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TOUCHE'LOL.
Seriously? You don't believe your own eyes?
Who would you accept as a "Housing expert" Paul Krugman? Jamie Gorelick? Franklin Raines? Robert Rubin?
LOL.
The only people whom I hear make this argument are ideologues who have a vested interest in explaining away why their ideology failed. No one else I know makes this argument. But if you find someone else who can prove your case - and no one has so far - please feel free to post it. I am more than interested in reading this evidence.
The evidence is in this thread.
http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html
It is a pretty simple argument, really. If you believe always and everywhere in the efficacy of the market, then the CRA should have caused the biggest increase in home prices in poor areas. But that did not happen. The biggest home prices were in places that have historically had housing bubbles - Arizona, California, Florida, etc., not in poor minority areas.
The other massive fact that seems to escape the ideologues is that the housing bubble was worldwide, with some places even worse than America. Please tell me how the CRA caused housing bubbles in Canada, Ireland, the UK, Spain, Portugal, Italy, South Africa, Singapore, China, Australia, etc.
excellent points toro!
Commodities Modernization Act exempted derivatives from regulatory oversight.
In 2004, the SEC allowed the Big 5 Wall Street investment banks to increase leverage
The OCC overrode states laws to regulate abusive mortgage practices, allowing subprime mortgage brokers to market any shit they wanted.
There's more.
FYI, the CEO of Ameriquest - one of the biggest abusers of shit subprime mortgage products, a company that was sued by 30 states for lying about their mortgage products, and a company that collapsed - was appointed ambassador to Holland by the Bush administration.
But CRA still mandated that banks HAD to provide them with essentially sub-prime paper, right?
If the banks didn't have a willing patsy to buy the mortgages in the form of the American Taxpayer, they would not have done anywhere near the volume they did, which is what tanked the US hosing market
If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.
De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.
Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.
But CRA still mandated that banks HAD to provide them with essentially sub-prime paper, right?
If the banks didn't have a willing patsy to buy the mortgages in the form of the American Taxpayer, they would not have done anywhere near the volume they did, which is what tanked the US hosing market
If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.
De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.
Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.
De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.
Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
I very seldom disagree with you. This is one of the times. The last two years befor the housing collapse started in late 2006, loans were being made to people who simply could not afford to make the house payment. Their mortgage was 90 percent of what they made if both the husband and wife were employed. That was wrong.
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
I very seldom disagree with you. This is one of the times. The last two years befor the housing collapse started in late 2006, loans were being made to people who simply could not afford to make the house payment. Their mortgage was 90 percent of what they made if both the husband and wife were employed. That was wrong.
Please show me the loan program that allowed for that.
I will agree that credit criteria sucked. But at the time you had rising housing prices and increasing incomes. With low rates it was reasonable that a couple could pay the loan if they tightened elsewhere and if they didnt there would be enough equity after 18 months (the time loans usualy default) to pay off the principle.
And while there were some people saying credit criteria was way too loose (I was one of them) we could easily have been wrong. And we were wrong for 4-5 years. Many people, including Angelo Mozilo, thought that "this time it's different" and they had good arguments.
I suppose governmetn could have stepped in and arbitrarily set credit criteria. But that would have squelched free enterprise and left many people who could have bought a home out.
But CRA still mandated that banks HAD to provide them with essentially sub-prime paper, right?
If the banks didn't have a willing patsy to buy the mortgages in the form of the American Taxpayer, they would not have done anywhere near the volume they did, which is what tanked the US hosing market
If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.
De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.
Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
If you have empirical evidence that the CRA was the cause of the housing bubble, I would love to see it. I would be happy to change my mind if shown to be wrong. However, I have yet to see any empirical evidence that the CRA was a cause of the financial catastrophe. The empirical evidence thus far says no.
De-regulation was a cause of the financial crisis. De-regulation often is. There is a paper by Ken Rogoff and Carmen Reinhardt - which they have included in a recent book entitled "This Time is Different" - which details pretty conclusively something like 100+ instances over time around the world of financial bubbles occurring after financial deregulation. That doesn't mean that financial deregulation is bad, but it often leads to excess creation of credit, which leads to overheated housing markets and eventual crashes.
