The smoking gun of the current economic Crisis we are all going to pay for

[Charles_Main]

While there are many causes of the current problems we face. A large part of the root cause of the credit crisis is the Community Reinvestment Act.

A high minded law wrote and passed into law by Democrats, and Pushed on lenders. Billed as help for the poor and minorities to get a home, and to stop what the Dems called unfair lending policies.

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The Dems claimed the Banks were only lending to the wealthy. Of course what this ignores is that for the most part they were only lending to "the wealthy" was because those are the people who can afford to pay back loans.

Now I know on this Liberal dominated board I will simply be dismissed and attacked for this post, but I suggest any of you who are open minded google the CRA and really read about it.

If you do you will see that it is really a map of point to Point of how we got to the place we are now. The instructions it made to Fanny and Freddy are the smoking gun. It instructed them to do what ever it took to enable low income people to secure loans for homes. It also laid out the instructions on how to put those loans into securities to be traded on the market.

The CRA is why when Nancy Pelosi says the Dems hold no responsibility in this Crisis she is telling you a bold faced lie. The CRA is surely a large part of the cause.

 

[dilloduck]

While there are many causes of the current problems we face. A large part of the root cause of the credit crisis is the Community Reinvestment Act.

A high minded law wrote and passed into law by Democrats, and Pushed on lenders. Billed as help for the poor and minorities to get a home, and to stop what the Dems called unfair lending policies.

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The Dems claimed the Banks were only lending to the wealthy. Of course what this ignores is that for the most part they were only lending to "the wealthy" was because those are the people who can afford to pay back loans.

Now I know on this Liberal dominated board I will simply be dismissed and attacked for this post, but I suggest any of you who are open minded google the CRA and really read about it.

If you do you will see that it is really a map of point to Point of how we got to the place we are now. The instructions it made to Fanny and Freddy are the smoking gun. It instructed them to do what ever it took to enable low income people to secure loans for homes. It also laid out the instructions on how to put those loans into securities to be traded on the market.

The CRA is why when Nancy Pelosi says the Dems hold no responsibility in this Crisis she is telling you a bold faced lie. The CRA is surely a large part of the cause.

You will probably be ignored like everyone else who has pointed out the disaster caused by affirmative action lending.

 

[Care4all]

it was forced on to no one...(you really think the very banks that have the POWER to force both dems and pubs to give them 700 BILLION, didn't have the power to push back on this act?)

it was USED as an excuse to make alot of money for alot of people, thru their own BAD and GREEDY negligent to their stock holders, business decisions...

 

[dilloduck]

it was forced on to no one...(you really think the very banks that have the POWER to force both dems and pubs to give them 700 BILLION, didn't have the power to push back on this act?)

it was USED as an excuse to make alot of money for alot of people, thru their own BAD and GREEDY negligent to their stock holders, business decisions...

You don't have to force cheap money on anyone---the banks were happy to borrow it and pass it on to those it was intended for. Now Congress will pay the bankers back. Do you see what happened there ?

 

[Care4all]

You don't have to force cheap money on anyone---the banks were happy to borrow it and pass it on to those it was intended for. Now Congress will pay the bankers back. Do you see what happened there ?

if the people kept their homes u might have a point...but nothing happened here, other than those on wall street, getting bailed out...AFTER they made a bundle

 

[dilloduck]

if the people kept their homes u might have a point...but nothing happened here, other than those on wall street, getting bailed out...AFTER they made a bundle

right--tricky how they swipe taxpayer money isn't it ?

 

[Care4all]

right--tricky how they swipe taxpayer money isn't it ?

it's always been this way, taking from the poor and middle class and giving it to the influential rich....but you used to deny such was their plan?

 

[dilloduck]

it's always been this way, taking from the poor and middle class and giving it to the influential rich....but you used to deny such was their plan?

I disagreed with you about who and how it was being done. It's the money changers. Sound familiar?

 

[jreeves]

it was forced on to no one...(you really think the very banks that have the POWER to force both dems and pubs to give them 700 BILLION, didn't have the power to push back on this act?)

it was USED as an excuse to make alot of money for alot of people, thru their own BAD and GREEDY negligent to their stock holders, business decisions...

