So who is really at fault for this financial melt-down

Discussion in 'Congress' started by oreo, Oct 5, 2008.

  1. oreo
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    oreo Gold Member Supporting Member

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    Just watched a special on Fox News, October 5, 2008.

    Unbelievable!

    As we know, in 1999 the Clinton adminstration pressured Fannie & Freddie to lower standards (credit & income) to persuade banks to loan out mortgage money to lower income people & minorities. They went as far as not even requiring down payments. (Easy money raced through our economy--thru new mortgages to refinancing). Not only were lower income & minorities getting homes they could not afford, but others jumped on the band wagon--using this money to buy vacation beach homes.

    At this time--government lead by pressuring democrats wanted Freddie & Fannie (government) to back 50% of these new loans in their portfolios to be what we know can honestly say (risky borrowers.)

    Wall Street bought up these mortgages in packages to hedge their capital. When housing prices fell--these risky borrowers walked out of the homes they purchased, primarily because they had nothing to lose. No down payment = no investment to lose.

    In 2001 the Bush adminstration warned that Freddie & Fannie may be getting out of control. Then again in 2003 the Bush administration brought new legislation in to reign these agencies under control. Then again Allan Greenspan warned. Then in 2005 John McCain sponsored a bill to get tighter regulations on these agencies.

    So who blocked these several new pieces of legislation that would have saved us from this 700 BILLION DOLLAR bail-out.

    Every time a new piece of legislation was brought up to the banking/finance committee. Every democrat on the board would vote against new regulation, every republican on the board would vote for it. This happened at least 3 different times during the Bush adminstration.

    NAMES MENTIONED: Democrat Criss Dodd--democrat Barney Frank--democrat--Charles Schumer whom were adamant that Fannie & Freddie needed no stricter regulations. Criss Dodd being the # 1 donor receipiant of Fannie/Freddie--Barack Obama being the # 2 donor receipiant of Fannie/Freddie.

    ACORN--whose sole purpose was to go into banks & scream discrimination--was also a player in this. BTW--Barack Obama is connected to ACORN--& was actually this agencies attorney in his Chicago community organizing days--whom also promoted loans given to people who could not pay them back. (Note that the first bail-out bill that house republicans defeated had $20 BILLION dollars going to ACORN). This outraged them. ACORN is also currently under criminal investigation in several states for voter registration fraud.

    There is absolutely no doubt in my mind--who is to blame for this financial crisis. The party who started it, the party who ignored it, & the party who voted several times against any new regulation to reign these agencies in. Democrats
     
    Last edited: Oct 5, 2008
  2. Skull Pilot
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    Skull Pilot Platinum Member

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    FactCheck.org: Who Caused the Economic Crisis?

    The Real Deal


    So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:

    The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.


    Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.


    Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.


    Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.


    The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.


    Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.


    Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.


    Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.


    The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.


    An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.


    Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

    The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.
     
  3. editec
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    editec Mr. Forgot-it-All

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    Who is responsible for this disaster?

    Who made money because off it?
     
  4. newpolitics
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    newpolitics vegan atheist indy

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    All I need to read here to discount your arguement, is to know your source: FOX NEWS.

    The most conservatively spun news ever. What does that mean? They left out TONS of facts that would hold the conservatives guilty for as much, if not more, for our economic downturn. No doubt dem's have their share of blame for this. I think it would be more fair to say, is that it was simply 'Washington politics" that did this. Each side will believe that it was the other, but in reality it was both. Fox only tells you one side, becuase they have a very conservatively-spun agenda, beyond what I consider appropriate. They're more of a propogandist channel as far as I'm concerned, because they try to represent the party that is already in power, and to promote certain ideas and ideals as being 'right.' MSNC and CNN only poke fun and expose holes in certain political figures, not try to argue for an entire ideology. Fox is shameless.
     
  5. rayboyusmc
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    rayboyusmc Senior Member

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    Who had eight years to stop it? The current administration.

    They didn't. They pushed more deregulation. They exacerbated it. ( I always wanted to use that word.:D)

    It happened on your watch. You own it. Live with it.
     
  6. bigdaddygtr
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    bigdaddygtr Senior Member

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    You're that 17yr old right? Ok, because of that I'll giggle at your post and place it under the umbrella of neive

    Secondly little teenager, if the House and Senate Repub's truly wanted to pass legislation to stop this madness you say Bill Clinton started(By the way, it started long before him) they could of

    Now, go back to school and decide on who your going to homecoming with
     
  7. Skull Pilot
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    Skull Pilot Platinum Member

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    Anatomy of a Train Wreck
    Causes of the Mortgage Meltdown
    Stan J. Liebowitz

    http://www.independent.org/pdf/policy_reports/2008-10-03-trainwreck.pdf

    This piece is 29 pages but here are some excerpts. i hope you all take time to read the entire essay.