Though financial deregulation was a significant cause of the financial crisis, it is nowhere near the most important cause. The most important cause IMO was the reckless and incompetent monetary policies of the Federal Reserve.
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
What regulatory body controlled the DEREIVATIVE market, Rabbi?
You keep making ascertains but ignorning contrary evidence.
Why?
I very seldom disagree with you. This is one of the times. The last two years befor the housing collapse started in late 2006, loans were being made to people who simply could not afford to make the house payment. Their mortgage was 90 percent of what they made if both the husband and wife were employed. That was wrong.
Please show me the loan program that allowed for that.
I will agree that credit criteria sucked. But at the time you had rising housing prices and increasing incomes. With low rates it was reasonable that a couple could pay the loan if they tightened elsewhere and if they didnt there would be enough equity after 18 months (the time loans usualy default) to pay off the principle.
And while there were some people saying credit criteria was way too loose (I was one of them) we could easily have been wrong. And we were wrong for 4-5 years. Many people, including Angelo Mozilo, thought that "this time it's different" and they had good arguments.
I suppose governmetn could have stepped in and arbitrarily set credit criteria. But that would have squelched free enterprise and left many people who could have bought a home out.
There was an expose' on Sixty Minutes that highlighted that exact fact out here in California. I doubt that such shenanigans were done all across the nation, but it does look like outrageous loans were done in California, Nevada and Arizona. If I remember right, the people were put into the house on a teaser rate that adjusted in a very short time period. When it adjusted, they did not have enough income to pay the mortgage and buy food at the same time. Almost all of the people were Blacks with a few Hispanics thrown in. These people did not have a clue what they were signing.
Does anybody know of other places?
De-regulation was not the cause of the financial crisis. Sorry. There is no, zero, eviednce for that statement.
The cause is well known and you mention it: ultra low interest rates feeding speculative frenzy and unsound lending. Unsound lending btw is only unsound in retrospect. While the loans are being made they look perfectly reasonable.
What regulatory body controlled the DEREIVATIVE market, Rabbi?
You keep making ascertains but ignorning contrary evidence.
Why?
Banks and brokerages are regulated by the Federal gov't under many different agencies.
I have no idea what "ascertains" are but I am not making them.
Quit trying to look good. You are only making yourself look like the idiot you are.
What regulatory body controlled the DEREIVATIVE market, Rabbi?
You keep making ascertains but ignorning contrary evidence.
Why?
Banks and brokerages are regulated by the Federal gov't under many different agencies.
I have no idea what "ascertains" are but I am not making them.
Quit trying to look good. You are only making yourself look like the idiot you are.
Nice attempt at tap dancing your way though the question but it doesn't get a pass.
NOBODY was regulating the dereivative industry, sport.
You can qubble you can parce, you can avoid the issue, but you're just wrong, sport.
The lack of regulations was one of the many things that cuased this depression.
Had the banks not been playing this game, the RE problems would not have been so toxic to the system as they turned out to be.
Rabbi?
Not hardly.
Rabbis are TEACHERS and you don't know enough about this issue to don that honorable label.
Who was in the "derivatives industry"? Was it not insurance companies (regulated by the gov't)? Was it not brokerages (regulated by the gov't)? Was it not banks (regulated by the gov't)? Was it not mortgage companies (regulated by the gov't)?
Your ignorance is astounding, matched only by the false sureness of your knowledge.
Supposn, you are a big government totalitarian who lives to see men's lives regulated by beneficent Big Brother. As such your opinions have been debunked by history and have no legitimacy. Your other thread on trade shows you are a wanker of the first order.
Sorry to point this out but it is the truth.
Supposn, you are a big government totalitarian who lives to see men's lives regulated by beneficent Big Brother. As such your opinions have been debunked by history and have no legitimacy. Your other thread on trade shows you are a wanker of the first order.
Sorry to point this out but it is the truth.
Oh Learned Man of the Sacred Scrolls, we all have our faults. I have not really found one with you yet, so as best I can tell politically, you and I are not that far apart. Good. If you really are a Rebbi, then you are an intelligent one, too.
