FACTS on Dubya's great recession

[Dad2three]

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "

http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf


Q Why is it commonly called the “subprime bubble” ?

A Because the Bush Mortgage Bubble coincided with the explosive growth of Subprime mortgage and politics. Also the subprime MBS market was the first to collapse in late 2006. In 2003, 10 % of all mortgages were subprime. In 2006, 40 % were subprime. This is a 300 % increase in subprime lending. (and notice it coincides with the dates of the Bush Mortgage bubble that Bush and the Fed said)

“Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006

https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf



Q. Er uh, didn’t you notice your link said the explosive growth of subprime mortgages started in 2001?

A. It did kinda say that didn’t it? However, the link below clearly states subprime was 10 % in 2003. 9% in 2001 to 10% in 2003 is only a 1% increase. A 1 % increase over 3 years is flat not explosive. 10 % in 2003 to 40% in 2006 is explosive. So the explosive growth started in 2004 which lines up pretty good but not exactly with the timeframe of the Bush Mortgage Bubble.


“In dollar terms, nonprime mortgages represented 32 percent of all mortgage originations in 2005, more than triple their 10 percent share only two years earlier


FRB: Finance and Economics Discussion Series: Screen Reader Version - 200899

 

[Dad2three]

Q Well there was a 300 % increase in subprime loans. Why not call it a “Subprime Bubble”?

A Subprime loans refers to the credit score of the borrower. It doesn’t make it a bad loan if proper underwriting standards are used. Bush’s working group said it was “triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages,”. He leaves out the part where it “quickly spread to all mortgages”. In 2004, 4.3 % of all mortgages were No Doc loans. In 2006 over 50% of all loans were No Doc loans. That’s over a 1000 % increase in loans where the borrowers income was not fully documented or documented at all. “Another form of easing” is a nice way of saying “lower lending standards”. And notice it lines up with the dates already posted. In addition to No Docs, banks allowed piggyback loans, teaser rates, I/0 and even negative amortization loans.

(from Dallas Fed link above)

"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN’T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.




Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them. And then they sold the loan and risk to investors and GSEs clamoring for the loans. Actually banks, pension funds, investment banks and other investors clamored for them. Bush forced Freddie and Fannie to buy an additional $440 billion in mortgages in the secondary market.

 

[Dad2three]

Q Why would Bush’s regulators let banks lower their lending standards?

A. Federal regulators at the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision work for Bush and he was pushing his “Ownership Society” programs that was a major and successful part of his re election campaign in 2004. And Bush’s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)

Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Invesntment bank’s capital requirements, Net Capital rule
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional 440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING


But the biggest policy was regulators not enforcing lending standards.

 

[Dad2three]

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


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."


June 17, 2004


Builders to fight Bush's low-income plan


NEW YORK (CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.


Home builders fight Bush's low-income housing - Jun. 17, 2004


Predatory Lenders' Partner in Crime

Predatory lending was widely understood to present a looming national crisis.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?

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

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


Eliot Spitzer - Predatory Lenders' Partner in Crime

 

[Dad2three]

Agency’s ’04 Rule Let Banks Pile Up New Debt

2004 Dubya allowed the leverage rules to go from 12-1 to 35-1+ which flooded the market with cheap money!


“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.


After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules.

http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=all



The SEC Rule That Broke Wall Street

The SEC Rule That Broke Wall Street.



Bush drive for home ownership fueled housing bubble


He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend as much as $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for government insured mortgages with no money down

 

[Dad2three]

The banks have known for 30 years the risks involved on the loan products they sold. This is why they lobbied so hard to allow them to sell the bad products to investors so they would not be holding the bad paper or the risks. The developed the products like stated income stated assets then bundled them to make it appear they were blended risks and then sold them to multiple investors. Who bought these high risk loans? Mostly pension funds and Insurances seeking higher returns who lost almost half of the pension funds value and the public that depended on those funds for retirement.




Nobody forced the big five investment banks to do what they did; they were not subject to CRA or other regulations common to depository banks. In fact, they mainly bought and sold loans rather than originate them. They did it because they thought they would make money.

 

[Mr. H.]

Why is it so difficult for Liberals to live in the present?

 

[kiwiman127]

Why is it so difficult for Liberals to live in the present?

Well H, not living in the present seems to be a non-partisan thing we got going on here. Just yesterday, I posted a song from the early 70's! And to continue being a rebel,,,,,,,,,,,,
[ame=http://www.youtube.com/watch?v=uAsV5-Hv-7U&feature=kp]Don McLean- American Pie (with Lyrics) - YouTube[/ame]

Oh no,,,,,,

 

[Dad2three]

Why is it so difficult for Liberals to live in the present?

Why can't conservative learn from their past mistakes? Why do they have to keep doing the same thing over and over and getting the same results?

