Paying my neighbors bills.

[Gunny]

I'm not sure I'm seeing the debate here, nor why some people have to make this partisan. The bankers lent money they didn't have and underwrote people that couldn't pay. The people that couldn't pay are just as guilty because no one forced them to sign the mortgages.

This fish stinks at the head and foot, and those in the middle, as usual, get to pay the bills for both.

It's not partisan for sure. There are bankers and brokers of all political stripes. What I am waiting for is the explanation of how exactly did they loan money that they didn't have ? Actually, that is a rhetorical question. I'm just fishing for the greedy folks in our midst that think raking interest from non existant money and riding the ship to the bottom is OK.

What's okay about it? It's getting rich by sleight-of-hand. It's using a loophole in semantics to make money from nothing. Doing so while knowing the market is going to tank is morally wrong, IMO. Knowingly screwing people over to make a buck is morally wrong, IMO.

Rewarding business failure with a bailout from the government is just plain stupid.

I disagree that CRA isn't part of the problem, or even a minimal part of it. It allowed people to sign for something they couldn't afford, and predatory lenders to sign them.

The whole problem in a nutshell to me is a financial structure running amok, and people living beyond their means. It takes two.

 

[Care4all]

I'm not sure I'm seeing the debate here, nor why some people have to make this partisan. The bankers lent money they didn't have and underwrote people that couldn't pay. The people that couldn't pay are just as guilty because no one forced them to sign the mortgages.

This fish stinks at the head and foot, and those in the middle, as usual, get to pay the bills for both.

It's not partisan for sure. There are bankers and brokers of all political stripes. What I am waiting for is the explanation of how exactly did they loan money that they didn't have ? Actually, that is a rhetorical question. I'm just fishing for the greedy folks in our midst that think raking interest from non existant money and riding the ship to the bottom is OK.

What's okay about it? It's getting rich by sleight-of-hand. It's using a loophole in semantics to make money from nothing. Doing so while knowing the market is going to tank is morally wrong, IMO. Knowingly screwing people over to make a buck is morally wrong, IMO.

Rewarding business failure with a bailout from the government is just plain stupid.

I disagree that CRA isn't part of the problem, or even a minimal part of it. It allowed people to sign for something they couldn't afford, and predatory lenders to sign them.

The whole problem in a nutshell to me is a financial structure running amok, and people living beyond their means. It takes two.

no, cra didn't...it is what ''they'' want you to think....it is a guise, covering up true shennanigans if not actual highway robbery....the people getting the borrowers didn't give 2 hoots about cra, they didn't even know it existed and fannie-freddie wasn't funding any of these scumbags....but the banks were, like wells fargo, and bank of america were funding the crappy mortgages that fannie and freddie would NOT underwrite....95% of the loans collapsed have come from them....countrywide, quickloan, and other fly by night mortgage brokers that popped up....

honest to god gunny, it had nothing to do with cra with these big mega banks giving the funding to other shotty mortgage companies producing these risky loans....

yes, they preyed on the poor, but not because of some community reinvestment act...they didn't give a hoot.

care

 

[Peejay]

I don't disagree with you much Gunny. Seems you understand the slight of hand used to manipulate the system.

The only question I would pose, and not taking more than their fair share of the blame off them, is if you acknowledge that the lenders intentionally used slight of hand, deciet and such in order to profit from these deals, what slight of hand did the borrowers use ? Did they try to pull off a sham in any fashion similar ? Or is it as I suspect, they are guilty of misjudgement for the most part ? Did the lenders not do the math and tell these folks what they could or couldn't afford ? And then it turned out that they were misled ? So, ok, they are guilty of being a little dumb, foolish and a lack of judgement. I'm still trying to arrive at actual intent. I can't see it.

 

[Gunny]

It's not partisan for sure. There are bankers and brokers of all political stripes. What I am waiting for is the explanation of how exactly did they loan money that they didn't have ? Actually, that is a rhetorical question. I'm just fishing for the greedy folks in our midst that think raking interest from non existant money and riding the ship to the bottom is OK.

What's okay about it? It's getting rich by sleight-of-hand. It's using a loophole in semantics to make money from nothing. Doing so while knowing the market is going to tank is morally wrong, IMO. Knowingly screwing people over to make a buck is morally wrong, IMO.

