Economy slow down chronology

[healthmyths]

Why is it that Congress and Democrats think MORE government rules and regulations HELP?
Case in point recent economic slowdown can place it's beginning in 1977 when
Community Reinvestment Act (CRA), was enacted by Jimmy Carter & Democrat Congress .

Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans.
So now the banks had a problem.
Forced to make sub-prime loans to people that they were pretty sure not going to pay off the loans they had to do something because the FDIC auditors said all those loans were affecting the banks financial status.

On one hand courts ordering bad loans and other hand loans were violating FDIC rules!

Enter Credit Default Swaps...
Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion,[4] falling to $26.3 trillion by mid-year 2010[5] but reportedly $25.5[6] trillion in early 2012.[

Using CDswaps banks could unload the sub-prime loans by having Fannie/Freddie securitizing them as explained in this statement:
Oct. 23,2008 (Bloomberg) -- Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the "full faith and credit'' of the U.S. government, Federal Housing Finance Agency Director James Lockhart
said after the hearing. That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg

"Effectively guarantee of the U.S. government"!!!!

So everything is OK as long as housing grows... but it didn't!

NO one in 1977 or 1995 or 1990s ever thought that $8 trillion would be losses in 6 years.
No one envisioned the dot.com bust would cost $5 trillion in market losses -- writeoffs against taxes!
No one ever considered airplanes flying into buildings costing $2 trillion... writeoffs against taxes!
Not one person could ever envision the WORST HURRICANE SEASONSS!!! in history $1 trillion writeoffs!

Then NO one ever considered that this action on sept 18,2008 the economic terrorist attack that moved
$500 billion out of USA money market fund in 2 hours and if nothing done the world economy would collapse!

All because Congress in 1977 thought Let's do something for the poor people so they can buy homes!

All because Congress in 1986 thought.."let's help those people with no insurance to be serviced by hospitals that take Medicare... EMTALA! Sounds compassionate. Right to do .
As a result today we have hospitals billing Medicare for services the hospitals markup 6,000%!
Services that cost the hospital $43 they bill Medicare $2,635 6,000% markup!

All of the above because Congress thought they were helping!!!!

 

[SniperFire]

If you want less of something, you regulate and tax it.

 

[8537]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

 

[SniperFire]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

They could have of course opted to close their doors and not participate in expansion or merger/acquisition.

You know - the CRA Kiss of Death.

 

[8537]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

They could have of course opted to close their doors and not participate in expansion or merger/acquisition.

You know - the CRA Kiss of Death.

No, that's not true at all. They were not forced to make loans to any individuals at all. All lendees had to meet objective, non-race based lending criteria.

 

[healthmyths]

If you want less of something, you regulate and tax it.

Absolutely correct!

Crews’ report cites the work of economists Nicole V. Crain and W. Mark Crain, whose study of the net cost of regulations determined that in 2009 federal regulation cost businesses and consumers $1.75 trillion, or nearly 12% of America’s 2009 GDP. As a comparison, in the same year, corporate pre-tax profits for all businesses totaled about $ 1.46 trillion.

The Hidden Cost of Regulation | FreedomWorks

 

[SniperFire]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

They could have of course opted to close their doors and not participate in expansion or merger/acquisition.

You know - the CRA Kiss of Death.

No, that's not true at all. They were not forced to make loans to any individuals at all. All lendees had to meet objective, non-race based lending criteria.

They were forced to make high-risk loans to poor people via use of 'creative lending practices' in low -income neighborhoods. Of course, you probably know this, but you are a Leftist piece of shit trying to sneak one by the less informed.


'A key weapon in the Cisneros arsenal was the Clinton administration’s changes to the Community Reinvestment Act. The CRA was passed in 1977 and updated in 1995 to pressure lenders into making more loans to moderate-income borrowers by allowing regulators to deny merger approvals for banks with low CRA ratings. Even complaints brought by activists, such as the leftist group ACORN, were now counted against a bank’s CRA rating. The result was that banks began issuing more loans to otherwise uncreditworthy borrowers while purchasing more CRA mortgage-backed securities. As housing finance expert Peter Wallison noted, “The most important fact associated with the CRA is the effort to reduce underwriting standards. … Once those standards were relaxed … they spread rapidly to the prime market and to subprime markets where loans were made by lenders other than insured banks.”'

