

So how did this change? Regulation. You knew that was coming.

See in the 1970s, government decided to create laws controlling how specifically pension funds worked. The funds could no longer buy securities off the market, unless they were rated.

It was actually the government, and union, and railroad pension funds themselves, that demanded the change. Why? Because this forced the sellers of securities to pay for their own rating. Why did it force them? Because without a rating, they could not be purchased by the biggest buyers of securities.... pension funds.

Now that seems counter intuitive. But there is a logic behind it. If all the securities are rated, at the cost of the sellers... guess who doesn't have to cough up the money? The pension funds The Union Funds, Government Funds, and Railroad Funds, didn't want to have to pay rating agencies for ratings. So they had the law written to force sellers of securities, to pay to rate their own securities.

Also, have you ever wondered why there are only three big rating agencies? The law required that pension funds not only buy rated securities, but rated by Government approved agencies. There used to be dozens of rating agencies, but government only approved a few, and the first three were...... S&P, Moody's, and Fitch.

Again, it's amazing how it all circles back around to government.

Right wing lie. Shocking you'd continue this nonsense. F/F didn't cause trhe WORLD WIDE CREDIT BUBBLE AND BUST, THOUGH DUBYA SURE CHEERED THE BANKSTER BUBBLE ON IN THE US AND HOSED F/F IN THE PROCESS!


Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.

Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn’t accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.

Fannie Mae and Freddie Mac were victims not culprits - BusinessWeek

MORE ON Dubya's regulator failure here Bubba


FACTS on Dubya s great recession US Message Board - Political Discussion Forum

 

[Dad2three]

I don't think you read the article very clearly. The sub-prime mortgage backed securities, were guaranteed by Freddie Mac... FIRST. Then they were given a AAA rating.

Who gave them a AAA rating?
Private rating agencies paid by investment banks?
Do you have any links?

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

By the way, did you notice which two banks signed this deal with Freddie Mac to guarantee sub-prime mortgage backed securities?
Bear Stearns..... shocking.... and First Union, which was bought out by.... Wachovia. Interesting? If the mortgages by the GSEs were safe.... odd how the first two banks to sign up for the Freddie Fannie plan, were in the first few big failures.

Now you did bring up the point that rating agencies are paid by the person providing the security, rather than the person who is buying the security.

That's true.

Again, if you read the book:
The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

One of the historical details he covers is that issue. Because in the beginning of rating agencies, banks and sellers never paid to have their securities rated. Buyers did, because buyers are who cared.

So how did this change? Regulation. You knew that was coming.

See in the 1970s, government decided to create laws controlling how specifically pension funds worked. The funds could no longer buy securities off the market, unless they were rated.

It was actually the government, and union, and railroad pension funds themselves, that demanded the change. Why? Because this forced the sellers of securities to pay for their own rating. Why did it force them? Because without a rating, they could not be purchased by the biggest buyers of securities.... pension funds.

Now that seems counter intuitive. But there is a logic behind it. If all the securities are rated, at the cost of the sellers... guess who doesn't have to cough up the money? The pension funds The Union Funds, Government Funds, and Railroad Funds, didn't want to have to pay rating agencies for ratings. So they had the law written to force sellers of securities, to pay to rate their own securities.

Also, have you ever wondered why there are only three big rating agencies? The law required that pension funds not only buy rated securities, but rated by Government approved agencies. There used to be dozens of rating agencies, but government only approved a few, and the first three were...... S&P, Moody's, and Fitch.

Again, it's amazing how it all circles back around to government.

Why would we believe your link from the free market apologists who created the MYTH that it was Gov't involvement in a WORLD WIDE CREDIT BUBBLE AND BUST? One cheered on by Dubya in the US?

Jun 16, 2005






What caused the financial crisis? The Big Lie goes viral

One group has been especially vocal about shaping a new narrative of the credit crisis and economic collapse: those whose bad judgment and failed philosophy helped cause the crisis.

Rather than admit the error of their ways — Repent! — these people are engaged in an active campaign to rewrite history. They are not, of course, exonerated in doing so. And beyond that, they damage the process of repairing what was broken. They muddy the waters when it comes to holding guilty parties responsible. They prevent measures from being put into place to prevent another crisis.

Here is the surprising takeaway: They are winning. Thanks to the endless repetition of the Big Lie.

A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

Indeed, the arguments these folks make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

What caused the financial crisis The Big Lie goes viral - The Washington Post

Examining the big lie: How the facts of the economic crisis stack up

The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”


Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.

Private lenders not subject to congressional regulations collapsed lending standards.