Rewarding business failure with a bailout from the government is just plain stupid.

I disagree that CRA isn't part of the problem, or even a minimal part of it. It allowed people to sign for something they couldn't afford, and predatory lenders to sign them.

The whole problem in a nutshell to me is a financial structure running amok, and people living beyond their means. It takes two.

no, cra didn't...it is what ''they'' want you to think....it is a guise, covering up true shennanigans if not actual highway robbery....the people getting the borrowers didn't give 2 hoots about cra, they didn't even know it existed and fannie-freddie wasn't funding any of these scumbags....but the banks were, like wells fargo, and bank of america were funding the crappy mortgages that fannie and freddie would NOT underwrite....95% of the loans collapsed have come from them....countrywide, quickloan, and other fly by night mortgage brokers that popped up....

honest to god gunny, it had nothing to do with cra with these big mega banks giving the funding to other shotty mortgage companies producing these risky loans....

yes, they preyed on the poor, but not because of some community reinvestment act...they didn't give a hoot.

care

I disagree. I've never seen you so partisan on an issue. The fact is, without CRA, a lot of people would not have qualified for loans. You're looking at only one side of the issue.

I'm not letting unscrupulous lenders off the hook. It STILL takes two. Without someone willing to sign for something they could not afford, those unscrupulous lenders can't bilk anyone for a thin dime.

 

[DiveCon]

What's okay about it? It's getting rich by sleight-of-hand. It's using a loophole in semantics to make money from nothing. Doing so while knowing the market is going to tank is morally wrong, IMO. Knowingly screwing people over to make a buck is morally wrong, IMO.

Rewarding business failure with a bailout from the government is just plain stupid.

I disagree that CRA isn't part of the problem, or even a minimal part of it. It allowed people to sign for something they couldn't afford, and predatory lenders to sign them.

The whole problem in a nutshell to me is a financial structure running amok, and people living beyond their means. It takes two.

no, cra didn't...it is what ''they'' want you to think....it is a guise, covering up true shennanigans if not actual highway robbery....the people getting the borrowers didn't give 2 hoots about cra, they didn't even know it existed and fannie-freddie wasn't funding any of these scumbags....but the banks were, like wells fargo, and bank of america were funding the crappy mortgages that fannie and freddie would NOT underwrite....95% of the loans collapsed have come from them....countrywide, quickloan, and other fly by night mortgage brokers that popped up....

honest to god gunny, it had nothing to do with cra with these big mega banks giving the funding to other shotty mortgage companies producing these risky loans....

yes, they preyed on the poor, but not because of some community reinvestment act...they didn't give a hoot.

care

I disagree. I've never seen you so partisan on an issue. The fact is, without CRA, a lot of people would not have qualified for loans. You're looking at only one side of the issue.

I'm not letting unscrupulous lenders off the hook. It STILL takes two. Without someone willing to sign for something they could not afford, those unscrupulous lenders can't bilk anyone for a thin dime.

they want to forget the fact that the CRA also changed the way banks did business so they wouldnt be taken to court under it

 

[Gunny]

I don't disagree with you much Gunny. Seems you understand the slight of hand used to manipulate the system.

The only question I would pose, and not taking more than their fair share of the blame off them, is if you acknowledge that the lenders intentionally used slight of hand, deciet and such in order to profit from these deals, what slight of hand did the borrowers use ? Did they try to pull off a sham in any fashion similar ? Or is it as I suspect, they are guilty of misjudgement for the most part ? Did the lenders not do the math and tell these folks what they could or couldn't afford ? And then it turned out that they were misled ? So, ok, they are guilty of being a little dumb, foolish and a lack of judgement. I'm still trying to arrive at actual intent. I can't see it.

Of course the borrowers were mostly guilty of bad judgment. So is a drunk driver. The latter is STILL held accountable. If I accidentally drive into my neighbor's car, I STILL have to pay.

People make mistakes. Not having any devious intent does not alleviate them of their responsibility for the mistake.

Like it or not, personal irresponsibility is half the equation.

Your same argument can be made the opposite way. I don't believe all the loans were based on unscrupulous people or practices. Lenders with the best of intentions can still easily fall prey to this situation.

And honestly, I'm more of an "okay, shit happened, how can we fix it?" type than a finger pointer. IMO, it's both sides at fault. What needs to be done to ensure this doesn't happen again?

