House Republicans Invite the Architect of the Financial Crisis for Advice

[nuhuh]

Former GOP Senator Phil Gramm had a lot to sat when he appeared at the invitation of Republican Congressmen. Perhaps the most ridiculous thing he had to say was his outrage at the lousy $75 million his friend Edward Whitacre got when he retired from AT&T.
“If there’s ever been an exploited worker” it was Whitacre, said Gramm, testifying on the fifth anniversary of passage of the Dodd-Frank financial reform bill. Gramm appeared genuinely aggrieved by Whitacre’s shabby treatment and literally pounded the table while speaking.

Whitacre actually received a retirement package totaling $158 million.

Five years after the passage of a sweeping Wall Street reform package in the wake of the worst financial crisis in generations, lawmakers opposed to strict government policing of the financial industry are inviting two prominent deregulators back to the scene of the crime.

When the House Financial Services Committee (HFSC) hears from former Sen. Phil Gramm (R-TX) and longtime conservative analyst Peter Wallison on Tuesday, the pair will have their laissez-faire perspectives on the money business elevated once again.

Gramm will blast Dodd-Frank’s reforms as not just “shackling economic growth” but “imperiling our freedom,” according to a draft copy of his prepared testimony. Gramm’s central theme is the idea that Dodd-Frank created a system of rules that are too arbitrary and too subject to bureaucratic whimsy for bankers to know what they can expect and plan accordingly. But the draft remarks also make room for comparing the law’s creation of in-house regulatory positions at Too Big To Fail banks to the old Soviet Union’s habit of injecting party politics into even the smallest manufacturing concern.

The hearing is entitled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?” The HFSC has been ground zero for efforts to undermine the parts of Dodd-Frank reform that are still in the works and repeal the ones that have gone into effect.

Gramm brings a history of interfering with America’s regulators to Capitol Hill just as lawmakers are trying to use the budget process to tear down the Consumer Financial Protection Bureau’s (CFPB) independence and remake it in the image of other regulators that are more subject to legislator influence. The attack on CFPB structures is just the latest in a long string of maneuvers to sabotage Dodd-Frank reform. House Republicans won repeal of a key provision of the law by inserting an amendment written by Citigroup lobbyists into last winter’s budget compromise. They have under-funded key regulatory agencies for years, weakening the government’s ability to make good on the law’s promises. They have tried to roll back new protections for people who buy mobile homes. Their Senate colleagues have drummed up momentum for rolling back elements of Dodd-Frank reform that would benefit the largest banks under the guise of seeking regulatory relief for small banks. And there are plenty more favors to the industry on tap, if past is prologue. Read the complete article at House Republicans Invite Architect Of The Financial Crisis Over For Advice ThinkProgress

 

[Stephanie]

LOL, freaking DNC Washington Compost. My freaking gawd are they lower than a snake

 

[whitehall]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

 

[1stRambo]

Yo,

Former GOP Senator Phil Gramm had a lot to sat when he appeared at the invitation of Republican Congressmen. Perhaps the most ridiculous thing he had to say was his outrage at the lousy $75 million his friend Edward Whitacre got when he retired from AT&T.
“If there’s ever been an exploited worker” it was Whitacre, said Gramm, testifying on the fifth anniversary of passage of the Dodd-Frank financial reform bill. Gramm appeared genuinely aggrieved by Whitacre’s shabby treatment and literally pounded the table while speaking.

Whitacre actually received a retirement package totaling $158 million.

Five years after the passage of a sweeping Wall Street reform package in the wake of the worst financial crisis in generations, lawmakers opposed to strict government policing of the financial industry are inviting two prominent deregulators back to the scene of the crime.

When the House Financial Services Committee (HFSC) hears from former Sen. Phil Gramm (R-TX) and longtime conservative analyst Peter Wallison on Tuesday, the pair will have their laissez-faire perspectives on the money business elevated once again.

Gramm will blast Dodd-Frank’s reforms as not just “shackling economic growth” but “imperiling our freedom,” according to a draft copy of his prepared testimony. Gramm’s central theme is the idea that Dodd-Frank created a system of rules that are too arbitrary and too subject to bureaucratic whimsy for bankers to know what they can expect and plan accordingly. But the draft remarks also make room for comparing the law’s creation of in-house regulatory positions at Too Big To Fail banks to the old Soviet Union’s habit of injecting party politics into even the smallest manufacturing concern.

The hearing is entitled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?” The HFSC has been ground zero for efforts to undermine the parts of Dodd-Frank reform that are still in the works and repeal the ones that have gone into effect.