Examining the big lie How the facts of the economic crisis stack up - The Washington Post

Because they lied. F/F labeled sub-prime loans, as Alt-A loans. The rating agencies had no idea how many sub-prime mortgage backed securities were out there, because F/F was giving bad data.

"The #1 Wall Street Journal Bestseller

“Required reading. . . . Shows how our economic crisis was a failure, not of the free market, but of government.”
—Charles Koch, Chairman and CEO, Koch Industries, Inc.

“The Financial Crisis and the Free Market Cure is a sophisticated yet accessible analysis of the causes and solutions to America’s financial meltdown.”
—Ed Crane, President Emeritus of the Cato Institute"

Who lied?

The Financial Crisis and the Free Market Cure Why Pure Capitalism is the World Economy s Only Hope John A. Allison 9780071806770 Amazon.com Books

Freddie and Fannie. You just cited some of the data that shows this.

Performed 450% -600% better than the private markets. Weird right? lol

The Myth of Fannie Mae, Freddie Mac, Barney Frank, the Housing Bubble and the Recession

The Myth of Fannie Mae Freddie Mac Barney Frank the Housing Bubble and the Recession The Long Goodbye







Fannie, Freddie and the Right Wing Myth of a "Mortgage Meltdown"

"At the end of the day what really matters is losses," said Mark Zandi of Moody's Analytics. "Where are the losses?"

Zandi, speaking at a recent American Enterprise Institute Book Forum that delved into the root causes of the financial crisis, took a position at odds with others on the panel. Everyone else embraced the research and analysis of AEI mortgage expert Edward Pinto.

Pinto's infamous 27 million mortgages

According to Pinto, the path to disaster was paved by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which set affordable housing goals for the government sponsored enterprises. These goals, which were expanded over time, allegedly poisoned the well, and thereby caused a marketwide deterioration in credit standards.

By 2008 things got so bad that, according to Pinto, close to half of all U.S. mortgages were "subprime or otherwise high risk." And these subprime-equivalent mortgages made the financial meltdown inevitable. However Pinto and his disciples refuse to discuss how those 27 million mortgages performed after 2008.

The Financial Crisis Inquiry Commission reviewed Pinto's research extensively. But staffers could find no way to reconcile his risk categorizations to actual loan performance. The FCIC's findings were soon echoed by the research of David Min, then of the Center for American Progress. Four years later, Zandi's updated analysis confirms and validates the earlier assessments made by Min, and almost all FCIC commissioners.

The one FCIC holdout, the Commissioner who wrote a scathing rebuttal to the Majority Report, was Pinto's colleague at AEI, Peter Wallison.

"Whenever he had the opportunity, [FCIC Chair Phil] Angelides would point out that nine of the ten commissioners disagreed with my analysis," writes Wallison in his book, Bad History, Worse Policy, published almost exactly two years ago. "Nevertheless, by the fall of 2011"virtually all the Republican candidates for president were saying in debates and elsewhere that the financial crisis was caused by government housing policy, with Fannie and Freddie at its heart."

Now, four years after the FCIC Report, Wallison can point to a long list of mortgage experts who wrote books based on Pinto's research. All of these authors, like Wallison, deem the FCIC analysis to be illegitimate and therefore unworthy of any direct response. As it happened, the recent AEI Book Forum was occasioned by the launch of Wallison's latest volume on the subject, Hidden in Plain Sigh t, which covers the same ground as Bad History.

Wallison follows in the footsteps of professors at the University of Chicago, Columbia, Stanford, and four professors NYU. Other mortgage experts, at the Hoover Institution, the Discovery Institute, the Mercatus Center, plus a former member of Britain's Parliament, also wrote very similar tomes. The author of Hidden in Plain Sigh t can cite at least ten other books that rely on Pinto's research to declare that the financial crisis was caused by affordable housing goals .


All these authors claim that close to half of all U.S. mortgages, or 27 million, were subprime-equivalent. And none of them take Zandi's approach, which is to compare GSE loan performance with the rest of the market. In fact, Paul Sperry, of the Hoover Institute, trashed the FCIC because it called Zandi to testify as a "star witness." ( If I didn't know better, I might think that there was some kind of coordinated messaging strategy, like that of a political campaign.)

But where are the losses?