Throwing money at it isn't a solution, IMO. People need to quit living on credit in this nation, and banks need to be a little more responsible with who they lend to. How do we make THAT happen?

 

[Peejay]

I don't disagree with you much Gunny. Seems you understand the slight of hand used to manipulate the system.

The only question I would pose, and not taking more than their fair share of the blame off them, is if you acknowledge that the lenders intentionally used slight of hand, deciet and such in order to profit from these deals, what slight of hand did the borrowers use ? Did they try to pull off a sham in any fashion similar ? Or is it as I suspect, they are guilty of misjudgement for the most part ? Did the lenders not do the math and tell these folks what they could or couldn't afford ? And then it turned out that they were misled ? So, ok, they are guilty of being a little dumb, foolish and a lack of judgement. I'm still trying to arrive at actual intent. I can't see it.

Of course the borrowers were mostly guilty of bad judgment. So is a drunk driver. The latter is STILL held accountable. If I accidentally drive into my neighbor's car, I STILL have to pay.

People make mistakes. Not having any devious intent does not alleviate them of their responsibility for the mistake.

Like it or not, personal irresponsibility is half the equation.

Your same argument can be made the opposite way. I don't believe all the loans were based on unscrupulous people or practices. Lenders with the best of intentions can still easily fall prey to this situation.

And honestly, I'm more of an "okay, shit happened, how can we fix it?" type than a finger pointer. IMO, it's both sides at fault. What needs to be done to ensure this doesn't happen again?

Throwing money at it isn't a solution, IMO. People need to quit living on credit in this nation, and banks need to be a little more responsible with who they lend to. How do we make THAT happen?

Regulate usury nearly out of existence. It is not needed.

And yes it takes two.....a perp and a victim.

 

[Vision]

Care,

I don't know why you posted that these people who ran Fannie Mae were appointed by President Bush.

Look up Raines, Johnson and Gorelic, they were not placed there by Bush and 5 minutes of looking would have told you that.

 

[elvis]

Care,

I don't know why you posted that these people who ran Fannie Mae were appointed by President Bush.

Look up Raines, Johnson and Gorelic, they were not placed there by Bush and 5 minutes of looking would have told you that.

for the dems, everything is bush's fault.

 

[Care4all]

Care,

I don't know why you posted that these people who ran Fannie Mae were appointed by President Bush.

Look up Raines, Johnson and Gorelic, they were not placed there by Bush and 5 minutes of looking would have told you that.

for the dems, everything is bush's fault.

Oh shut up elvis I have not bashed bush....you got some kind of insecurity complex with your loverboy? Do you have to pull out the whining in order to even debate a topic? GROW UP and debate like an adult and if you are an adult, then act like one.

I have done nothing but politely answer every thread in this post giving each and every one of you respect with your own opinions.

sheesh almighty!

Care

 

[Care4all]

Care,

I don't know why you posted that these people who ran Fannie Mae were appointed by President Bush.

Look up Raines, Johnson and Gorelic, they were not placed there by Bush and 5 minutes of looking would have told you that.

I did NOT POST THAT THESE PEOPLE were appointed by president bush, I posted that the presidents of fanny and freddies's positions are appointed by the president of the united states. PERIOD.

I did not say the president appointed and picked all the workers and management at fannie mae...Dive con and elvis made that up in their own heads and are trying to change the subject because they do not know how to continue to debate the topic without trying to change it....which is fine and dandy if they wish...but please don't imply that i have been on this thread for hours supplying link after link supporting my stance and write it off to me 'bush bashing...' because some people can't debate what they believe....and feel they can one up the person they are debating with by hollering BushBushBsuh bashing crap.

Care

 

[Care4all]

What's okay about it? It's getting rich by sleight-of-hand. It's using a loophole in semantics to make money from nothing. Doing so while knowing the market is going to tank is morally wrong, IMO. Knowingly screwing people over to make a buck is morally wrong, IMO.

Rewarding business failure with a bailout from the government is just plain stupid.

I disagree that CRA isn't part of the problem, or even a minimal part of it. It allowed people to sign for something they couldn't afford, and predatory lenders to sign them.