Who was in the "derivatives industry"? Was it not insurance companies (regulated by the gov't)? Was it not brokerages (regulated by the gov't)? Was it not banks (regulated by the gov't)? Was it not mortgage companies (regulated by the gov't)?
Your ignorance is astounding, matched only by the false sureness of your knowledge.
Who was in the "derivatives industry"? Was it not insurance companies (regulated by the gov't)? Was it not brokerages (regulated by the gov't)? Was it not banks (regulated by the gov't)? Was it not mortgage companies (regulated by the gov't)?
Your ignorance is astounding, matched only by the false sureness of your knowledge.
That's a canard.
CDS was exempt from government regulation. It was specifically exempted in the Commodity Futures Modernization Act. Underwriters of CDOs bought CDS to hedge themselves against default but the writers of CDS - i.e. AIG - did not have to set aside reserves in case of default, as a regulated insurer must. Guys like Gramm and Greenspan argued that companies like AIG did not need regulation because they and the market would regulate themselves. When they did default, AIG could not pay back their obligations. The global financial system probably would have collapsed had the government not bailed out AIG. It almost collapsed when Lehman collapsed.
In 2004, the SEC waived capital restrictions for the Big Five brokers - Goldman, Merrill, Morgan Stanley, Lehman and Bear. Until then, those firms could only be leveraged 12-15:1 to equity, depending on assets. When these restrictions were lifted, they geared up there balance sheet and went to as high as 40:1. Lehman as a counter-party to many of these offshore and unregulated entities in the shadow system nearly brought down the global financial system as interbank lending froze and the TED spread rose to +400 bps above Treasuries, an unheard of level. Bear had to be bailed out by the Fed, Merrill was forced into a shotgun marriage with Bank of America, and would have collapsed otherwise given all the toxic equity portions of the shit CDOs they underwrote. Morgan was essentially bankrupt as hedge funds could not access their cash in the prime broker accounts. Goldman was days away from insolvency had the government not bailed out AIG.
So, yeah, deregulation contributed to the financial crisis. There are something like 60 or 70 instances since WWII alone of countries deregulating their financial system then experiencing a financial crisis after a housing bubble collapse. What happened in America is hardly new and was highly predictable.
Who was in the "derivatives industry"? Was it not insurance companies (regulated by the gov't)? Was it not brokerages (regulated by the gov't)? Was it not banks (regulated by the gov't)? Was it not mortgage companies (regulated by the gov't)?
Your ignorance is astounding, matched only by the false sureness of your knowledge.
That's a canard.
CDS was exempt from government regulation. It was specifically exempted in the Commodity Futures Modernization Act. Underwriters of CDOs bought CDS to hedge themselves against default but the writers of CDS - i.e. AIG - did not have to set aside reserves in case of default, as a regulated insurer must. Guys like Gramm and Greenspan argued that companies like AIG did not need regulation because they and the market would regulate themselves. When they did default, AIG could not pay back their obligations. The global financial system probably would have collapsed had the government not bailed out AIG. It almost collapsed when Lehman collapsed.
In 2004, the SEC waived capital restrictions for the Big Five brokers - Goldman, Merrill, Morgan Stanley, Lehman and Bear. Until then, those firms could only be leveraged 12-15:1 to equity, depending on assets. When these restrictions were lifted, they geared up there balance sheet and went to as high as 40:1. Lehman as a counter-party to many of these offshore and unregulated entities in the shadow system nearly brought down the global financial system as interbank lending froze and the TED spread rose to +400 bps above Treasuries, an unheard of level. Bear had to be bailed out by the Fed, Merrill was forced into a shotgun marriage with Bank of America, and would have collapsed otherwise given all the toxic equity portions of the shit CDOs they underwrote. Morgan was essentially bankrupt as hedge funds could not access their cash in the prime broker accounts. Goldman was days away from insolvency had the government not bailed out AIG.
So, yeah, deregulation contributed to the financial crisis. There are something like 60 or 70 instances since WWII alone of countries deregulating their financial system then experiencing a financial crisis after a housing bubble collapse. What happened in America is hardly new and was highly predictable.
Was the 1999 repeal of the Glass-Steagall Act an action that led to the 2008 collapse?
Does the repeal of Glass-Steagall qualify as "deregulation?"
