The Big Lie

[daveman]

I'm saying she's full of shit. Try to follow along.

You say it, but, typically, you don't prove it.

Prove that she's pulling shit out of her ass? How am I supposed to do that, dave?

So you just have an impossible-to-prove claim based solely on leftist butthurt.

Typical.

Do you want me to find the thread that I'm claiming she never created?

Months ago, when I talked about the same points as have been raised in the OP...​

Strawman. She didn't say she started a thread.

 

[Synthaholic]

You say it, but, typically, you don't prove it.

Prove that she's pulling shit out of her ass? How am I supposed to do that, dave?

So you just have an impossible-to-prove claim based solely on leftist butthurt.

Typical.

Do you want me to find the thread that I'm claiming she never created?

Months ago, when I talked about the same points as have been raised in the OP...​

Strawman. She didn't say she started a thread.

And I called her a liar. She can find her old posts and show that she isn't lying, but she won't. Because she didn't make those posts.

 

[Samson]

That's because it turns out they were a minor cause.

You boys should keep up with the news!


Private sector loans, not Fannie or Freddie, triggered crisis



Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.


Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.


Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

"Federal housing data reveal that the charges aren't true, and that the private sector, not the [Federal] government or [Federal] government-backed companies, was behind the soaring subprime lending at the core of the crisis."

Maybe you're suseptable to naivate, but I'm not.

Do you have anything that refutes the Federal Reserve Board data?

Besides Mark LEVin's talking points, I mean . . .

I'm not aware of Mark Levin.

However, I am aware that data can be interpreted in a number of ways, and should be intelligently scrutinized for expample, let's examine the data from your article:

"Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006."

How HUD Mortgage Policy Fed The Crisis

The agency [HUD] neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending.

Fannie and Freddie CREATED A MARKET FOR MORE SUCH LENDING: The question is, How much more?

The answer (Federal reserve data) is A LOT:


1. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
2. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
3. Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics

This is why the INTERPRETATION of Federal housing data "reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis," is obviously disingenuous. The subprime lending done by private institutions was a REACTION to a false market created by HUD recommendations and poorly regulated FEDERAL LENDING.

 

[expat_panama]

...The answer (Federal reserve data) is A LOT:

1. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
2. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
3. Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics...

--and all privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

 

[Samson]

...The answer (Federal reserve data) is A LOT:

1. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
2. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
3. Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics...

--and all privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

Meh......Fannie and Freddie got the ball rolling: HOWEVER, I'm skeptical about how much private lenders protested.

The fact is I think private lenders were able to take government policy and turn it on its head with the invention of derivative hedge funds. Once a market was established for this, then everyone dove into the pool, and there were certainly few complaints about how deep it was....

 

[Toro]

...The answer (Federal reserve data) is A LOT:

1. More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
2. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
3. Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics...

--and all privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

Meh......Fannie and Freddie got the ball rolling: HOWEVER, I'm skeptical about how much private lenders protested.

The fact is I think private lenders were able to take government policy and turn it on its head with the invention of derivative hedge funds. Once a market was established for this, then everyone dove into the pool, and there were certainly few complaints about how deep it was....

Plus, the lenders' profits exploded.

Remember, most of the subprime lenders had nothing to do with this. They lent because they made an enormous amount of money doing so. Full stop. Government pressure had zero to do with the Countrywide's of the nation lending to condo speculators in Miami, San Diego and Las Vegas.

Ritholz is more accurate the conservatives.

 

[Samson]

--and all privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

Meh......Fannie and Freddie got the ball rolling: HOWEVER, I'm skeptical about how much private lenders protested.

The fact is I think private lenders were able to take government policy and turn it on its head with the invention of derivative hedge funds. Once a market was established for this, then everyone dove into the pool, and there were certainly few complaints about how deep it was....

Plus, the lenders' profits exploded.

