Should the Glass Steagall Act be brought back?

[Dad2three]

Because you blogged about it you're an expert?

ROFLMAO!!!

You delivered the NYT's? So you had a paper route?

You take the cake, dam I knew someday I would run into a expert, UFB...

You're nothing close, novice, maybe? Even that would be a stretch to say the least...

Oh and BTW, Nehemiah was the first one to do DPA in '97...

But I forgot you're an expert

In 1997, Nehemiah designed and introduced the first privately funded down payment assistance program in the US, the Nehemiah Down Payment Assistance Program. This program offered down payment assistance for low- to moderate-income families who had sufficient credit and income to qualify for a conventional loan but needed funds for a down payment.

The Nehemiah Down Payment Assistance Program has helped over 325,000 families achieve homeownership and delivered gift funds of over $1.5 billion to households that would otherwise have not been able to afford a down payment on a new home. As part of the Nehemiah Down Payment Assistance Program, homebuyers have received valuable education courses that include financial management skills, budgeting, and credit management principles

About Us | NEHEMIAH - Corporation of America

Here is American Family Funds...

About American Family Funds

American Family Funds, Inc., located in Mobile, Alabama, is the administrator for The Dove Foundation, a 501(c)3 non-profit charity that provides nationwide downpayment and/or closing cost assistance to qualified American home buyers.

By working with lenders, real estate agents, builders, buyers, and sellers, American Family Funds helps families who can afford a monthly home mortgage payment, meet the lenders credit requirements, but do not have the cash to make a downpayment.

American Family Funds gives buyers the assistance they need in obtaining a down payment through our simple, non-governmental, down payment gift program.

Down Payment Gift Assistance works best with an FHA insured loan.

With an approved FHA lender, the buyer with a few credit slips or high ratios may qualify for a loan and receive 100% of their required down payment from American Family Funds Down Payment Gift Program.

AFF meets the HUD requirements to participate in down payment assistance as a non-profit charity set forth in the HUD guidelines in section 4155.1, REV 4, CNG 1 Chapter 2, Section 3C.


I suggest you broaden your scope because your research has no clue when DPA started, I am pretty sure I already told you, but you seem to have missed that...

And your research sucks bad, I thought you said you're an EXPERT? But you have no clue when DPA was initiated or how many DPA loans where done?

Genesis was another popular DPA Non Profit, hell there was a whole slew of them...

Hey I know you feel like your special and all, but seriously you don't have a f'ing clue little one...

I am having too much fun with this

Better call CPS...

Got it, you FINALLY know more about the SAFE HUD programs started under Clinton's HUD. THANKS. Now about your false premise that CRA ot GSE's caused Dubya's subprime crisis? ANYTHING? LOL




“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”



Some 6 percent of Fannie- and Freddie-sponsored loans made during that span were 90 days late at some point in their history, according to Fannie and Freddie’s regulator, the Federal Housing Finance Agency. By contrast, the FHFA says, roughly 27 percent of loans that Wall Street folded into mortgage-backed investments were at least 90 days late at some point.


Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast


CRA



The first point is a matter of timing. The current crisis is rooted in the poor performance of mortgage loans made between 2005 and 2007. If the CRA did indeed spur the recent expansion of the subprime mortgage market and subsequent turmoil, it would be reasonable to assume that some change in the enforcement regime in 2004 or 2005 triggered a relaxation of underwriting standards by CRA-covered lenders for loans originated in the past few years. However, the CRA rules and enforcement process have not changed substantively since 1995. This fact weakens the potential link between the CRA and the current mortgage crisis.


In total, of all the higher-priced loans, only 6 percent were extended by CRA-regulated lenders (and their affiliates) to either lower-income borrowers or neighborhoods in the lenders' CRA assessment areas, which are the local geographies that are the primary focus for CRA evaluation purposes. The small share of subprime lending in 2005 and 2006 that can be linked to the CRA suggests it is very unlikely the CRA could have played a substantial role in the subprime crisis.



To the extent that banking institutions chose not to include their affiliates' lending in their CRA examinations, the 6 percent share overstates the volume of higher-priced, lower-income lending that CRA examiners would have counted.



https://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4136&


Financial Crisis Inquiry Commission: "The CRA Was Not A Significant Factor In Subprime Lending Or The Crisis."


Federal Reserve: "We Find Little Evidence That Either the CRA Or The GSE [Government-Sponsored Enterprise] goals played a significant role in the subprime crisis."



Bernanke: The CRA Was Not "At The Root Of, Or Otherwise Contributed In Any Substantive Way To, The Current Mortgage Difficulties."




SF Reserve Bank's Yellen: "tudies Have Shown That The CRA Has Increased The Volume Of Responsible Lending To Low- And Moderate-Income Households."

How is it you can be so wrong about DPA's creation and be so right about CRA's influence in the Mortgage Meltdown?

Could it be you don't know as much as you thought?

I find it even more amusing you quote Bernanke...

It is very simple and yet you continue to try and make it complex...

No one is as concerned when they have ZERO invested in the asset...

It is very easy to understand for the simplest minds...

The admission that CRA was the birth right for this bizarre lending practice is political suicide for the Liberal Left...

Tell me how many loans for $150K do you want to fund for someone that has a difficult time paying Sears $25 a month?