The next financial meltdown- and why Andrew Cuomo should be in prison [Reader Post] | Flopping Aces financial-meltdown-and-why-andrew-cuomo-should-b e-in-prison-reader-post/

 

[healthmyths]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

What is your background to make that statement?
I sourced mine where are your sources.


Banks have been placed in a Catch 22 situation by the CRA: If they comply, they know they will have to suffer from more loan defaults. If they don't comply, they face financial penalties and, worse yet, their business plans for mergers, branch expansions, etc. can be blocked by CRA protesters, which can cost a large corporation like Bank of America billions of dollars. Like most businesses, they have largely buckled under and have surrendered to their bureaucratic masters.

Then of course there is the issue of the Fed's monetary policy having created the housing bubble, characterized by a spectacular escalation of real estate values in every American city over the past decade or so. This created a further problem for the financial institutions that are victimized by the CRA. They are forced to make a certain amount of bad loans, but because of the Fed-created explosion in housing prices, many thousands of subprime borrowers no longer qualified, by a long stretch, for conventional mortgages based on their incomes.

Thomas J. DiLorenzo [send him mail] is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You're Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton's Curse: How Jefferson's Archenemy Betrayed the American Revolution — And What It Means for America Today.




The Government-Created Subprime Mortgage Meltdown by Thomas DiLorenzo

 

[Bfgrn]

Why is it that Congress and Democrats think MORE government rules and regulations HELP?
Case in point recent economic slowdown can place it's beginning in 1977 when
Community Reinvestment Act (CRA), was enacted by Jimmy Carter & Democrat Congress .

Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans.
So now the banks had a problem.
Forced to make sub-prime loans to people that they were pretty sure not going to pay off the loans they had to do something because the FDIC auditors said all those loans were affecting the banks financial status.

On one hand courts ordering bad loans and other hand loans were violating FDIC rules!

Enter Credit Default Swaps...
Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion,[4] falling to $26.3 trillion by mid-year 2010[5] but reportedly $25.5[6] trillion in early 2012.[

Using CDswaps banks could unload the sub-prime loans by having Fannie/Freddie securitizing them as explained in this statement:
Oct. 23,2008 (Bloomberg) -- Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the "full faith and credit'' of the U.S. government, Federal Housing Finance Agency Director James Lockhart
said after the hearing. That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg

"Effectively guarantee of the U.S. government"!!!!

So everything is OK as long as housing grows... but it didn't!

NO one in 1977 or 1995 or 1990s ever thought that $8 trillion would be losses in 6 years.
No one envisioned the dot.com bust would cost $5 trillion in market losses -- writeoffs against taxes!
No one ever considered airplanes flying into buildings costing $2 trillion... writeoffs against taxes!
Not one person could ever envision the WORST HURRICANE SEASONSS!!! in history $1 trillion writeoffs!

Then NO one ever considered that this action on sept 18,2008 the economic terrorist attack that moved
$500 billion out of USA money market fund in 2 hours and if nothing done the world economy would collapse!

All because Congress in 1977 thought Let's do something for the poor people so they can buy homes!

All because Congress in 1986 thought.."let's help those people with no insurance to be serviced by hospitals that take Medicare... EMTALA! Sounds compassionate. Right to do .
As a result today we have hospitals billing Medicare for services the hospitals markup 6,000%!
Services that cost the hospital $43 they bill Medicare $2,635 6,000% markup!

All of the above because Congress thought they were helping!!!!

Right wing fairy tales.

Here is what we DO know:

1) The financial crisis was not caused by low and middle income families buying a home.

2) It was not caused by dead beat poor people.

3) Fannie and Freddie were not to cause.

4) The Community Investment Act was not the culprit either.