Remember, most of the subprime lenders had nothing to do with this. They lent because they made an enormous amount of money doing so. Full stop. Government pressure had zero to do with the Countrywide's of the nation lending to condo speculators in Miami, San Diego and Las Vegas.

Ritholz is more accurate the conservatives.

While I agree that "Government pressure" might have had little to do with "the Countrywide's of the nation lending to condo speculators in Miami, San Diego and Las Vegas," and I'm certain no one held a gun to any lending officer at Countrywides' head, actions by Freddie and Fannie gave them the justification to go crazy.

 

[Wiseacre]

--and all privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

Meh......Fannie and Freddie got the ball rolling: HOWEVER, I'm skeptical about how much private lenders protested.

The fact is I think private lenders were able to take government policy and turn it on its head with the invention of derivative hedge funds. Once a market was established for this, then everyone dove into the pool, and there were certainly few complaints about how deep it was....

Plus, the lenders' profits exploded.

Remember, most of the subprime lenders had nothing to do with this. They lent because they made an enormous amount of money doing so. Full stop. Government pressure had zero to do with the Countrywide's of the nation lending to condo speculators in Miami, San Diego and Las Vegas.

Ritholz is more accurate the conservatives.

Subprime lenders also lent because they were allowed to do so, even encouraged to do so. No gov't pressure was needed for them to make as much money as they could, in fact there should have been sufficient gov't pressure to ensure mortgages were not written in cases where there was no chance it could be paid for. Underwriters and regulators alike were working in the same environment the lenders were - rubber stamp that sucker and move on to the next one. Fannie and Freddie may not have had the lion's share of these mortgages, but they lead the way. It was they who first bundled mortgages together and sold 'em as mortgage backed securities.

Make no mistake, everybody involved should share in the blame, including the people who bought houses they knew damn well they could not afford when the adjustable rate went up. Hell, nothing down, no skin in the game, why not live large? But for me the lion's hare of the blame should go to Congress and every administration from Bush41 forward. They were supposed to provide sound oversight, but instead lead us right off the cliff.

 

[daveman]

Prove that she's pulling shit out of her ass? How am I supposed to do that, dave?

So you just have an impossible-to-prove claim based solely on leftist butthurt.

Typical.

Do you want me to find the thread that I'm claiming she never created?

Months ago, when I talked about the same points as have been raised in the OP...​

Strawman. She didn't say she started a thread.

And I called her a liar. She can find her old posts and show that she isn't lying, but she won't. Because she didn't make those posts.

Like I said: You just have an impossible-to-prove claim based solely on leftist butthurt.

 

[expat_panama]

...privately made sub-prime loans were forced by a documented aggressive federal policy going back to Clinton requiring an annual quota to prevent charges of 'red-lining' and 'profiling'.

...I'm skeptical about how much private lenders protested....

Exactly. It's stupid to protest during a robbery, the only thing to do is shut up, hand over the money, and take back control later.

 

[expat_panama]

...Plus, the lenders' profits exploded...

No they didn't. Sure, that's the party line we keep hearing but the actual record shows--

--bank incomes from loans were flat and when the defaults hit bank losses skyrocketed.

 

[Toro]

...Plus, the lenders' profits exploded...

No they didn't. Sure, that's the party line we keep hearing but the actual record shows--

--bank incomes from loans were flat and when the defaults hit bank losses skyrocketed.

Look, I figured you're a reasonably bright fellow, so I didn't think I'd have to explain the very basic mistakes you are making with that graph. But because it comes from the St Louis Fed, you think it confers some level of authority supporting your argument.

It should be plainly obvious that you are posting graphs of ratios. This graph proves nothing in terms of total profitability.

Return on assets is return divided by total assets. Return on assets can remain constant if total assets increase, and assets can explode if the financial system takes on more leverage. And that is what has happened. Total assets in the financial system exploded (though in fairness, the acceleration in asset growth was a trend that began in the early 1970s). And you can't just look at banks because banks offloaded their balance sheets into the capital markets via securitization and were moving inventory into structured products and off their books.