What's your answer?

When homebuyers complain about the lenders requirements it is a very simple response "What would you want to know about me if I wanted you to lend me $200K?" Without question everyone's answer has been "EVERYTHING"...

You have no idea what you're talking about...

How many mortgages have you closed?

How many?

Hello?

Are you in there?

Got it, as a good conservative you blow right by the FACTS and don't actually address ANYTHING about the good quality CRA (that stopped Banksters red lining and didn't require ANY bad loans) that had been around for decades prior to Dubya's subprime 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 OCT 2008


Glad to see you admit you were part of the Bankster created mess cheered on by Dubya.Kudo's to you

 

[Dad2three]

.

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

So the guys who ASKED for the loan from the guys who set standards were the problem? *shaking head*


THIS IS THE EXACT THING THAT HAPPENED PRE GOP GREAT DEPRESSION, AFTER WW1 US DEBT RELATIVE TO GDP TRIPLED BETWEEN 1920-1930


Driven by the 'culture' then too?



Conservative Ideas Can't Escape Blame for the Financial Crisis


The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation. As the crisis quickly spiraled out of control, it quickly became apparent that the massive credit bubble of the mid-2000s, followed by the inevitable bust that culminated with the financial markets freeze in the fall of 2008, occurred predominantly among those parts of the financial system that were least regulated, or where regulations existed but were largely unenforced.

Predictably, many conservatives sought to blame the bogeymen they always blamed.



In March of 2008, Sen. Jon Kyl (R-AZ) blamed loans “to the minorities, to the poor, to the young” as causing foreclosures. Not long after, conservative commentator Michele Malkin went so far as to claim that illegal immigration caused the crisis.

This tendency to shift blame to minorities and poor people for the financial crisis soon developed into a well-honed narrative on the right.


Politics Most Blatant | Center for American Progress

 

[Dad2three]

You don't realize CDO'S are derivatives? lol

CDOs are bonds, not derivatives. LOL!

A CDO only becomes a derivative when it is used in conjunction with credit default swaps (CDS), in which case it becomes a Synthetic CDO.

Your claim was CDOs, not synthetic CDOs.

Weird how SO many things so you are full of it start here


CDO - Collateralised Debt Obligation They are basically a complex amalgamation of parts of mortgage backed securities (MBS).


MBSs are home loans that have been transformed into financial products so the original home loaner is able to sell them to others. So CDOs are derivatives of home loans. They are very hard to accurately value because of how complex they are.



As one journalist (Gretchen Morgenson) put it, CDOs became "the perfect dumping ground for the low-rated slices Wall Street couldn't sell on its own."

So CDOs are derivatives of home loans.

Start with a bond, slice it any way you'd like, the slices are still bonds.

Sure

 

[GWV5903]

Got it, you FINALLY know more about the SAFE HUD programs started under Clinton's HUD. THANKS. Now about your false premise that CRA ot GSE's caused Dubya's subprime crisis? ANYTHING? LOL




“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”



Some 6 percent of Fannie- and Freddie-sponsored loans made during that span were 90 days late at some point in their history, according to Fannie and Freddie’s regulator, the Federal Housing Finance Agency. By contrast, the FHFA says, roughly 27 percent of loans that Wall Street folded into mortgage-backed investments were at least 90 days late at some point.


Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast


CRA



The first point is a matter of timing. The current crisis is rooted in the poor performance of mortgage loans made between 2005 and 2007. If the CRA did indeed spur the recent expansion of the subprime mortgage market and subsequent turmoil, it would be reasonable to assume that some change in the enforcement regime in 2004 or 2005 triggered a relaxation of underwriting standards by CRA-covered lenders for loans originated in the past few years. However, the CRA rules and enforcement process have not changed substantively since 1995. This fact weakens the potential link between the CRA and the current mortgage crisis.


In total, of all the higher-priced loans, only 6 percent were extended by CRA-regulated lenders (and their affiliates) to either lower-income borrowers or neighborhoods in the lenders' CRA assessment areas, which are the local geographies that are the primary focus for CRA evaluation purposes. The small share of subprime lending in 2005 and 2006 that can be linked to the CRA suggests it is very unlikely the CRA could have played a substantial role in the subprime crisis.



To the extent that banking institutions chose not to include their affiliates' lending in their CRA examinations, the 6 percent share overstates the volume of higher-priced, lower-income lending that CRA examiners would have counted.



https://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4136&


Financial Crisis Inquiry Commission: "The CRA Was Not A Significant Factor In Subprime Lending Or The Crisis."


Federal Reserve: "We Find Little Evidence That Either the CRA Or The GSE [Government-Sponsored Enterprise] goals played a significant role in the subprime crisis."



Bernanke: The CRA Was Not "At The Root Of, Or Otherwise Contributed In Any Substantive Way To, The Current Mortgage Difficulties."




SF Reserve Bank's Yellen: "tudies Have Shown That The CRA Has Increased The Volume Of Responsible Lending To Low- And Moderate-Income Households."

How is it you can be so wrong about DPA's creation and be so right about CRA's influence in the Mortgage Meltdown?

Could it be you don't know as much as you thought?

I find it even more amusing you quote Bernanke...