The whole problem in a nutshell to me is a financial structure running amok, and people living beyond their means. It takes two.

no, cra didn't...it is what ''they'' want you to think....it is a guise, covering up true shennanigans if not actual highway robbery....the people getting the borrowers didn't give 2 hoots about cra, they didn't even know it existed and fannie-freddie wasn't funding any of these scumbags....but the banks were, like wells fargo, and bank of america were funding the crappy mortgages that fannie and freddie would NOT underwrite....95% of the loans collapsed have come from them....countrywide, quickloan, and other fly by night mortgage brokers that popped up....

honest to god gunny, it had nothing to do with cra with these big mega banks giving the funding to other shotty mortgage companies producing these risky loans....

yes, they preyed on the poor, but not because of some community reinvestment act...they didn't give a hoot.

care

I disagree. I've never seen you so partisan on an issue. The fact is, without CRA, a lot of people would not have qualified for loans. You're looking at only one side of the issue.

I'm not letting unscrupulous lenders off the hook. It STILL takes two. Without someone willing to sign for something they could not afford, those unscrupulous lenders can't bilk anyone for a thin dime.

May I ask you, why is saying the CRA is not what caused this or began this PARTISAN....maybe if you explained that i could understand where you and dive and elvis and all those on the opposite view on this comes from?

The CRA has been around for over 30 years, did this happen before? Don't you think relations between congress and fannie freddie has been going on for years prior to this all of a sudden boom in home ownership?

How you can not ask yourself what changed or WHO IS INVOLVED in this crisis is beyond me??? I don't understand why you and Dive are taking the stances YOU ARE TAKING, and WITHOUT RYHME OF REASON gunny...

AT LEAST NONE that you or dive have expressed or shown to be valid or related to this problem in any way, shape or form...

POOR PEOPLE BUY HOUSES....they just buy houses much cheaper than yours...do you have a problem with that...?

there is nothing wrong with poor people buying houses they can afford...

MY INLAWS DID who were dirt poor with no credit and the house is paid for now....40 years later...

White people not covered by the cra got these loans, your mother and father got these loans, your neighbor your minister took out these loans...this is not about people that would qualify for a loan with fannie freddie...thru CRA

fannie freddie did not issue or underwrite or give the assurance of underwriting these risky loans, their charter did not allow it...fannie losened their requirement of a 5% downpayment to 0 downpayment, at the urging of president bush for his i home ownership initiative i believe, but what you are missing is that this still was for a CONVENTIONAL LOAN not a subprime loan and they still required, proof of income and assets and a credit check and income tax returns and bank accounts when applying....

Please, for the love of God...find out what happened here in this crisis Gunny...it is bigger than you think.....do it on your own, do it for yourself, and do it for your country...I can't help with this anymore...



Care

 

[DiveCon]

<snipped>
Fannie and freddie are privately owned banks and the president of these banks are appointed by the president of the united states, the head of both fannie and freddie were appointed by president Bush....


<snipped>
care

you most certainly DID say they were appointed by Bush
right there

 

[Care4all]

<snipped>
Fannie and freddie are privately owned banks and the president of these banks are appointed by the president of the united states, the head of both fannie and freddie were appointed by president Bush....


<snipped>
care

you most certainly DID say they were appointed by Bush
right there

YES, the president of the untited states, president bush, did appoint the president of fannie and the president of freddie...who are there now...IT IS HIS JOB, it is required by law....

and those are the ONLY 2 position that are appointed by our president and government, in their involvement with this PRIVATE BANK with private owners.

There are a kazillion jobs at fannie and freddie that are not intermingled with the congress or the president...

What did you want me to say, that the president did not appoint these positions and lie....i was informing you all the relation between our gvt and fanny and what i had learned was that our President appoints their presidents.....that's the only connection of us ruling them in some manner and even then, it is ONLY an appointment and these people appointed do not necessarily mean they are in bed with our gvt and not in bed with the people who employ them, fannie and freddie....

I don't think fannie and freddie are the big culprets in this mess, in fact I KNOW they are NOT....I think they did some other things wrong and had other scandals, but not so much involved in this scam....

so how could I have been bashing president bushDive, by saying he has appointed their presidents??

President Bush didn't even like having to appoint these positions, I remember it coming out that he thought the rules should be changed because he didn't think he should do it....

Care

 

[DiveCon]

<snipped>
Fannie and freddie are privately owned banks and the president of these banks are appointed by the president of the united states, the head of both fannie and freddie were appointed by president Bush....