Net loan losses and delinquencies are irrelevant to your argument that bank profits didn't explode in the 1990s and first half of the 2000s.

 

[asterism]

...Plus, the lenders' profits exploded...

No they didn't. Sure, that's the party line we keep hearing but the actual record shows--

--bank incomes from loans were flat and when the defaults hit bank losses skyrocketed.

Where is bank income from loans in that graph?

 

[editec]

The BIG LIE?

Easy peasy.

The AMERICAN DREAM is the biggest lie of all the lies we deal with.

The idea that with luck and pluck anybody can become a CAPITALIST.

No, at best most people can, with luck and pluck, can be solvent.

If you own your own business, and you work IN that business?

You are NOT a capitalist.

Capitalists do not work for their daily bread, their MONEY works for their daily bread.

 

[expat_panama]

...Look, I figured you're a reasonably bright fellow, so I didn't think....

Everyone has to know by now that my being bright has no affect on banks losing money. While I'd be willing to agree with your assertion that you didn't think, we all have to know that when the ratio of return to assets goes from positive to negative that profits turned into losses.

 

[Toro]

Everyone has to know by now that my being bright has no affect on banks losing money. While I'd be willing to agree with your assertion that you didn't think, we all have to know that when the ratio of return to assets goes from positive to negative that profits turned into losses.

If assets explode higher, then ROA can remain constant while profits explode.

This is a very, very simply concept.

ROA = profits / assets

profits = $1
assets = $100
ROA = 1%

or

profits = $10
assets = $1000
ROA = 1%

See how ROA in both cases are the same? See how profits are 10x higher in the second example yet how ROA is the same in both?

 

[Samson]

Everyone has to know by now that my being bright has no affect on banks losing money. While I'd be willing to agree with your assertion that you didn't think, we all have to know that when the ratio of return to assets goes from positive to negative that profits turned into losses.

If assets explode higher, then ROA can remain constant while profits explode.

This is a very, very simply concept.

ROA = profits / assets

profits = $1
assets = $100
ROA = 1%

or

profits = $10
assets = $1000
ROA = 1%

See how ROA in both cases are the same? See how profits are 10x higher in the second example yet how ROA is the same in both?

I'm still confused.

 

[Toro]

Everyone has to know by now that my being bright has no affect on banks losing money. While I'd be willing to agree with your assertion that you didn't think, we all have to know that when the ratio of return to assets goes from positive to negative that profits turned into losses.

If assets explode higher, then ROA can remain constant while profits explode.

This is a very, very simply concept.

ROA = profits / assets

profits = $1
assets = $100
ROA = 1%

or

profits = $10
assets = $1000
ROA = 1%

See how ROA in both cases are the same? See how profits are 10x higher in the second example yet how ROA is the same in both?

I'm still confused.

ex-pat is arguing that banks didn't see an increase in profitability because their returns on assets were fairly constant through the housing boom, and is using the metric Return on Assets to prove his point.

I'm arguing that is false because ROA is a ratio that is not indicative of total bank profitability, i.e. the sum of all profits. If both assets and profits move higher at a constant, ROA will remain constant.

 

[expat_panama]

...I'm still confused.

ex-pat is arguing that banks didn't see an increase in profitability because their returns on assets were fairly constant...

The choice is between my arguments and what Toro says I'm arguing, and once again we run into the problem of thinking that reading a critics quote is the same as reading the original.

What's going on is we started with--

...the lenders' profits exploded...

No data. No bank records. Just party line orthodoxy. That's when we needed actual bank reports --

--bank incomes from loans were flat and when the defaults hit bank losses skyrocketed.

--showing how losses (negative returns) came with soaring defaults.

 

[Dragon]

Look, I figured you're a reasonably bright fellow, so I didn't think I'd have to explain the very basic mistakes you are making with that graph.

You don't, except to the rest of us. Expat's deficiency isn't in intelligence, it's in honesty.