The crisis was caused by private lending, to mostly upper middle class and the wealthy. ONLY 6% of of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas. The majority of those foreclosed on were wealthy and upper middle class, plus a large segment of buyers who were wealthy home flippers looking for a fast buck. They strategically walked away from their mortgages, leaving people who bought homes to live in with lower values on their house and neighborhood.

AND, what really sucks for the right wing propaganda of lies, all the way back to the late '90's there was one very outspoken and vocal critic of predatory lending practices, they even held protests at companies like Wells Fargo and Lehman Brothers...ACORN


WSJ - Fed’s Kroszner: Don’t Blame CRA

WSJ - Fed’s Kroszner: Don’t Blame CRA - The Sequel

Reuters - UPDATE 2-Lending to poor didn't spur crisis

Don't Blame the Community Reinvestment Act

Business Insider - Here's Why Fannie And Freddie Are Not At Fault For The Housing Bubble

Center for Responsible Lending - CRA is not to Blame for the Mortgage Meltdown

Don't blame Fannie and Freddie

Private sector loans, not Fannie or Freddie, triggered crisis

ForeclosureS.com - ACORN - Progress in the Fight Against Predatory Lending

Acorn Led Financial Sector With Warnings on Lending

Biggest Defaulters on Mortgages Are the Rich

The Millionaire Foreclosure Club

Foreclosure double standard: Why the rich get away with defaulting

More Rich People Default On Mortgages

The rich bail faster on mortgages

Biggest Defaulters on Mortgages Are the Rich

Rich Borrowers More Likely to Default on Mortgage

Foreclosures & Walking Away: 60 Minutes Eyes an ‘Epidemic’

Speculation By Investors Largely Cause Of Foreclosure Crisis

How the Foreclosure Crisis Started: Investors, Speculators, Mortgage Fraud & Lax Lending Standards


"Eighty percent of Republicans are just Democrats that don't know what's going on"
Robert F. Kennedy Jr.

 

[8537]

They could have of course opted to close their doors and not participate in expansion or merger/acquisition.

You know - the CRA Kiss of Death.

No, that's not true at all. They were not forced to make loans to any individuals at all. All lendees had to meet objective, non-race based lending criteria.

They were forced to make high-risk loans to poor people via use of 'creative lending practices' in low -income neighborhoods. Of course, you probably know this, but you are a Leftist piece of shit trying to sneak one by the less informed.

No, they were not forced to make loans to anyone. I don't care what some blogger at FloppingACes says.

The facts are that all loans had to meet objective lending criteria- which explain why the most toxic mortgages were not offered by CRA-regulated banks, why CRA-regulated banks had a far lower rate of default and why CRA-regulated loans were still purchased by the GSE's.

I especially love folks blaming this all on poor people. As if it was poor people in the highest foreclosure areas like Naples, Miami and Vegas flipping homes.

 

[8537]

"Then 1995..
1995 ACORN/with Obama as one of the attorneys sued CitiBank forcing them to make loans to people THAT would default on their properties!
Citibank settled out of court but this laid the premise for banks to make sub-prime loans."

No bank was forced to make loans to anybody. anywhere. ever.

In fact, depository institutions were expressly barred from writing the most toxic types of mortgages.

What is your background to make that statement?

Facts.

I

sourced mine where are your sources.

You tied a bunch of unrelated ideas together and called it a point.

Banks have been placed in a Catch 22 situation by the CRA: If they comply, they know they will have to suffer from more loan defaults.

Depository institutions have a far lower rate of default than nondepository institutions.

 

[SniperFire]

No, that's not true at all. They were not forced to make loans to any individuals at all. All lendees had to meet objective, non-race based lending criteria.

They were forced to make high-risk loans to poor people via use of 'creative lending practices' in low -income neighborhoods. Of course, you probably know this, but you are a Leftist piece of shit trying to sneak one by the less informed.

No, they were not forced to make loans to anyone. I don't care what some blogger at FloppingACes says.