It is very simple and yet you continue to try and make it complex...

No one is as concerned when they have ZERO invested in the asset...

It is very easy to understand for the simplest minds...

The admission that CRA was the birth right for this bizarre lending practice is political suicide for the Liberal Left...

Tell me how many loans for $150K do you want to fund for someone that has a difficult time paying Sears $25 a month?

What's your answer?

When homebuyers complain about the lenders requirements it is a very simple response "What would you want to know about me if I wanted you to lend me $200K?" Without question everyone's answer has been "EVERYTHING"...

You have no idea what you're talking about...

How many mortgages have you closed?

How many?

Hello?

Are you in there?

Got it, as a good conservative you blow right by the FACTS and don't actually address ANYTHING about the good quality CRA (that stopped Banksters red lining and didn't require ANY bad loans) that had been around for decades prior to Dubya's subprime 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 OCT 2008


Glad to see you admit you were part of the Bankster created mess cheered on by Dubya.Kudo's to you

You haven't stated any facts...

All you have done is copy & paste others opinions...

CRA was Carter's means to force banks to lend in low income areas, if they didn't they could not get the fed discount...

While I understand his purpose, it has not been successful in 34 years of law...

In fact it is a constant red tape issue for ALL LENDING...

Again you have no clue how this works...

 

[Dad2three]

How is it you can be so wrong about DPA's creation and be so right about CRA's influence in the Mortgage Meltdown?

Could it be you don't know as much as you thought?

I find it even more amusing you quote Bernanke...

It is very simple and yet you continue to try and make it complex...

No one is as concerned when they have ZERO invested in the asset...

It is very easy to understand for the simplest minds...

The admission that CRA was the birth right for this bizarre lending practice is political suicide for the Liberal Left...

Tell me how many loans for $150K do you want to fund for someone that has a difficult time paying Sears $25 a month?

What's your answer?

When homebuyers complain about the lenders requirements it is a very simple response "What would you want to know about me if I wanted you to lend me $200K?" Without question everyone's answer has been "EVERYTHING"...

You have no idea what you're talking about...

How many mortgages have you closed?

How many?

Hello?

Are you in there?

Got it, as a good conservative you blow right by the FACTS and don't actually address ANYTHING about the good quality CRA (that stopped Banksters red lining and didn't require ANY bad loans) that had been around for decades prior to Dubya's subprime 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 OCT 2008


Glad to see you admit you were part of the Bankster created mess cheered on by Dubya.Kudo's to you

You haven't stated any facts...

All you have done is copy & paste others opinions...

CRA was Carter's means to force banks to lend in low income areas, if they didn't they could not get the fed discount...

While I understand his purpose, it has not been successful in 34 years of law...

In fact it is a constant red tape issue for ALL LENDING...

Again you have no clue how this works...

Good you agree, CRA DIDN'T create Dubya's subprime failure, Banksters free to wheel and deal, with their new securitize and sell model, created this mess



It's time to stop the scapegoating: According to a study by the Federal Reserve, 94% of high-cost loans originated during the housing boom had nothing to do with Community Reinvestment Act goals. Lending to poor didn't spur crisis -Fed's Kroszner -




CRA was effective long before the subprime market existed. CRA was passed in 1977 to correct the longstanding problem of redlining – the lack of lending in low and moderate income communities and in communities of color.


Most subprime lenders weren’t covered under CRA.


Wall Street created the demand for riskier loans.


Regulatory oversight and accountability was missing


The majority of subprime loans went to white borrowers


CRA is not to Blame for the Mortgage Meltdown


It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.


Lest We Forget: Why We Had A Financial Crisis - Forbes



The 1990s were the heyday of CRA enforcement-for a variety of reasons ..demonstrates that property values went up dramatically in low and very low income urban census tracts during the 1990s, reversing severe declines during the prior two decades.



CRA does not either encourage or condone bad lending. Bank regulators were decrying bad subprime lending before the turn of the millennium



It's Still Not CRA | New America Blogs

 

[Dad2three]

How is it you can be so wrong about DPA's creation and be so right about CRA's influence in the Mortgage Meltdown?

Could it be you don't know as much as you thought?

I find it even more amusing you quote Bernanke...

It is very simple and yet you continue to try and make it complex...

No one is as concerned when they have ZERO invested in the asset...

It is very easy to understand for the simplest minds...

The admission that CRA was the birth right for this bizarre lending practice is political suicide for the Liberal Left...

Tell me how many loans for $150K do you want to fund for someone that has a difficult time paying Sears $25 a month?

What's your answer?

When homebuyers complain about the lenders requirements it is a very simple response "What would you want to know about me if I wanted you to lend me $200K?" Without question everyone's answer has been "EVERYTHING"...

You have no idea what you're talking about...

How many mortgages have you closed?

How many?

Hello?

Are you in there?

Got it, as a good conservative you blow right by the FACTS and don't actually address ANYTHING about the good quality CRA (that stopped Banksters red lining and didn't require ANY bad loans) that had been around for decades prior to Dubya's subprime 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 OCT 2008


Glad to see you admit you were part of the Bankster created mess cheered on by Dubya.Kudo's to you

You haven't stated any facts...

All you have done is copy & paste others opinions...