<snipped>
care

you most certainly DID say they were appointed by Bush
right there

YES, the president of the untited states, president bush, did appoint the president of fannie and the president of freddie...who are there now...IT IS HIS JOB, it is required by law....

and those are the ONLY 2 position that are appointed by our president and government, in their involvement with this PRIVATE BANK with private owners.

There are a kazillion jobs at fannie and freddie that are not intermingled with the congress or the president...

What did you want me to say, that the president did not appoint these positions and lie....i was informing you all the relation between our gvt and fanny and what i had learned was that our President appoints their presidents.....that's the only connection of us ruling them in some manner and even then, it is ONLY an appointment and these people appointed do not necessarily mean they are in bed with our gvt and not in bed with the people who employ them, fannie and freddie....

I don't think fannie and freddie are the big culprets in this mess, in fact I KNOW they are NOT....I think they did some other things wrong and had other scandals, but not so much involved in this scam....

so how could I have been bashing president bushDive, by saying he has appointed their presidents??

President Bush didn't even like having to appoint these positions, I remember it coming out that he thought the rules should be changed because he didn't think he should do it....

Care

then how do you explain Bush, the divider, appointed DEMOCRATS(some of which either worked for Obama in his campaign, or are in his administration working for him now)

 

[Care4all]

you most certainly DID say they were appointed by Bush
right there

YES, the president of the untited states, president bush, did appoint the president of fannie and the president of freddie...who are there now...IT IS HIS JOB, it is required by law....

and those are the ONLY 2 position that are appointed by our president and government, in their involvement with this PRIVATE BANK with private owners.

There are a kazillion jobs at fannie and freddie that are not intermingled with the congress or the president...

What did you want me to say, that the president did not appoint these positions and lie....i was informing you all the relation between our gvt and fanny and what i had learned was that our President appoints their presidents.....that's the only connection of us ruling them in some manner and even then, it is ONLY an appointment and these people appointed do not necessarily mean they are in bed with our gvt and not in bed with the people who employ them, fannie and freddie....

I don't think fannie and freddie are the big culprets in this mess, in fact I KNOW they are NOT....I think they did some other things wrong and had other scandals, but not so much involved in this scam....

so how could I have been bashing president bushDive, by saying he has appointed their presidents??

President Bush didn't even like having to appoint these positions, I remember it coming out that he thought the rules should be changed because he didn't think he should do it....

Care

then how do you explain Bush, the divider, appointed DEMOCRATS(some of which either worked for Obama in his campaign, or are in his administration working for him now)

huh? what are you talking about? appointed democrats where and when?

As presidents of fannie or freddie? please explain?

 

[Care4all]

let me google it all to see if i understand it correctly...brb.

 

[Care4all]

ok, should have said Chief Executive officer, CEO, instead of the word President! And it looks like our President appoints the Board "Chairman" as well

Fannie Mae's government-appointed chief executive, Herbert M. Allison, and government-appointed board chairman, former Ernst & Young chief executive Philip A. Laskawy, also are on the board.

 

[editec]

Aside from the math mistake, if the bank records this $90,000 in deposits and then loans out $81,000 and records that in the account of the borrower, do you not understand that now there exist $171,000 in recorded deposits ? The depositor has $90,000 and the borrower has $81,000. Where did it come from ?

I think you and both know where it came from.

It came from the borrowers promise to pay it back.

OR...the alternative theory...it was created out of thin air for the benefit of the LENDER who them gets to charge interest on money they never had to loan out to begin with.

The later is my theory of how it really works.

Debt is indentured servitude to banks.

Wish I'd really understood that about 40 years ago.

The people who lived through the depression as adults tried to explain that to me, but of course, I was young, so what did they know?

They knew what I think this generation is about to learn...that debt is the golden chains which we put upon ourselves.

 

[Care4all]

this article was writen in december OF 2007....2007, it is very long but well worth the read, it explains in detail, what i couldn't....