The facts are that all loans had to meet objective lending criteria- which explain why the most toxic mortgages were not offered by CRA-regulated banks, why CRA-regulated banks had a far lower rate of default and why CRA-regulated loans were still purchased by the GSE's.

I especially love folks blaming this all on poor people. As if it was poor people in the highest foreclosure areas like Naples, Miami and Vegas flipping homes.

Then remain an uninformed, ignorant asshole.

 

[SniperFire]

Before CRA, it was 20% down and ability to repay.

Ask anybody who tried to buy a house before the Clinton CRA revisions.

CRA lowered (read: destroyed) lending standards, and Clinton's most enduring legacy - if it weren't for rape of little girls in his employ - would have been his being the impetus for the destruction of our credit markets.

 

[8537]

Before CRA, it was 20% down and ability to repay.

Ask anybody who tried to buy a house before the Clinton CRA revisions.

CRA lowered (read: destroyed) lending standards,

Let me see if I have this right: You're saying that down payments of less than 20% were a product of the CRA?

Am I reading that right?

 

[SniperFire]

Before CRA, it was 20% down and ability to repay.

Ask anybody who tried to buy a house before the Clinton CRA revisions.

CRA lowered (read: destroyed) lending standards,

Let me see if I have this right: You're saying that down payments of less than 20% were a product of the CRA?

Am I reading that right?

I am telling you that 20% down and ability to repay used to be the standard.

CRA revisions by Clinton were the #1 reason for massively lowered lending standards in America, and like hogs to the trough, everyone eagerly jumped aboard.

 

[8537]

Before CRA, it was 20% down and ability to repay.

Ask anybody who tried to buy a house before the Clinton CRA revisions.

CRA lowered (read: destroyed) lending standards,

Let me see if I have this right: You're saying that down payments of less than 20% were a product of the CRA?

Am I reading that right?

I am telling you that 20% down and ability to repay used to be the standard.

Right. Did the CRA change that standard?

 

[SniperFire]

CRA revisions by Clinton were the #1 reason for massively lowered lending standards in America.

The rest is history.

It is Bill Clinton's most important legacy.

 

[Bfgrn]

CRA revisions by Clinton were the #1 reason for massively lowered lending standards in America.

The rest is history.

It is Bill Clinton's most important legacy.

The history of the CRA is sterling. It worked extremely well for 30 years.

Bernanke: The CRA Was Not "At The Root Of, Or Otherwise Contributed In Any Substantive Way To, The Current Mortgage Difficulties." In a November 25, 2008, letter, Federal Reserve chairman Ben Bernanke stated: "Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties." [Federal Reserve, 11/25/08]

Maybe you just FORGOT...

Bush's 'ownership society'

"America is a stronger country every single time a family moves into a home of their own," George W. Bush said in October 2004. To achieve his vision, Bush pushed new policies encouraging homeownership, like the "zero-down-payment initiative," which was much as it sounds—a government-sponsored program that allowed people to get mortgages without a down payment. More exotic mortgages followed, including ones with no monthly payments for the first two years. Other mortgages required no documentation other than the say-so of the borrower. Absurd though these all were, they paled in comparison to the financial innovations that grew out of the mortgages—derivatives built on other derivatives, packaged and repackaged until no one could identify what they contained and how much they were, in fact, worth.

As we know by now, these instruments have brought the global financial system, improbably, to the brink of collapse.

End of the ‘Ownership Society’

 

[SniperFire]

You didn't refute a word of it.

CRA revisions by Clinton were the #1 reason for massively lowered lending standards in America.

The rest is history.

It is Bill Clinton's most important legacy.

 

[Bfgrn]

You didn't refute a word of it.

CRA revisions by Clinton were the #1 reason for massively lowered lending standards in America.

The rest is history.

It is Bill Clinton's most important legacy.

Maybe if you keep parroting it poly, magic fairy dust will make your dogmatic ignorance real.

The CRA was merely a law to prevent red lining or to reduce discriminatory credit practices against low-income neighborhoods.