CRA was Carter's means to force banks to lend in low income areas, if they didn't they could not get the fed discount...

While I understand his purpose, it has not been successful in 34 years of law...

In fact it is a constant red tape issue for ALL LENDING...

Again you have no clue how this works...

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud

William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud - New Economic PerspectivesNew Economic Perspectives


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



In 1998, following the Savings & Loan debacle, Texas enacted a law—under none other than George Dubya Bush—limiting mortgage borrowing to 80 percent of the appraised value of a home (EQUITY LOANS)


DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources. Later in 2004 Dubya allowed the leverage rules to go from 12-1 to 35+-1 which flooded the market with cheap money!


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



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."

 

[GWV5903]

Got it, as a good conservative you blow right by the FACTS and don't actually address ANYTHING about the good quality CRA (that stopped Banksters red lining and didn't require ANY bad loans) that had been around for decades prior to Dubya's subprime 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 OCT 2008


Glad to see you admit you were part of the Bankster created mess cheered on by Dubya.Kudo's to you

You haven't stated any facts...

All you have done is copy & paste others opinions...

CRA was Carter's means to force banks to lend in low income areas, if they didn't they could not get the fed discount...

While I understand his purpose, it has not been successful in 34 years of law...

In fact it is a constant red tape issue for ALL LENDING...

Again you have no clue how this works...

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud

William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud - New Economic PerspectivesNew Economic Perspectives


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



In 1998, following the Savings & Loan debacle, Texas enacted a law—under none other than George Dubya Bush—limiting mortgage borrowing to 80 percent of the appraised value of a home (EQUITY LOANS)


DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources. Later in 2004 Dubya allowed the leverage rules to go from 12-1 to 35+-1 which flooded the market with cheap money!


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



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."

The S & L Crisis was a decade before this and it had nothing to do with the Home Equity Laws for Texas which BTW is one of the best in the nation...

How many times are you going to post crap you have no f'ing understanding about?

You're the poster boy for the Liberal Dumbass Club...

You can't help it can you...

 

[Dad2three]

You haven't stated any facts...

All you have done is copy & paste others opinions...

CRA was Carter's means to force banks to lend in low income areas, if they didn't they could not get the fed discount...

While I understand his purpose, it has not been successful in 34 years of law...

In fact it is a constant red tape issue for ALL LENDING...

Again you have no clue how this works...

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud

William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud - New Economic PerspectivesNew Economic Perspectives


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



In 1998, following the Savings & Loan debacle, Texas enacted a law—under none other than George Dubya Bush—limiting mortgage borrowing to 80 percent of the appraised value of a home (EQUITY LOANS)


DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources. Later in 2004 Dubya allowed the leverage rules to go from 12-1 to 35+-1 which flooded the market with cheap money!


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



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."

The S & L Crisis was a decade before this and it had nothing to do with the Home Equity Laws for Texas which BTW is one of the best in the nation...

How many times are you going to post crap you have no f'ing understanding about?

You're the poster boy for the Liberal Dumbass Club...

You can't help it can you...

So you can't use reading comprehension and critical thinking skills? Thanks for pointing that out again

Yes, Dubya signed the Texas law brought by the Realtors of Texas to stop ANOTHER conservative meltdown that they had under Ronnie's S&L meltdown. To bad Dubya couldn't look out for the rest of US with GOOD homes ownership policies...


George W. Bush was a major proponent of the kind of mortgages that banks had started making under the CRA. He urged low-to-no doc mortgages and the elimination of downpayments, just like the CRA regulators had long done. “We certainly don't want there to be a fine print preventing people from owning their home,” the President said in a 2002 speech. “We can change the print, and we've got to.”


July 8, 2004

HUD DATA SHOWS FANNIE MAE AND FREDDIE MAC HAVE TRAILED THE INDUSTRY IN PROVIDING AFFORDABLE HOUSING IN 44 STATES

New regulations will increase mortgage financing for homebuyers and underserved communities

This data covering 1999-2002 shows that combined, the GSEs have lagged behind the primary market in 44 states in their commitment to provide affordable housing opportunities for low- and moderate-income families.


HUD Archives: HUD DATA SHOWS FANNIE MAE AND FREDDIE MAC HAVE TRAILED THE INDUSTRY IN PROVIDING AFFORDABLE HOUSING IN 44 STATES


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


KEEP LOOKING IGNORANT BUBBA

 

[MikeK]

.

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

Mac,

I am completely ignorant on the subject of auto mechanics, so when my car needs work I am at the mercy of any mechanic I pick to do the work. Usually a diagnosis and estimate seems reasonable to me but there have been times when I knew I was being scammed. But ignorance can be costly.

The same circumstance applies to the average individual who plays around in the finance world. While an auto mechanic might manage to rip one off for a few hundred dollars the kind of swindling that takes place in the financial marketplace can be ruinous -- and often has been.

So, while I can't avoid occasionally placing myself at the mercy of car mechanics the closest I've ever gotten to investments is U.S. Savings Bonds.

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

While I have no substantive awareness of that business, based on everything I've read and heard my guess is the absence of serious and effective protective measures has enabled the rise of rampant corruption, bribery, insider trading, and any other kind of underhanded maneuvering that greed-driven environment might engender.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there..