Harding/Coolidge 'believed in' laizze affaie economies, brought US the GOP great depression

Reagan ignored regulator warnings THAT STARTED IN 1984 and continued the deregulation of S&L's, about 90% of the S&L crisis could've been averted, IF Ronnie 'believed in' Gov't and it's regulators

TWENTY YEARS LATER, EXACTLY, the FBI started warning Dubya of an EPIDEMIC of mortgage fraud (2004) in the mortgage industry, but with resources they could stop what could be as large as the S&L crisis. Bush gutted them by 1/3rd instead

 

[Mad Scientist]

What did Bush OR Obama have to do with the Federal Reserves Zero Interest Rate Policy (ZIRP)?

Oh yeah, nothing. Because it's Privately Owned Bank.

 

[CrusaderFrank]

2004?

LOL

It started in 2004?

LOL

The Koch Brothers are going to have to pay you extra for making Libs look so moronic

 

[Dad2three]

What did Bush OR Obama have to do with the Federal Reserves Zero Interest Rate Policy (ZIRP)?

Oh yeah, nothing. Because it's Privately Owned Bank.

Sure, that didn't help. But why didn't Bush listen to the other regulators or the 50 states who sued him?



Sorry, you can't blame the federal reserve for much more than 'believing in' libertarian philosophy, markets will look out for itself



The former Federal Reserve chairman, Alan Greenspan, has conceded that the global financial crisis has exposed a "mistake" in the free market ideology which guided his 18-year stewardship of US monetary policy.


"I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms," said Greenspan.


Greenspan - I was wrong about the economy. Sort of | Business | The Guardian


Regulators and policymakers enabled this process at virtually every turn. Part of the reason they failed to understand the housing bubble was willful ignorance: they bought into the argument that the market would equilibrate itself. In particular, financial actors and regulatory officials both believed that secondary and tertiary markets could effectively control risk through pricing.


http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf

 

[Katzndogz]

Bush tried 17 times to stop the community reinvestment act. He could never overcome Franklin Raines being black.

 

[Dad2three]

2004?

LOL

It started in 2004?

LOL

The Koch Brothers are going to have to pay you extra for making Libs look so moronic

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets OCT 2008

 

[Stephanie]

lol
Dubyas great recession


So we call it the Obambam great recession?

 

[Dad2three]

Bush tried 17 times to stop the community reinvestment act. He could never overcome Franklin Raines being black.

Sure he did. You meant he 'warned' GOP Congress 17 times on GSE reforms, but blocked the only bill to get out of the GOP House with bipartisan support?



Bush talked about reform. He talked and he talked. And then he stopped reform. (read that as many times as necessary. Bush stopped reform). And then he stopped it again

Testimony from W’s Treasury Secretary John Snow to the REPUBLICAN CONGRESS concerning the 'regulation’ of the GSE’s 2004

“Mr. Frank: ...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.“


October 26, 2005

STATEMENT OF ADMINISTRATION POLICY

The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs' commitment to low-income homebuyers.

George W. Bush: Statement of Administration Policy: H.R. 1461 - Federal Housing Finance Reform Act of 2005

Yes, he said he was against it because it "would lessen the housing GSEs' commitment to low-income homebuyers"


June 17, 2004

(CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.


Home builders fight Bush's low-income housing - Jun. 17, 2004


BUT NO, THOUGH BUSH CRUSHED F/F (AS REGULATOR), THE GSE'S DIDN'T CAUSE THE BUSH SUBPRIME CRISIS


Private sector loans, not Fannie or Freddie, triggered crisis


The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets

Private sector loans, not Fannie or Freddie, triggered crisis | Economics | McClatchy DC

 

[Dad2three]

lol
Dubyas great recession


So we call it the Obambam great recession?

DECEMBER 2007

The Economic Consequences of Mr. Bush
The next president will have to deal with yet another crippling legacy of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz, sees a generation-long struggle to recoup.


The Economic Consequences of Mr. Bush | Vanity Fair

 

[Dad2three]

 

[Luddly Neddite]

RWs won't look at these but the fact is, Bush and Cheney both lied about Iraq and the ME. So did the rest of that lousy bunch slimebags. They got hundreds of thousands killed and maimed and devastated a country - for oil money. They knew what they doing.

And now they want to blame their failures on Obama and, amazingly, they want to go back to Irag.

The Lies We Believed (And Still Believe) About Iraq | Blog | BillMoyers.com


Watch: The 1994 Video Dick Cheney Doesn?t Want You to See | Occupy Democrats

 

[Stephanie]

Maybe you find the facts on the Dear wonderful leader Obambam great recession

http://www.usmessageboard.com/economy/361483-headed-for-a-recession.html#post9326126