Gramm brings a history of interfering with America’s regulators to Capitol Hill just as lawmakers are trying to use the budget process to tear down the Consumer Financial Protection Bureau’s (CFPB) independence and remake it in the image of other regulators that are more subject to legislator influence. The attack on CFPB structures is just the latest in a long string of maneuvers to sabotage Dodd-Frank reform. House Republicans won repeal of a key provision of the law by inserting an amendment written by Citigroup lobbyists into last winter’s budget compromise. They have under-funded key regulatory agencies for years, weakening the government’s ability to make good on the law’s promises. They have tried to roll back new protections for people who buy mobile homes. Their Senate colleagues have drummed up momentum for rolling back elements of Dodd-Frank reform that would benefit the largest banks under the guise of seeking regulatory relief for small banks. And there are plenty more favors to the industry on tap, if past is prologue. Read the complete article at House Republicans Invite Architect Of The Financial Crisis Over For Advice ThinkProgress

Yo, we have a Puppet for Obama here, he really don`t understand history, simple dumb-ass!!

"GTP"

 

[nuhuh]

Architect of the financial crisis? Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market. Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

I didn't expect you to pull out what you learned in your Fascist re-education camp, but there is a reason why the bill that replaced Glass-Steagall is called Gramm-Leach-Blilely no mistake that all three are prominent Republicans.

 

[Stephanie]

 

[Stephanie]

Look who's leading the pack. the comrade Hillary
that WashingtonCompost should be shunned. they are nothing but lies and DNC propaganda

 

[g5000]

Architect of the financial crisis?

Yes. He is the G in GLB. The Gramm in Gramm-Leach-Bliley.

Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market.

Wow. Now this is some seriously ignorant shit right here.

The GSEs were brought down by the practices of the 2003-2006 years, dipshit. Giant time bombs with three to five year fuses called ARMs. Along with other time bombs called Pick-A-Pay loans.

Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

Wall Street wanted the GSEs market share. That is why Bush tried to reduce their portfolios. Barney Frank and the Democratic minority did manage to stop the reduction of the portfolios, but even if they hadn't, the outcome would have been identical. The GSEs would still have imploded, and Wall Street would have imploded in even bigger fashion.

 

[nuhuh]

So Republicans ask the Captain of the Titanic to navigate the next financial iceberg floe. YCMTSU

 

[CrusaderFrank]

Gramm wasn't he the guy who thwarted the Presidents request to reform Fannie and Freddie, telling us "these two entities... Are not in any financial difficulties"

 

[CrusaderFrank]

Architect of the financial crisis?

Yes. He is the G in GLB. The Gramm in Gramm-Leach-Bliley.

Do you mean Barney Frank? Lest we forget the democrat party held the majority in both houses when Fannie Mae went under, bringing down the financial market.

Wow. Now this is some seriously ignorant shit right here.

The GSEs were brought down by the practices of the 2003-2006 years, dipshit. Giant time bombs with three to five year fuses called ARMs. Along with other time bombs called Pick-A-Pay loans.

Frank was chairperson of the powerful House Banking Committee which had oversight responsibility for Fannie Mae and Frank told Americans (and the world) that Fannie was solvent and doing fine when it was clearly on the verge of collapse. Frank was either a fool who didn't have a clue or he planned the collapse as the biggest October surprise in history. Nobody ever asked him what the hell he was talking about before he retired and ran off with his boyfriend.

Wall Street wanted the GSEs market share. That is why Bush tried to reduce their portfolios. Barney Frank and the Democratic minority did manage to stop the reduction of the portfolios, but even if they hadn't, the outcome would have been identical. The GSEs would still have imploded, and Wall Street would have imploded in even bigger fashion.

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie set the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

 

[nuhuh]

Gramm wasn't he the guy who thwarted the Presidents request to reform Fannie and Freddie, telling us "these two entities... Are not in any financial difficulties"

Well let's discuss exactly what Phil Gramm is responsible for:

"He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.

And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s most venerable institutions and spread the risks, like a virus, around the world." http://www.nytimes.com/2008/11/17/business/economy/17gramm.html?pagewanted=all&_r=0

The man was literally the champion of no government intervention in financial markets and is completely unabashed about it.

 

[g5000]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Even more factual, there were financial firms all over the planet in the picture. The GSEs were practically bit players.

Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper ending up on Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical. There would not have been less loans made. There would have been exactly the same number of toxic loans made. The GSEs would have made less, Wall Street would have made more. Zero sum. Still get a giant derivatives bubble.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

 

[CrusaderFrank]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper being moved onto the Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

You just don't know anything about the topic, its comical. You're cutting and pasting Krugmans moronic ideas.

You're off in the trillions column and labor under the misconception "wall street" FORCED f/f to buy subprime paper.

There's no fixing that kind of stupid

 

[g5000]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper being moved onto the Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

You just don't know anything about the topic, its comical. You're cutting and pasting Krugmans moronic ideas.

