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The problem with "regulation" is that the feds tend to assume that more regulation is better regulation, and that's just not true. Effective, elastic regulation is crucial, but when it's nothing more than red tape designed to restrict, it becomes a negative.
The mortgage market was not "over regulated". And when investment houses got in the mortgage business, they worked very hard through their lobbying organizations to take the teeth out of the regs that were in place. And they succeeded.
Now who sponsored the bill that allowed investment firms to write mortgage loans.
It's a tough balancing act, and we sure as hell don't have it figured out yet.
Not hardly. I spent 18 years writing mortgage loans. And we had a fine system in place when it was run by true mortgage bankers.
As soon as investment houses were permitted to write, fund and sell mortgage loans, all the BS loans started hitting the streets.
Now what was the legislative act that permitted this change?
And to think that people in the industry did not know what was going to happen is crazy.
I and some of my cohorts would bet on which month a loan would go into default.
Any decent underwriter or loan officer KNEW that we were creating a disaster. The ONLY reason it was allowed to continue is because of the money being made and with the sale of MBS, the risk of these bad loans could be passed on to an un suspecting investor.
Thanks to the credit rating agencies.
BTW, sub prime loans used to serve a useful purpose in the mortgage market. A niche if you will. When sub prime loans became the norm the end was near. I always wrote what was considered "A" paper loans and got out as the sub prime collapse was near. Besides that, as the end neared you couldn't find anything but crummy borrowers getting sub prime loans.
But to think the industry did not know what they were doing is crazy. They knew. They just didn't care. Greed was king. You had loan officers making 200k a year that had never made over 50. That will make you greedy. Managers making 500k a year. The amount of money being made was astounding.
But surely the right wing knows it was all Barney Frank's fault.
It is Barney Frank, Chris Dodd, Jim Johnson and Frank Raines fault
As Ken Burns says; Frontline is the finest show on TV. I agree. They don't mess around.
I did not know one true mortgage banker, regardless of political party, that thought the Grahm legislation was a good thing. NONE.
I also find it strange that the realtors didn't suffer to much critiscism for the role they played. And it was a big one. Many shitty borrowers would have never known about a "sub prime" loan if it wasn't for the realtor sending them to a sub prime loan officer.
The list of people and industries who were complicit in this is long and wide. Politicians, bankers, brokers, mortgage companies, realtors and consumers. Everyone took advantage of the system, directly or indirectly, and the system failed to respond. While both ends of the political spectrum point the finger at the other, that's just more political noise; the villains are everywhere.
The list of people and industries who were complicit in this is long and wide. Politicians, bankers, brokers, mortgage companies, realtors and consumers. Everyone took advantage of the system, directly or indirectly, and the system failed to respond. While both ends of the political spectrum point the finger at the other, that's just more political noise; the villains are everywhere.
That is where the primary blame lies.
I always suspected that the bottom 90% of Americans had it too good!According to the Congressional Budget Office ...... Since 1979 the average pre-tax income for the bottom 90% of households has decreased by $900, while that of the top 1% increased by over $700,000, as federal taxation became less progressive. From 1992-2007 the top 400 income earners in the U.S. saw their income increase 392% and their average tax rate reduced by 37%. In 2009, the average income of the top 1% was $960,000 with a minimum income of $343,927.
....., the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%.
.... The Great Recession (2007-)also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%, further widening the gap between the 1% and the 99%.
During the economic expansion between 2002 and 2007, the income of the top 1% grew 10 times faster than the income of the bottom 90%. In this period 66% of total income gains went to the 1%, who in 2007 had a larger share of total income than at any time since 1928.
http://en.wikipedia.org/wiki/Distribution_of_wealth
Obama had crook banker Jon Corzine author the Failed Stimulus for him
The list of people and industries who were complicit in this is long and wide. Politicians, bankers, brokers, mortgage companies, realtors and consumers. Everyone took advantage of the system, directly or indirectly, and the system failed to respond. While both ends of the political spectrum point the finger at the other, that's just more political noise; the villains are everywhere.
That is where the primary blame lies.
As for the degree of blame, I'll leave that to others. We'll never know, and it will always be up for debate, of course. I'd definitely add the repeal of Glass-Steagall to the list. But there's plenty of blame to go around, and not many clean hands.
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Fannie and Freddie are the binary black holes at the epicenter of the bubble and meltdown
They need to be liquidated and closed
They are 2 5,000 person organizations with identical missions
Talking about the 08 Collapse without mentioning Fannie and Freddie is like discussing Earth's climate without mentioning the Sun
Barack Obama has received more money from Wall Street Bankers than both George Bush & John McCain received. That's fact.
Barack Obama has received more money from Wall Street Bankers than both George Bush & John McCain received. That's fact.wow.....I'm convinced.
....And, how can anyone be expected to pay anything, while "conservatives" & Teabaggers have (so) successfully gridlocked D.C., to the point where NOTHING'S being accomplished....let-alone, exposing the hu$tle that Corporate America (and, The DICK; Armey) ran, on the dim-witted Teabaggers....who acted as human-shields for Wall $treet???!!!I did not know one true mortgage banker, regardless of political party, that thought the Grahm legislation was a good thing. NONE.
I also find it strange that the realtors didn't suffer to much critiscism for the role they played. And it was a big one. Many shitty borrowers would have never known about a "sub prime" loan if it wasn't for the realtor sending them to a sub prime loan officer.
The list of people and industries who were complicit in this is long and wide. Politicians, bankers, brokers, mortgage companies, realtors and consumers. Everyone took advantage of the system, directly or indirectly, and the system failed to respond. While both ends of the political spectrum point the finger at the other, that's just more political noise; the villains are everywhere.
And that's why the effects are so deep and complex, and will remain so for a while. Time to pay the piper.