Human nature being what it is there always will be a significant percentage of those whose choices are motivated by desire rather than reason. That doesn't mean they are bad people but rather potential victims of the voraciously dishonest and exploitative among us.

 

[Andylusion]

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

First let's talk about the regulators. Anyone who thinks that 'government regulators' are there for the benefit of the public, by preventing companies from doing wrong things, doesn't understand the real purpose of regulators.

Regulators are there to get companies to give money to politicians. I can't even begin to count the number of times where a story comes out that X person, went to Y company, and demanded they do something, or 'who know what might happen if you don't'.

Regulators are not there to prevent companies from screwing stuff up. They are there to benefit the politicians.

It's the nature of government. It's nothing explicit. There is no document somewhere saying "we're here to shake down political enemies". But the regulators know that if they attack the wrong people, the politicians will attack them. If they attack the right people, the politicians will back them.

[ame=http://youtu.be/IyqYY72PeRM]Democrats in their own words Covering up Fannie Mae, Freddie Mac scandal - YouTube[/ame]

Everyone has seen this video I'm sure, but if you haven't, I'll give you the run down....

FHEO is the regulator over Freddie Mac, and Fannie Mae. FHEO discovered clear, unambiguous fraudulent accounting practices, at the GSEs Fannie and Freddie. FHEO properly made up a report, and reported to Congress as they are supposed to do.

In this film, FHEO is directly attacked as being incompetent, and is threatened with being replaced.

And then you.... wonder why.... regulators don't want to regulate?

 

[Mac1958]

.

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

So the guys who ASKED for the loan from the guys who set standards were the problem? *shaking head*

So you take one (1) of the several examples I provide and pretend that I'm saying that was "the problem". I can always tell when a conversation is going to be a waste of time.

The most complicated financial meltdown our history had/has several components, some of which were political and some were not. But, as is their way, the partisan ideologues are just simplistically and predictably and obediently pointing the fingers at each other. Sure beats looking in the mirror.

And yes, a culture that celebrates & ignores buying stuff beyond a person's means, a culture that is incurious and shallow and intellectually lazy and largely can't be bothered to hold our "leaders" accountable, was/is a part of the problem.

I realize that doesn't fit into your partisan ideology, but most things in life are far more complicated that what fits into a person's partisan ideology.

.

 

[Andylusion]

.

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

A few years back, I heard the story of an old lady that showed up at the hospital. She was yelling about having a headache, and saying all kinds of crazy stuff, and was fairly well out of her mind.

So the hospital staff gave her medication for her headache, and pain relievers and so on, but nothing was working, and the lady was getting worse, and acting nutz.

Finally the staff asked her family if there was anything they could think of recently health related that could explain this. One said that she had a tooth that was hurting, but refused to go to the dentist. Sure enough, they found the tooth, and found a massive infection. They treated the infection, and she got better.

Let's talk about CDS, Credit Default Swaps.

A credit default swap, is insurance against a default.

Like any insurance anywhere for anything, it is a mitigation of risk. It's not an elimination of risk, just a mitigation of risk. Contrary to partisan hack belief, it does not allow banks to remove all risk from their books.

Now of course, what you get insurance on, determine how risky the CDS is. So if you place a CDS on a Mortgage Backed Security, which contains Sub-prime loans, and the loans defaults, causing the MBS to default, then the insurance company pays out the CDS.

So AIG, issued hundreds of CDS, on MBSs that contained sub-prime loans. Those loans defaulted, which caused the MBSs to default, which caused AIG to pay out, which caused them to have a equity problem, which the government bailed out.

Right? So why do we on the right, not focus on Credit Default Swaps?

Because we're focused the cause of the problem, not the symptom of the problem.

If there were no sub-prime loans, would there have been a massive default? Nope. If there was no massive default, would there have been Mortgage Backed Securities that defaulted? Nope. If there were no MBS that defaulted would there have been a mass of Credit Default Swaps that triggered? Nope. If there was no wave of CDSs that triggered would AIG have crashed? Nope.

Where was the cause? The cause was sub-prime loans. Not MBSs. Not CDSs. Not AIG.

See, before 1997, there were no Mortgage Backed Securities with sub-prime loans in them. Didn't exist.

Let's figure out why that changed first. All the other symptoms, start with this cause.

 

[Mac1958]

See, before 1997, there were no Mortgage Backed Securities with sub-prime loans in them. Didn't exist.

Let's figure out why that changed first. All the other symptoms, start with this cause.

I think folks would be helped quite a bit by reading your post. Well, the full post. It illustrates the complexity of one part of the problem. Unfortunately, few partisan ideologues are curious enough to dig down a bit.

I've heard several different accounts of precisely who started these things, when, and why (I believe Fannie Mae issued the first actual MBS back in the early 80's), but you bet, AIG would never have issued the CDS's if the market didn't perceive the risk in the MBS's.

And I'd like to know how it was that these incredibly complex and synthetic securities were sold with so little regulation. I don't care which party failed here, and it would not surprise me if it were both. In fact, I would expect it.