You're off in the trillions column and labor under the misconception "wall street" FORCED f/f to buy subprime paper.

There's no fixing that kind of stupid

Now you are just making shit up, and constructing straw men to boot.

You also have a reading comprehension problem, which is not surprising after seeing your nonsensical statement above.

I am not saying Wall Street would have been forced to buy the GSE loans. I am saying if the GSEs stopped making loans, Wall Street would have made those loans instead. They would have filled the demand vacuum.

Therefore, identical outcome.

Idiot.

 

[blackhawk]

It's always funny to see partisan idiots calling each other partisan idiots.

 

[CrusaderFrank]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper being moved onto the Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

You just don't know anything about the topic, its comical. You're cutting and pasting Krugmans moronic ideas.

You're off in the trillions column and labor under the misconception "wall street" FORCED f/f to buy subprime paper.

There's no fixing that kind of stupid

Now you are just making shit up, and constructing straw men to boot.

No one was forced to make those loans.

No one. That's another bullshit meme parroted by clueless retards.

You also have a reading comprehension problem, which is not surprising after seeing your nonsensical statement above.

I am not saying Wall Street would have been forced to buy the GSE loans. I am saying if the GSEs stopped making loans, Wall Street would have made those loans instead. They would have filled the demand vacuum.

Therefore, identical outcome.

Idiot.

One last time, F/F were writing AAA rated paper, the set the top tier and everyone underwrote behind them.

They dropped their standards to accept subprime as AAA, they were the binary financial black holes at the epicenter of the meltdown

 

[g5000]

There was tremendous demand by investors for the derivatives which were built on debts like home mortgages.

The GSEs and Wall Street and every bank on the planet were scrambling to meet that demand. No one was forcing any of them to make these toxic loans. They WANTED to make these loans so they could create the derivatives products to sell to investors.

And who were those investors? Saudi princes, blue bloods, and YOU. You visited your HR office one day and hacked off a piece of every paycheck and plunked it into a 401k account. Now go out there and invest my money!

In 2005, George Bush attempted to reduce the size of the GSE portfolios. The Democrats resisted.

Even if Bush had succeeded, and the GSEs were reduced in size, it would not have made any difference. They were already doomed by the end of 2005. No one knew it yet, though.

Not only that, if the GSEs reduced their loan portfolio, Wall Street would have picked up the slack. The same amount of loans would still be created. Wall Street would have seen a GSE reduction as a boon to their own bottom lines. For all we know, Wall Street was pushing Bush to reduce the GSE portfolios for this very reason.

This is what the retards do not know or understand.

 

[CrusaderFrank]

No matter how many times you channel Krugman, you're still off in the trillions column. Fannie and Freddie step the standard for the paper they wanted to buy. They underwrote subprime paper as AAA.

Get the basic facts right -- for once

Your bias is preventing you from ever understanding the facts.

The GSEs were just a part of the picture. In fact, Wall Street was the larger part of the picture. Wall Street was writing far more toxic paper than the GSEs, and had a much larger market share of the secondary market than the GSEs.

Reducing the portfolios of the GSEs in 2005 as Bush attempted to do would only have resulted in all that paper being moved onto the Wall Street's books. This is exactly what Wall Street wanted. Even more market share.

Therefore, the outcome would have been identical.

"They underwrote subprime paper as AAA" is nonsensical. You are a monkey trying to mimic your betters.

You just don't know anything about the topic, its comical. You're cutting and pasting Krugmans moronic ideas.

You're off in the trillions column and labor under the misconception "wall street" FORCED f/f to buy subprime paper.

There's no fixing that kind of stupid

Now you are just making shit up, and constructing straw men to boot.

No one was forced to make those loans.

No one. That's another bullshit meme parroted by clueless retards.

You also have a reading comprehension problem, which is not surprising after seeing your nonsensical statement above.

I am not saying Wall Street would have been forced to buy the GSE loans. I am saying if the GSEs stopped making loans, Wall Street would have made those loans instead. They would have filled the demand vacuum.

Therefore, identical outcome.

Idiot.

One last time, F/F were writing AAA rated paper, the set the top tier and everyone underwrote behind them.

They dropped their standards to accept subprime as AAA, they were the binary financial black holes at the epicenter of the meltdown

 

[g5000]

The GSEs were not setting the lead for lowering standards for loans. They followed Wall Street's lead.

I get really tired of proving this shit over and over and over. I really do.

Big-name Wall Street investment banking houses have joined Fannie and Freddie as buyers of subprime mortgages.