    How did this come about? Why were there so
    many defaults when the economy was not particularly
    weak? Why were the securities based upon these
    mortgages not considered anywhere as risky as they
    actually turned out to be?
    It is the thesis of this report that this large increase
    in defaults had been a potential problem waiting to
    happen for some time. The reason is that mortgageunderwriting
    standards had been undermined by
    virtually every branch of the government since the
    early 1990s. The government had been attempting
    to increase home ownership in the U.S., which had
    been stagnant for several decades. In particular, the
    government had tried to increase home ownership
    among poor and minority Americans
    ...

    After the government succeeded in weakening
    underwriting standards, mortgages seemed to require
    virtually no down payment, which is the main
    key to the problem, but few restrictions on the size
    of monthly payments relative to income, little examination
    of credit scores, little examination of
    employment history, and so forth also contributed.
    This was exactly the government’s goal.
    The weakening of mortgage-lending standards
    did succeed in increasing home ownership (discussed
    in more detail later). As home ownership rates increased
    there was self-congratulation all around.
    The community of regulators, academic specialists,
    and housing activists all reveled in the increase in
    home ownership and the increase in wealth brought
    about by home ownership. The decline in mortgageunderwriting
    standards was universally praised as an
    “innovation” in mortgage lending.
    The increase in home ownership increased the
    price of housing, helping to create a housing “bubble.”
    The bubble brought in a large number of speculators
    in the form of individuals owning one or two
    houses who hoped to quickly resell them at a profit.
    Estimates are that one quarter of all home sales were
    speculative sales of this nature.
    Speculators wanted mortgages with the smallest
    down payment and the lowest interest rate. These
    would be adjustable-rate mortgages (ARMs), option
    ARMs, and so forth. Once housing prices stopped
    rising, these speculators tried to get out from under
    their investments made largely with other peoples’
    money, which is why foreclosures increased mainly
    for adjustable-rate mortgages and not for fixed-rate
    mortgages, regardless of whether mortgages were
    prime or subprime. The rest, as they say, is history.
    ...

    1. The Birth of “Flexible
    Underwriting Standards”
    After the warm and fuzzy glow of “flexible
    underwriting standards” has worn off, we may
    discover that they are nothing more than standards
    that led to bad loans.


    2. Relaxed Lending Standards—
    Everyone’s Doin’ It

    Within a few months of the appearance of the Boston
    Fed study, a new manual appeared from the Boston
    Fed. It was in the nature of a “Nondiscriminatory
    Mortgage Lending for Dummies”3 booklet. The
    president of the Boston Fed wrote in the foreword:
    The Federal Reserve Bank of Boston wants to
    be helpful to lenders as they work to close the
    mortgage gap [higher rejection rate for minorities].


    I especially like this part:

    The part of this document that is of greatest interest
    to us is the section on underwriting standards.
    This is where we find the seeds of today’s mortgage
    meltdown. It starts out:
    Even the most determined lending institution
    will have difficulty cultivating business from
    minority customers if its underwriting standards
    contain arbitrary or unreasonable measures
    of creditworthiness
    .


    All this in just the first 10 pages. Please read the rest.
     
  8. WillowTree
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    WillowTree Diamond Member

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    starts with a D.
     
  9. editec
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    editec Mr. Forgot-it-All

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    I was hawking NINA mortgages in Connecticut in 1989, folks. ALL of the people I sold them to were white people buying homes in towns like CosCob and Wilton Connecticut.

    This is how I know this argument blaming Clinton for this problem is pure partisan nonsense.

    Often the reason that )as one example) the anestheisologist making $400,000 a year would go with a NINA is because he already owned so much real investment estate (he was buying up one and two bedroom condos in mostly affluent middle class neighbohoods) that he would not have qualified to take on any more debts otherwise.

    In point of fact I never managed to get one of those NINAs approved for poor people.

    Every one of them went to basically very affluent people who were gaming the real estate market.

    Every one of them.

    Now, I don't doubt that times changed, but to suggest that Clinton was solely responsible for a policy that started before he was in office is simply ignorant.
     
    Last edited: Oct 6, 2008
  10. sealybobo
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    sealybobo Diamond Member

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    Yes, it is laughable to blame Clinton or Carter, but these people have nothing else. I said before that no matter what Carter, Reagan, HW Bush or Clinton did, Bush 2 had 6 years to make it right. And those bills the GOP tried to pass between 2002-2006 were crap. They would have grown government and not fixed anything.

    I compare their solution to Bush's wish that we give Paulson $700 billion to fix the mess that he created and with ZERO oversite.

    This was the GOP solution. It was mearly to rob the treasury and to say later, "see, we tried". CYA. Cover Your Ass!!!

    :eusa_shhh::eusa_silenced::eusa_shifty:
     

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