We were creating, improperly rating, approving, selling and buying these things -- all based on shitty, high-risk mortgage loans -- that virtually no one understood, and then insuring them virtually without regulatory oversight. That's a shitload of diverse parties involved, right under the noses of our "leaders". And this was just one element of the meltdown. Yet the partisan ideologues simplify it down to "it's all his fault". Holy crap. This is why things don't get fixed.

.

 

[Contumacious]

We were creating, improperly rating, approving, selling and buying these things -- all based on shitty, high-risk mortgage loans -- that virtually no one understood, and then insuring them virtually without regulatory oversight. That's a shitload of diverse parties involved, right under the noses of our "leaders". And this was just one element of the meltdown. Yet the partisan ideologues simplify it down to "it's all his fault". Holy crap. This is why things don't get fixed.

.

ABOLISH THE FEDERAL RESERVE BOARD and things will get fixed.

"Then of course there is the issue of the Fed’s monetary policy having created the housing bubble, characterized by a spectacular escalation of real estate values in every American city over the past decade or so. This created a further problem for the financial institutions that are victimized by the CRA. They are forced to make a certain amount of bad loans, but because of the Fed-created explosion in housing prices, many thousands of subprime borrowers no longer qualified, by a long stretch, for conventional mortgages based on their incomes.".

.

 

[Dad2three]

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

First let's talk about the regulators. Anyone who thinks that 'government regulators' are there for the benefit of the public, by preventing companies from doing wrong things, doesn't understand the real purpose of regulators.

Regulators are there to get companies to give money to politicians. I can't even begin to count the number of times where a story comes out that X person, went to Y company, and demanded they do something, or 'who know what might happen if you don't'.

Regulators are not there to prevent companies from screwing stuff up. They are there to benefit the politicians.

It's the nature of government. It's nothing explicit. There is no document somewhere saying "we're here to shake down political enemies". But the regulators know that if they attack the wrong people, the politicians will attack them. If they attack the right people, the politicians will back them.

[ame=http://youtu.be/IyqYY72PeRM]Democrats in their own words Covering up Fannie Mae, Freddie Mac scandal - YouTube[/ame]

Everyone has seen this video I'm sure, but if you haven't, I'll give you the run down....

FHEO is the regulator over Freddie Mac, and Fannie Mae. FHEO discovered clear, unambiguous fraudulent accounting practices, at the GSEs Fannie and Freddie. FHEO properly made up a report, and reported to Congress as they are supposed to do.

In this film, FHEO is directly attacked as being incompetent, and is threatened with being replaced.

And then you.... wonder why.... regulators don't want to regulate?

"FHEO is directly attacked as being incompetent, and is threatened with being replaced."


GOP CONGRESS DIDN'T HAVE BALLS? WHAT HAPPENED? KNOW WHICH BRANCH OF GOV'T WAS IN CHARGE OF FHEO (GSE's Fannie/Freddie)/ HINT BUSH'S EXECUTIVE BRANCH!

2003-2004 ACCOUNTING SCANDALS? lol

Strong opposition by the Bush administration forced a top Republican congressman to delay a vote on a bill that would create a new regulator for mortgage giants Fannie Mae and Freddie Mac.

Oct. 7, 2003
Oxley pulls Fannie, Freddie bill under heat from Bush - MarketWatch

Oxley pulls Fannie, Freddie bill under heat from Bush - MarketWatch

Testimony from W’s Treasury Secretary John Snow to the REPUBLICAN CONGRESS concerning the 'regulation’ of the GSE’s September 2003 “
“
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.“


THE TREASURY DEPARTMENT'S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES

- THE TREASURY DEPARTMENT'S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES


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"



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.


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.”


In April (2004), HUD proposed new federal regulations that would raise the GSEs targeted lending requirements. HUD estimates that over the next four years an additional one million low- and moderate-income families would be served as a result of the new goals.

HUD Archives: HUD DATA SHOWS FANNIE MAE AND FREDDIE MAC HAVE TRAILED THE INDUSTRY IN PROVIDING AFFORDABLE HOUSING IN 44 STATES


WASHINGTON - The U.S. Department of Housing and Urban Development released data today giving a state-by-state breakdown of the performance of Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. This data covering 1999-2002 shows that combined, the GSEs have lagged behind the primary market in 44 states in their commitment to provide affordable housing opportunities for low- and moderate-income families.


HUD Archives: HUD DATA SHOWS FANNIE MAE AND FREDDIE MAC HAVE TRAILED THE INDUSTRY IN PROVIDING AFFORDABLE HOUSING IN 44 STATES


WEIRD, PUT THOSE IN CHARGE OF GOV'T WHO DON'T 'BELIEVE IN' GOVT THEN ARE SHOCKED UNDER THEM THE GOP GREAT DEPRESSION, RONNIE'S S&L MELTDOWN AND DUBYA'S SUBPRIME CRISIS HIT US!



NOW WHAT POLICIES COULD'VE CHANGED BETWEEN 2003-EARLY 2004 GSE ACCOUNTING SCANDALS AND DUBYA'S SUBPRIME CRISIS?

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."
;


DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources. Later in 2004 Dubya allowed the leverage rules to go from 12-1 to 35+-1 which flooded the market with cheap money!