Subprime: Tentacles of a Crisis - Finance & Development, December 2007

Securitization allows originators to earn fee income from their underwriting activities without leaving themselves exposed to credit, market, or liquidity risks because they sell the loans they make. If they want, originators can buy back the market risk by purchasing the securities. Investors get more liquid and more diversified mortgage assets, and the mortgage market as a whole obtains greater access to capital. Mortgage servicers earn lucrative fees and interest income. Issuers of mortgage-backed securities earn underwriting fees, and Fannie Mae and Freddie Mac, the government-sponsored enterprises, earn guarantee fees for their securitized issuances.



Private label securities

This market structure, with government-sponsored enterprises at its center, was a tremendous success and attracted competition from other major financial institutions.

After the government charged Freddie Mac and Fannie Mae several years ago with serious errors in complying with new accounting rules for derivatives, the major Wall Street firms launched an aggressive move into the issuance of mortgage-backed securities.

In 2003, the government-sponsored enterprises were the source of 76 percent of the mortgage-backed and asset-backed issuances; "private label" issues by major Wall Street firms accounted for the remaining 24 percent, according to Inside Mortgage Finance. By mid-2006, the government-sponsored enterprise share had fallen to 43 percent, with private label issues accounting for 57 percent. Among the large private label issuers were well-known firms—such as Wells Fargo, Lehman Brothers, Bear Stearns, JPMorgan, Goldman Sachs, and Bank of America—as well as several major lenders to high-risk subprime borrowers, such as Indymac, WAMU, and Countrywide.

Along with this radical, and rapid, shift in market shares came a similar change in underwriting standards.

Whereas Fannie Mae and Freddie Mac were almost entirely "prime" mortgage lenders,

the private label share grew in large part through the origination and securitization of high-risk subprime mortgages as well as "Alt-A" mortgages, which were made to borrowers who were more creditworthy than subprime customers but presented more risks than prime borrowers (see table).

Subprime: Tentacles of a Crisis - Finance & Development, December 2007

Locating the ruptures

Several points of weakness contributed to the market failure that allowed a 3 percentage point jump in serious delinquency rates on a subsection of U.S. mortgages to throw a $57 trillion U.S. financial system into turmoil and cause shudders across the globe:

The market first broke down at the juncture where the highest-risk tranches of subprime debt were placed with highly leveraged investors. Hedge funds have no capital requirements (they are unregulated in this regard), and the industry practice of highly leveraged investing allowed for excessive risk taking. Taking risks in proportion to invested capital has the prudential benefit of limiting risk taking and providing a buffer between losses and bankruptcy. Taking risks in excess of prudential limits is an unstable foundation for organizing capital markets and a weak point in the market structure.
The market also ruptured because unregulated and undercapitalized financial institutions were liquidity providers to the OTC markets in subprime collateralized debt obligations and credit derivatives. As soon as those markets' solvency troubles emerged, they became illiquid and trading essentially ceased.
Unregulated and undercapitalized mortgage originators also contributed to the crunch. The originators, like the hedge funds, operated with too little capital and used short-term financing to fund the subprime mortgages they made and expected to hold only briefly. When they could not sell those mortgages to the firms that packaged them into securities, many unregulated originators were forced out of business.
Lack of transparency in the OTC markets exacerbated the situation. The inability of market participants to identify the nature and location of the subprime mortgage risk led to a sudden shift in risk assessment. Once overly optimistic about the risks of the subprime market, scared and confused investors suddenly panicked and overestimated risk, shunning even senior, investment-grade tranches.
OTC markets also suffered from a failure of liquidity. Instead of showing resilience in the face of greater price volatility, these markets ceased trading as counterparties became untrustworthy and buyers fled.


A start at fixing the markets

Athough specific remedies are needed to restore stability to housing finance, the subprime crisis brought to light broader weaknesses. To deal with those weaknesses, several issues need to be considered.

First, the effectiveness of applying industry standards and any existing regulations pertaining to the use of collateral (margin) to OTC derivatives and hedge fund borrowing should be evaluated.

Second, policymakers ought to assess the impact on efficiency and stability of setting reporting requirements for hedge funds and OTC markets, such as those for derivatives and for securities—for example, collateralized debt obligations.

Third, extending measures—such as those in existence at stock exchanges and OTC markets for U.S. treasury securities—that oblige dealers to act as market makers ought to be considered. Otherwise, what can be done to help prevent illiquidity in key OTC markets?

Fourth, the benefits should be explored of placing mortgage originators under a prudential regulatory framework and federal authority that treats these firms like financial institutions, which they are.