Wall Street has gotten involved in subprime securitization "in a very large way," says Brendan Keane, managing director of CS First Boston, New York. * CSFB and many of its peers on Wall Street have become subprime buyers in recent years. The group includes Merrill Lynch, Lehman Bros., Morgan Stanley, Greenwich Capital, UBS and Bank of America. More recently, Goldman Sachs has entered the competition through its purchase of Household International's collateral, which it securitized for the firm.

All this investor interest in subprime loans is propelled by the mountain of money piling up on the sidelines of the stock market, fearing entry into that uninviting terrain.

"Mutual funds, hedge funds, private-equity funds are sitting on a tremendous amount of liquidity," says Kenneth Slosser, managing director of investment banking at Friedman, Billings, Ramsey & Co., Inc., Irvine, California.

Look at those names. Starting their own securitizations. Propelled by the downturn of the 2001 recession in which the housing sector was the only performing sector. Not propelled by the GSEs. And quite knowingly were buying subprime loans.

Knowingly. Deliberately.

For the past several years, money has been flowing into subprime securitizations. Secondary market purchases of alternative-A loans, high-loan-to-value (LTV) loans, home-equity lines of credit, "scratch-and-dent loans" and other nonconforming products totaled $160 billion in 2002, according to CS First Boston. That was 77 percent higher than in 2001. This year, CSFB reports activity could top out at $200 billion, another 25 percent increase.

Meanwhile on the origination front, subprime lending is estimated to have grown threefold in the past decade. Data cited by syndicated housing columnist Ken Harney at the recent Subprime Lending Conference sponsored by the Mortgage Bankers Association of America (MBA) pegged this slice of the market at 15 percent of all mortgage originations. That's up from 5 percent in 1994.

According to data from CSFB, it led the securitizing pack last year with $9.6 billion in subprime loan transactions, followed by Lehman Bros. with $9.5 billion and Morgan Stanley with $8.7 billion.

You see? No one in government is forcing this. This was all Wall Street's idea. This is identical to the junk bond boom of the 80s. They thought they had made "risk management" their bitch.

And here we see Fannie Mae starting to join the pack:

Even as more "designer legislation" is enacted around the country, subprime loan acquisition continues to gain new appeal among a broader group of participants--partially due to the imprimatur of Fannie Mae and Freddie Mac, who are also actively buying.

Mercy Jimenez, Fannie Mae's Dallas-based senior vice president of marketing, puts the acquisition volume of the government-sponsored enterprise's (GSE's) Expanded Approval (EA) program (for alt-A loans) at $17 billion last year, about a third more than 2001. Because Fannie Mae "makes constant adjustments" in its criteria for buying nontraditional loans, Jimenez says she cannot predict whether more, or indeed less, buying will take place.

"We have our finger on the pulse of this product," says Jimenez. "As we have more history... we'll decide whether to increase volume or decrease [it] where we think the risk is not appropriately priced." At present, some 200 authorized lenders participate in EA.

Finger on the pulse. Seeing what the Wall Street demand is.

But here we see Freddie Mac holding back:

"We are not presently doing T-deal wraps," says Douglas Robinson, director of media relations for Freddie Mac, "because there are better ways to participate and provide liquidity" to that market segment. Going further, Robinson says, "A-minus is now flow business" for Freddie Mac, "and has been for more than a year." Robinson adds that T-deals are "an execution that we continue to have and, if appropriate, we'll use [again]."

By way of further explanation, market professionals say if Freddie Mac can structure entire deals, it does not have to wrap them with a capital outlay of insurance. It is more efficient for the GSE to approach the market this way. "They probably just said, 'Wait a second, we've got guys buying and other guys insuring--wouldn't one group be better than two?"' says one observer.

And here we see the competition from Wall Street providing the impetus to move down the credit spectrum so that everyone can get a piece of the securitization pie:

Bradley Brunts, managing director of capital markets for CitiMortgage Inc., St. Louis, agrees with Posner about the difficulty in defining what the GSEs will want to buy. "[N]onprime is becoming just Like the prime business," he says. As a result, "we're going to continue to see shrinking margins to a certain degree. The GSEs have a huge appetite to grow, [and] this is a wide margin product--so it's no surprise they'll be going after [it]," he says.

It stands to reason, adds Brunts, that "as you get more people into the [subprime] space ... the margins are going to shrink. The distinction between an originator of what is today a subprime product and a prime product is going to continue to blur."

Brunt predicts that "the big survivors are those who can deliver and respond to borrowers across the credit spectrum, and have the outlets to deliver that product into the secondary market."

Check out that last sentence. There is the if-we-don't-do-it-the-other-guy-will mentality right there that fed the whole bubble.


Here: SEC Info - Bear Stearns Asset Backed Securities Inc - 8-K - For 7/15/02 - EX-4.1

Here: Possible Dangers in Home Equity Loans | MidAtlantic Mortgages.com