 

[Dad2three]

We were creating, improperly rating, approving, selling and buying these things -- all based on shitty, high-risk mortgage loans -- that virtually no one understood, and then insuring them virtually without regulatory oversight. That's a shitload of diverse parties involved, right under the noses of our "leaders". And this was just one element of the meltdown. Yet the partisan ideologues simplify it down to "it's all his fault". Holy crap. This is why things don't get fixed.

.

ABOLISH THE FEDERAL RESERVE BOARD and things will get fixed.

"Then of course there is the issue of the Fed’s monetary policy having created the housing bubble, characterized by a spectacular escalation of real estate values in every American city over the past decade or so. This created a further problem for the financial institutions that are victimized by the CRA. They are forced to make a certain amount of bad loans, but because of the Fed-created explosion in housing prices, many thousands of subprime borrowers no longer qualified, by a long stretch, for conventional mortgages based on their incomes.".

.

You should REALLY learn some history of the 'free markets' bubbles and busts pre fed reserve banking and WHY the federal reserve was created! w

 

[Dad2three]

See, before 1997, there were no Mortgage Backed Securities with sub-prime loans in them. Didn't exist.

Let's figure out why that changed first. All the other symptoms, start with this cause.

I think folks would be helped quite a bit by reading your post. Well, the full post. It illustrates the complexity of one part of the problem. Unfortunately, few partisan ideologues are curious enough to dig down a bit.

I've heard several different accounts of precisely who started these things, when, and why (I believe Fannie Mae issued the first actual MBS back in the early 80's), but you bet, AIG would never have issued the CDS's if the market didn't perceive the risk in the MBS's.

And I'd like to know how it was that these incredibly complex and synthetic securities were sold with so little regulation. I don't care which party failed here, and it would not surprise me if it were both. In fact, I would expect it.

We were creating, improperly rating, approving, selling and buying these things -- all based on shitty, high-risk mortgage loans -- that virtually no one understood, and then insuring them virtually without regulatory oversight. That's a shitload of diverse parties involved, right under the noses of our "leaders". And this was just one element of the meltdown. Yet the partisan ideologues simplify it down to "it's all his fault". Holy crap. This is why things don't get fixed.

.

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.”

 

[Dad2three]

.

I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

.

A few years back, I heard the story of an old lady that showed up at the hospital. She was yelling about having a headache, and saying all kinds of crazy stuff, and was fairly well out of her mind.

So the hospital staff gave her medication for her headache, and pain relievers and so on, but nothing was working, and the lady was getting worse, and acting nutz.

Finally the staff asked her family if there was anything they could think of recently health related that could explain this. One said that she had a tooth that was hurting, but refused to go to the dentist. Sure enough, they found the tooth, and found a massive infection. They treated the infection, and she got better.

Let's talk about CDS, Credit Default Swaps.

A credit default swap, is insurance against a default.

Like any insurance anywhere for anything, it is a mitigation of risk. It's not an elimination of risk, just a mitigation of risk. Contrary to partisan hack belief, it does not allow banks to remove all risk from their books.

Now of course, what you get insurance on, determine how risky the CDS is. So if you place a CDS on a Mortgage Backed Security, which contains Sub-prime loans, and the loans defaults, causing the MBS to default, then the insurance company pays out the CDS.

So AIG, issued hundreds of CDS, on MBSs that contained sub-prime loans. Those loans defaulted, which caused the MBSs to default, which caused AIG to pay out, which caused them to have a equity problem, which the government bailed out.

Right? So why do we on the right, not focus on Credit Default Swaps?

Because we're focused the cause of the problem, not the symptom of the problem.

If there were no sub-prime loans, would there have been a massive default? Nope. If there was no massive default, would there have been Mortgage Backed Securities that defaulted? Nope. If there were no MBS that defaulted would there have been a mass of Credit Default Swaps that triggered? Nope. If there was no wave of CDSs that triggered would AIG have crashed? Nope.

Where was the cause? The cause was sub-prime loans. Not MBSs. Not CDSs. Not AIG.

See, before 1997, there were no Mortgage Backed Securities with sub-prime loans in them. Didn't exist.

Let's figure out why that changed first. All the other symptoms, start with this cause.

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.”

Examining the big lie: How the facts of the economic crisis stack up

The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.” It is highly unlikely that a simultaneous boom and bust everywhere else in the world was caused by one set of factors (ultra-low rates, securitized AAA-rated subprime, derivatives) but had a different set of causes in the United States. Indeed, this might be the biggest obstacle to pushing the false narrative. How did U.S. regulations against redlining in inner cities also cause a boom in Spain, Ireland and Australia? How can we explain the boom occurring in countries that do not have a tax deduction for mortgage interest or government-sponsored enterprises? And why, after nearly a century of mortgage interest deduction in the United States, did it suddenly cause a crisis?



Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.



Private lenders not subject to congressional regulations collapsed lending standards. Taking up that extra share were nonbanks selling mortgages elsewhere, not to the GSEs. Conforming mortgages had rules that were less profitable than the newfangled loans. Private securitizers — competitors of Fannie and Freddie — grew from 10 percent of the market in 2002 to nearly 40 percent in 2006. As a percentage of all mortgage-backed securities, private securitization grew from 23 percent in 2003 to 56 percent in 2006

Examining the big lie: How the facts of the economic crisis stack up | The Big Picture


No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data)

1. Private markets caused the shady mortgage boom

2. The government’s affordability mission didn’t cause the crisis

4. Conservatives sang a different tune before the crash

MY FAV, THE PARTNER OF ED PINTO, THE GUY YOU SOURCED THE OTHER DAY:


AEI'S Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”


Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data) | The Big Picture




It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.