As the one Pinto-skeptic in the room, Zandi proceeded to answer his own question, "Where are the losses?" As of year-end 2013, approximately $1 trillion in credit losses on pre-crisis loans had been realized. But the realized loss rate among different sectors varied considerably. Best in class were Fannie and Freddie, with a realized loss rate of 3%. Then came depository institutions, like banks, which had a realized loss rate of 6%. The strong outlier was private label mortgage securities, with a realized loss rate of 23%, seven times that of the GSEs.



lol

....These lopsided disparities are confirmed over and over from data going back two decades. By any standard"--"delinquencies, defaults, loss severity"--"GSE mortgages perform exponentially better than the rest of the market, whereas private label mortgages perform exponentially worse. To state otherwise is to lie.

Article Fannie Freddie and the Right Wing Myth of a Mortgage Meltdown OpEdNews

 

[ralfy]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

Let me just clarify.... I don't want to imply you are saying something that you are not.

FDsys - Browse Code of Federal Regulations Annual Edition

This web site is the Federal Code of Regulations, for the year 2000.

If you scroll down to Title 12, Banks and Banking, you will discover that the regulations come in a 6 Volume set. If you download all 6 volumes, (as I have done), you will discovered over 4,000 pages of regulations on virtually all aspects of banking.

In addition, you will discovered several government bodies created to monitor banks, including Federal Financing Bank, Federal Housing Finance Board, Department of the Treasury which has it's own regulations, FDIC which has it's own regulations, and lastly Comptroller of the Currency which has it's own regulations.

But wait! There's more!

Moving down to Title 17, you'll find a three volume set, containing over 2,400 pages exclusively to regulation on securities.
Then moving to Title 24, you'll find another three volumes, of just under 1500 pages, and while they are not all related to mortgage securities, some are, such as Government National Mortgage Association, Office of Assistant Secretary for Housing, and Office of Housing and Office of Multifamily Housing Assistance Restructuring, each with their own various regulations that must be followed.

And of course, if you wish to claim that the roughly 8,000 pages of regulations that existed back in 2000, regulating and over-seeing every aspect of banks was just far too limited and modest.....

Lawriter - ORC - Title 11 XI FINANCIAL INSTITUTIONS

Let us add in State Level banking regulations as well. Ohio Revised Code, Title 11, contains no less than 80 Chapters regulating banks. That's just Ohio Revised Code. Many states have more regulations than Ohio.


Now.... Allow me to ask again.... Are you saying that the banks and mortgage backed securities were not regulated?

Failure due to deregulation was the conclusion made by the FCIC:

Government policies and the subprime mortgage crisis - Wikipedia the free encyclopedia

 

[georgephillip]

Again, it's amazing how it all circles back around to government.

Government that is bought and paid for by the richest 1% of its voters? Government that creates and regulated the money supply the richest 1% monopolize? Why are you limiting your criticisms to government without including the private Wall Street banks whose fortunes regulate government?

 

[RKMBrown]

"Productivity in the economy grew by 80.4 percent between 1973 and 2011 but the growth of real hourly compensation of the median worker grew by far less, just 10.7 percent….

"The pattern was very different from 1948 to 1973, when the hourly compensation of a typical worker grew in tandem with productivity.

"Reestablishing the link between productivity and pay of the typical worker is an essential component of any effort to provide shared prosperity and, in fact, may be necessary for obtaining robust growth without relying on asset bubbles and increased household debt."

40 Years of Economic Policy in One Chart CounterPunch Tells the Facts Names the Names

In the 1970s wages detached from productivity and the richest among us began using their newly acquired wealth to reduce taxes on capital, role back regulations, break unions, "and induce their shady Central Bank buddies to keep interest rates locked below the rate of inflation so they could cream hefty profits off gigantic asset bubbles."

Mission Accomplished?

Translation:
1) Improvements in productivity were driven by changes to labor in the 50s and 60s.
2) Then in the 70s productivity increases were mainly based on technology investments.
3) People have been rewarded with an average hourly compensation that has remained relatively level with respect to inflation despite heavy competition for said labor overseas
4) The average salary after inflation adjustments is double today than it was in 1950.

 

[georgephillip]

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

There's nothing in that link that confirms your claim "(t)he sub-prime mortgage backed securities were guaranteed by Freddie Mac...FIRST. Then they were given a AAA rating." Your link is also lacking in details concerning which private rating agency supplied the AAA rating; HOWEVER, your link does provide the reason why First Union choose to participate in the epidemic of mortgage fraud that caused the Great Recession:

"First Union has grown its capital markets business substantially over the
last three years. First Union's Capital Markets Group reported 1997 fee income
through Sept. 30 of $531 million, up from $464 million for the full year of
1996 and $265 million in 1995."

First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

Obviously, Wall Street parasites could not have looted the US economy of trillions of dollars over the span of the Great Recession without help from government, Why are you unwilling to blame any institution other than government for that looting?

