Democrats are to blame for financial meltdown

[sealybobo]

Here's proof that if you throw enough darts, one is going to hit the target. Agreed, the bailout will not work; all it will do is put off the inevitable. Best to let the free market do its thing and get the 21st century depression over with as soon as possible.

No, do what Sweden did:

Sweden. The country was so far in the hole in 1992 -- after years of imprudent regulation, short-sighted economic policy and the end of its property boom -- that it’s banking system was, for all practical purposes, insolvent.

But Sweden took a different course than the one now being proposed by the United States Treasury.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.


The final cost to Sweden ended up being less than two per cent of its GDP. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.




http://www.nst.com.my/Current_News/NST/Sunday/Columns/2361578/Article/index_html



And regulate them so this can never happen again!!!!

 

[glockmail]

and guess what else... fannie and freddie worked fine until the Republicans deregulated banking and mortgage practices.

I know it's difficult to see with your head so far up your own ass but the truth is the truth...

You're the one with trouble understanding the failure mechanism. If Fannie and Freddie weren't around to buy up all the high risk loans then they wouldn't have been written in the first place.

 

[sealybobo]

You're the one with trouble understanding the failure mechanism. If Fannie and Freddie weren't around to buy up all the high risk loans then they wouldn't have been written in the first place.

Yes, we understand you are a 100% free market dude.

 

[editec]

You're the one with trouble understanding the failure mechanism. If Fannie and Freddie weren't around to buy up all the high risk loans then they wouldn't have been written in the first place.

they didn't buy up ALL the bad risks, sport.

Pay attention and stop guessing what is going on based on your goofy political theories.

 

[xsited1]

I thought Bush was to blame for everything?

 

[glockmail]

they didn't buy up ALL the bad risks, sport.

Pay attention and stop guessing what is going on based on your goofy political theories.

Obviously they bought up enough, sport.

 

[glockmail]

I thought Bush was to blame for everything?

That's the mantra. Makes you sick, doesn't it?

 

[Care4all]

You're the one with trouble understanding the failure mechanism. If Fannie and Freddie weren't around to buy up all the high risk loans then they wouldn't have been written in the first place.

fannie and freddie have only 25% of the subprime loans for the past 5 years....other financial institutions issued and sold off to others 75% of all subprime mortgages.... and of those subprime loans, 1 in 4 are being foreclosed, 3 in 4 are good mortgages although still subprime, people are not defaulting...

 

[glockmail]

fannie and freddie have only 25% of the subprime loans for the past 5 years....other financial institutions issued and sold off to others 75% of all subprime mortgages.... and of those subprime loans, 1 in 4 are being foreclosed, 3 in 4 are good mortgages although still subprime, people are not defaulting...

So "only" 25% of the loans are bad. That's your defense of Democrat policies?

 

[editec]

Obviously they bought up enough, sport.

Not enough to be the SOLE cause of the problem.

Pay attention.

 

[Care4all]

So "only" 25% of the loans are bad. That's your defense of Democrat policies?

read this...

It's Still Not CRA | New America Blogs

 

[jreeves]

read this...

It's Still Not CRA | New America Blogs

Read this, it's not that hard to understand, if people can't afford their payments they are going to default.

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and savings and loan associations to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities, to under-served populations, and commercial loans to small businesses. The Act was passed in 1977 and has been subjected to important regulatory revisions since then.

Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act.[2
The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community.
That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions after the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 repealed restrictions on interstate banking.[3] However, until 1995 the Act was laxly enforced and banks only were required to advertise in local minority newspapers or sit on the boards of local community groups.[4] The CRA is enforced by the financial regulators (Federal Deposit Insurance Corporation ("FDIC"), Office of the Comptroller of the Currency ("OCC"), Office of Thrift Supervision ("OTS"), and the Federal Reserve System).[citation needed]The bill encouraged mortgage lending through two government sponsored enterprises ("GSEs"). One, the Federal National Mortgage Association, commonly known as Fannie Mae, enables mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. The other, the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, buys mortgages on the secondary market and sells them as mortgage-backed securities on the open market.[5] It also charged the Federal Reserve System to implement the CRA through ensuring banks and savings and loans met their CRA obligations.[3]



In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7] The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[4][6]

Federal Reserve chairman Ben Bernanke has stated that an underlying assumption of the CRA – that more lending is always better for local communities – is questionable.[3]
The chief executive of Countrywide Financial, the nation's largest mortgage lender, is said to have "bragged" that in order to approve minority applications, "lenders have had to stretch the rules a bit."[14]



I don't believe it was the sole cause of the credit crisis, but it played a large role.

 

[Care4all]

Read this, it's not that hard to understand, if people can't afford their payments they are going to default.

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and savings and loan associations to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities, to under-served populations, and commercial loans to small businesses. The Act was passed in 1977 and has been subjected to important regulatory revisions since then.

Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act.[2
The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community.
That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions after the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 repealed restrictions on interstate banking.[3] However, until 1995 the Act was laxly enforced and banks only were required to advertise in local minority newspapers or sit on the boards of local community groups.[4] The CRA is enforced by the financial regulators (Federal Deposit Insurance Corporation ("FDIC"), Office of the Comptroller of the Currency ("OCC"), Office of Thrift Supervision ("OTS"), and the Federal Reserve System).[citation needed]The bill encouraged mortgage lending through two government sponsored enterprises ("GSEs"). One, the Federal National Mortgage Association, commonly known as Fannie Mae, enables mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. The other, the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, buys mortgages on the secondary market and sells them as mortgage-backed securities on the open market.[5] It also charged the Federal Reserve System to implement the CRA through ensuring banks and savings and loans met their CRA obligations.[3]



In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7] The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[4][6]

Federal Reserve chairman Ben Bernanke has stated that an underlying assumption of the CRA – that more lending is always better for local communities – is questionable.[3]
The chief executive of Countrywide Financial, the nation's largest mortgage lender, is said to have "bragged" that in order to approve minority applications, "lenders have had to stretch the rules a bit."[14]



I don't believe it was the sole cause of the credit crisis, but it played a large role.

yes, it was a part of it ... but to me...perhaps more of an excuse for it imo, from the bankers that created these wild and crazy and irresponsible to their stock holders and community subprime loans....that they could sell off the next day to someone else...

And if you consider the Clinton administration push to enforce the law on discrimination and Redlining after evaluating a Report that was done during the George herbert walker Bush administration...then you have to consider this initiative of President Bush's to put more people in homes and his encouragement to the banks to come up with CREATIVE ways to service this community without putting in any safety measures for them, as PART of the problem as well:

Expanding Homeownership. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent. Minority homeownership set a new record of 51 percent in the second quarter, up 0.2 percentage point from the first quarter and up 2.1 percentage points from a year ago. President Bush's initiative to dismantle the barriers to homeownership includes:
American Dream Downpayment Initiative, which provides down payment assistance to approximately 40,000 low-income families;
Affordable Housing. The President has proposed the Single-Family Affordable Housing Tax Credit, which would increase the supply of affordable homes;
Helping Families Help Themselves. The President has proposed increasing support for the Self-Help Homeownership Opportunities Program; and
Simplifying Homebuying and Increasing Education. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners.

Fact Sheet: America's Ownership Society: Expanding Opportunities

I happen to think that increased home ownership does improve communities with less crime, and investment and does increase wealth of the individual as all statistics show...

We just need to regulate such more, so it is not abused by institutions taking no risk due to their slicing and dicing and selling off their high risk loans...

 

[jreeves]

yes, it was a part of it ... but to me...perhaps more of an excuse for it imo, from the bankers that created these wild and crazy and irresponsible to their stock holders and community subprime loans....that they could sell off the next day to someone else...

And if you consider the Clinton administration push to enforce the law on discrimination and Redlining after evaluating a Report that was done during the George herbert walker Bush administration...then you have to consider this initiative of President Bush's to put more people in homes and his encouragement to the banks to come up with CREATIVE ways to service this community without putting in any safety measures for them, as PART of the problem as well:



I happen to think that increased home ownership does improve communities with less crime, and investment and does increase wealth of the individual as all statistics show...

We just need to regulate such more, so it is not abused by institutions taking no risk due to their slicing and dicing and selling off their high risk loans...

Where in President Bush's initiative does it talk about having banks to pay out fees, if they don't serve the miniority community as the government sees fit.

 

[ZFProductions]

Republicans say its the Democrats, Democrats say its the Republicans... maybe its the Independents

 

[Care4all]

Where in President Bush's initiative does it talk about having banks to pay out fees, if they don't serve the miniority community as the government sees fit.

as larkin has stated, it required that if the bank was going to give a loan to a white person of equal means as the black person, the black person could not be denied... or if a loan was given to a man, a woman of equal means as the man, the woman could not be denied............ is that bad legislation? i don't think so....

the bankers are using this as an excuse, for their own negligence reeves....they really are....

 

[sealybobo]

Republicans say its the Democrats, Democrats say its the Republicans... maybe its the Independents

No. Like the Democrats, they didn't have any say in Government from 2000-2006.

 

[Care4all]

Where in President Bush's initiative does it talk about having banks to pay out fees, if they don't serve the miniority community as the government sees fit.

laws, without a means of punishment for not following them or breaking them, are USELESS laws....not worth the paper they are writen on!

president bush challenged banks and financial institutions to come up with ways to service more low income people...without requiring any restrictions or regulations protecting the buyer and the stock holder....he left it up to the ''free market''....well, one can clearly see where that got us....

 

[sealybobo]

laws, without a means of punishment for not following them or breaking them, are USELESS laws....not worth the paper they are writen on!

president bush challenged banks and financial institutions to come up with ways to service more low income people...without requiring any restrictions or regulations protecting the buyer and the stock holder....he left it up to the ''free market''....well, one can clearly see where that got us....

You nailed it. So Carter may have passed a law making it easier for poor people with a long history of work to get homes, but Bush made it so people who just started a job could get a home, with nothing down. That was irresponsible and caused this crash. Or approving people for too big of a loan. Or allowing them to take $100K out of their homes was dumb.

So that squashes the "it was Carter's fault" argument.

 

[Care4all]

You nailed it. So Carter may have passed a law making it easier for poor people with a long history of work to get homes, but Bush made it so people who just started a job could get a home, with nothing down. That was irresponsible and caused this crash. Or approving people for too big of a loan. Or allowing them to take $100K out of their homes was dumb.

So that squashes the "it was Carter's fault" argument.

i'm not blaming president bush....i'm arguing that what clinton did, regarding the putting of TEETH in to the CRA was not the problem....because most of the subprime loans that were issued the last 5 years were by institutions not regulated by the CRA... the problem came with sleasy, crooked, at best negligent ceo's at the financial institutions that saw an opportunity to nake some quick money, with no regard to the consequences.

yes president bush should have requested some oversite on his initiative to get banks more involved in creating more financing for the low income families...but honestly, it is not his fault for what the lenders irresponsibly did.