Lest We Forget: Why We Had A Financial Crisis - Forbes

 

[Dad2three]

See, before 1997, there were no Mortgage Backed Securities with sub-prime loans in them. Didn't exist.

Let's figure out why that changed first. All the other symptoms, start with this cause.

I think folks would be helped quite a bit by reading your post. Well, the full post. It illustrates the complexity of one part of the problem. Unfortunately, few partisan ideologues are curious enough to dig down a bit.

I've heard several different accounts of precisely who started these things, when, and why (I believe Fannie Mae issued the first actual MBS back in the early 80's), but you bet, AIG would never have issued the CDS's if the market didn't perceive the risk in the MBS's.

And I'd like to know how it was that these incredibly complex and synthetic securities were sold with so little regulation. I don't care which party failed here, and it would not surprise me if it were both. In fact, I would expect it.

We were creating, improperly rating, approving, selling and buying these things -- all based on shitty, high-risk mortgage loans -- that virtually no one understood, and then insuring them virtually without regulatory oversight. That's a shitload of diverse parties involved, right under the noses of our "leaders". And this was just one element of the meltdown. Yet the partisan ideologues simplify it down to "it's all his fault". Holy crap. This is why things don't get fixed.

.

"Yet the partisan ideologues simplify it down to "it's all his fault"."


Weird how the 3 major failings the past 100 years happened under the closest to those 'laizze affaire' guys, GOP depression, Reagan ignoring regulator warnings on the S&L crisis and Dubya running his home ownership society ponzi scheme where he ignored REPEATED regulator warnings (years) and cheered on the Banksters

Elect the guys who don't 'believe in' Gov't then shocked when it doesn't work? REALLY?

 

[Dad2three]

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I've never understood why the roles played by credit default swaps and the ratings agencies have been so underplayed (at least relatively speaking) in the meltdown. They were huge. Maybe it's because they're a little complicated to explain, and/or don't allow certain folks to just point their fingers at certain other folks for the entire mess.

The CDS's allowed those dealing in those astonishingly complicated -- I wonder how many people know that physicists were brought in by the quants to build them - CMO's were able to take that risk off their books by leveraging them with CDS's. Which, of course, allowed them to get deeper into CMO's.

And I wonder how many people know that the CDS's were virtually unregulated and therefore did not require the same kind of reserves that most other insurance policies require. Where were the fucking regulators when AIG was selling these things? Does anyone care?

And I wonder how the ratings agencies were allowed to get away with assigning AAA ratings to these piles of shit, and how those selling the CMO's were selling them to every type of investor, from municipalities to charities based on those ratings. Now I'm hearing that they're claiming their ratings were never meant to actually be a guide. That wasn't what they were saying BEFORE the shit hit the fan.

And I wonder why consumers were willing to sign on the dotted line for no-doc and low-doc loans knowing quite well they may not be able to make the payments, and consumers who signed on the dotted line knowing quite well that their mortgage payments would explode in X years are being treated as helpless victims, as if they were in third grade when they signed.

But, when you're dealing with a culture that is far more concerned about the new furniture in Kim Kardashian's sister's new house, getting the public to get this deep into such a massive and critical story just ain't gonna happen. Better to just blame this guy over here or that guy over there.

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So the guys who ASKED for the loan from the guys who set standards were the problem? *shaking head*

So you take one (1) of the several examples I provide and pretend that I'm saying that was "the problem". I can always tell when a conversation is going to be a waste of time.

The most complicated financial meltdown our history had/has several components, some of which were political and some were not. But, as is their way, the partisan ideologues are just simplistically and predictably and obediently pointing the fingers at each other. Sure beats looking in the mirror.

And yes, a culture that celebrates & ignores buying stuff beyond a person's means, a culture that is incurious and shallow and intellectually lazy and largely can't be bothered to hold our "leaders" accountable, was/is a part of the problem.

I realize that doesn't fit into your partisan ideology, but most things in life are far more complicated that what fits into a person's partisan ideology.

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Conservative Ideas Can't Escape Blame for the Financial Crisis



The onset of the recent financial crisis in late 2007 created an intellectual crisis for conservatives, who had been touting for decades the benefits of a hands-off approach to financial market regulation. As the crisis quickly spiraled out of control, it quickly became apparent that the massive credit bubble of the mid-2000s, followed by the inevitable bust that culminated with the financial markets freeze in the fall of 2008, occurred predominantly among those parts of the financial system that were least regulated, or where regulations existed but were largely unenforced.

Predictably, many conservatives sought to blame the bogeymen they always blamed


As the FCIC staff reports demonstrate fairly conclusively, it was the shadow banking system’s unregulated private securitization of mortgages that caused the financial crisis, not affordable housing policies. The FCIC staff has done an excellent job of compiling the facts, and we encourage you to check out the FCIC’s comprehensive reports to date. In our view, below are their most persuasive arguments,



Politics Most Blatant | Center for American Progress