 

[Andylusion]

And yet where did the crash happen? In regulated mortgage backed securities.

Actually, they were "regulated," but not really regulated.

They were regulated, period.

Hardly. Try this feature for details:

House Of Cards The Mortgage Mess - CBS News

Let me just clarify.... I don't want to imply you are saying something that you are not.

FDsys - Browse Code of Federal Regulations Annual Edition

This web site is the Federal Code of Regulations, for the year 2000.

If you scroll down to Title 12, Banks and Banking, you will discover that the regulations come in a 6 Volume set. If you download all 6 volumes, (as I have done), you will discovered over 4,000 pages of regulations on virtually all aspects of banking.

In addition, you will discovered several government bodies created to monitor banks, including Federal Financing Bank, Federal Housing Finance Board, Department of the Treasury which has it's own regulations, FDIC which has it's own regulations, and lastly Comptroller of the Currency which has it's own regulations.

But wait! There's more!

Moving down to Title 17, you'll find a three volume set, containing over 2,400 pages exclusively to regulation on securities.
Then moving to Title 24, you'll find another three volumes, of just under 1500 pages, and while they are not all related to mortgage securities, some are, such as Government National Mortgage Association, Office of Assistant Secretary for Housing, and Office of Housing and Office of Multifamily Housing Assistance Restructuring, each with their own various regulations that must be followed.

And of course, if you wish to claim that the roughly 8,000 pages of regulations that existed back in 2000, regulating and over-seeing every aspect of banks was just far too limited and modest.....

Lawriter - ORC - Title 11 XI FINANCIAL INSTITUTIONS

Let us add in State Level banking regulations as well. Ohio Revised Code, Title 11, contains no less than 80 Chapters regulating banks. That's just Ohio Revised Code. Many states have more regulations than Ohio.


Now.... Allow me to ask again.... Are you saying that the banks and mortgage backed securities were not regulated?

Failure due to deregulation was the conclusion made by the FCIC:

Government policies and the subprime mortgage crisis - Wikipedia the free encyclopedia

Are you telling me..... that you are going to the word of the people who caused the problem... over the facts that already know? Are you saying there were not 8,000 pages of regulations? Because I have already posted direct links to those regulations.

So you can't examine the evidence yourself, but blindly follow what some government agency says? And by the way..... who benefits from this conclusion? Government. See if they came to the conclusion "our policies caused the problem", we would blame government, and people would lose their cushy government agency positions. Can't have that.

Instead let's blame deregulation, and what does that do? Well obviously we need MORE cushy government jobs, MORE lush paid government agencies.

Isn't it funny how when a company says "our product is great", you instantly realize a conflict of interest, but when government says "we need more government", no such ethical question comes to mind? Why do you blindly trust these guys?

I can't find any credible evidence that the problem was lack of regulation. If you have it, share it.

 

[Andylusion]

Yeah, I linked it before. It was in my original post.
First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

There's nothing in that link that confirms your claim "(t)he sub-prime mortgage backed securities were guaranteed by Freddie Mac...FIRST. Then they were given a AAA rating." Your link is also lacking in details concerning which private rating agency supplied the AAA rating; HOWEVER, your link does provide the reason why First Union choose to participate in the epidemic of mortgage fraud that caused the Great Recession:

"First Union has grown its capital markets business substantially over the
last three years. First Union's Capital Markets Group reported 1997 fee income
through Sept. 30 of $531 million, up from $464 million for the full year of
1996 and $265 million in 1995."

First Union Capital Markets Corp. Bear Stearns Co. Price Securities Offering... -- re CHARLOTTE N.C. Oct. 20 PRNewswire --

Obviously, Wall Street parasites could not have looted the US economy of trillions of dollars over the span of the Great Recession without help from government, Why are you unwilling to blame any institution other than government for that looting?

Because I'm not partisan, and I don't have a problem with greedy and envy, causing me to automatically blame everyone who makes more than my income.

That's why. I need real evidence first. Not conclusions first, and then find evidence to fit it.

First off, the banks didn't loot anything. There was no "looting". The banks made a bunch of securities based on expectations of value, created by the government. These sub-prime loans, were only given AAA ratings because government guaranteed them.

How is that looting? I'm Government. You're the bank. "Gorge, make this product, and I'll guarantee it". Do you tell me, the government, no? And risk me suing your butt? Because that's what I just did to the other banks.

No, you are going to do what I tell you to, because I'm government. When it fails, "Gorgy Looted!"? How does that make sense in your world? Explain that to me?