Fannie and Freddie were able to take on this bad paper because everyone believed they federally backed. Well it turns out, this is true.
Freddie Mac: A Mercantilist Enterprise - Paul Cleveland - Mises Institute
While these institutions have been privatized to a degree, they still remain tied to the federal government in some important respects. In fact, Fannie Mae and Freddie Mac have access to a guaranteed line of credit of $2.25 billion with the U.S. treasury.[4] This guarantee, coupled by the perception that federal money would be used beyond the extent of the credit limit, allows both companies to maintain lower borrowing costs than would otherwise be the case. In many cases, the companies are able to sell bonds yielding only a few dozen basis points above U.S. treasury benchmarks. If the government's guarantee disappeared, the borrowing spreads for both companies would widen. Beyond the government's line of credit, these companies are also exempt from state and local income taxation and are exempt from SEC filings. Moreover, their securities are listed as government securities and can be held by banks and thrifts as low-risk bonds.[5] These benefits provide a significant advantage since such privileges are not offered to other financial institutions.
For the most part, Fannie Mae and Freddie Mac have affected private mortgage markets by securitizing mortgages through the selling of bonds based. Freddie Mac veered from this strategy in the early 1990s when the company's management sought to generate higher profits. Though its business of securitizing mortgages was growing steadily, managers determined that the company could generate greater profitability by holding mortgages in a portfolio rather than by merely securitizing them through issuing bonds.[6]

However, as with any investment, a higher return typically entails accepting greater risk and this fact applies as much to Freddie Mac as it does to any other enterprise. In its original form of operation, securitizing mortgage contracts by selling bonds in the debt market passed on any interest rate risk to the bondholders. But, this situation changed dramatically when Freddie Mac began to hold mortgages in its own portfolio. Since most of the mortgages pay a fixed rate of interest, any change in interest rates can significantly affect the value of the portfolio. For this reason, Freddie Mac's management decided to hedge their exposure to fluctuations in the market rate of interest by using derivatives. One of the main instruments that the company uses is the over-the-counter derivative product called an interest rate swap.[7] The swap market is used by global banks, brokers, and insurance companies everyday, and its usefulness is immeasurable. It allows financial companies to reduce risk. It also provides a means of financial speculation.[8]

Freddie Mac manages a portfolio valued in the hundreds of billions of dollars. Furthermore, the portfolio contains mortgages at different interest rates with different durations. The task of successfully hedging such a portfolio is monumental, and Freddie Mac is forced to engage in numerous interest rate swaps in an effort to attempt to protect itself from interest rate fluctuations.

 

[Ravi]

Charles, can you show me where this is written:

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The bill you are talking about made it illegal for banks to charge more bank fees and to charge higher interest rates to people that didn't happen to be white. Show me where banks were forced to do anything.

If you are interested in knowing what led to this crisis, read my short explanation here: http://www.usmessageboard.com/curre...-ing-deregulation-you-peons-3.html#post808614.

It saddens me dillo, that you buy into this shit. But I guess it doesn't really surprise me.

 

[editec]

You don't know what you're talking about, Charles.

Not you fault, of course, since you and the rest of us are constantly being lied to.

The SMOKING GUN is the understated risk associated with these financial instruments based on NINA mortgages.

The SMOKING GUN is the very EXISTENCE of NINA mortgages.

 

[Isolde]

Charles, can you show me where this is written:

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The bill you are talking about made it illegal for banks to charge more bank fees and to charge higher interest rates to people that didn't happen to be white. Show me where banks were forced to do anything.

If you are interested in knowing what led to this crisis, read my short explanation here: http://www.usmessageboard.com/curre...-ing-deregulation-you-peons-3.html#post808614.

It saddens me dillo, that you buy into this shit. But I guess it doesn't really surprise me.

Your link didn't point to any particular post, just a back and forth between Willow and you.

It's called personal responsibility or in this case personal irresponsibility. People borrowed money they couldn't afford to pay back. From what I understand and from what I actually see in my own neighborhood, the irresponsibility is across racial lines.

 

[Ravi]

Your link didn't point to any particular post, just a back and forth between Willow and you.

It's called personal responsibility or in this case personal irresponsibility. People borrowed money they couldn't afford to pay back. From what I understand and from what I actually see in my own neighborhood, the irresponsibility is across racial lines.

I think the permalink button is messed up. Here's what I was trying to link to:

Let me see if I can make this easy for you.

There was a lot of money floating around the world, looking for a place to invest.

Wall Street came up with a solution. Mortgage backed securities. What these are, basically, is bundles of thousands of morgages, broken up into pieces and invested in by investors.

All was well for awhile until there were no more regular mortgages to invest in.

So someone dreamed up NINAs...no income, no asset loans that anyone that was breathing, and even some that weren't, could easily get.

NINAs became so popular and profitable for the lending institutions loaning them out that the lending institutions began offering them to everyone. If you actually qualified the old fashioned way for a $200,000 mortage, they'd try to talk you into getting an NINA for $500,000 (and often they did just that). Then people started getting home equity NINAs on top of their mortgages because they could and because they often had no other way to pay off their original debt.

Whoever rated these mortgage backed securities rated them based on the default rate of conventional loans. That was a really stupid and boneheaded thing to do, because it was like comparing apples to oranges.

And then, housing prices began to fall, and fall big time. People started defaulting, and the companies that bought these loans to resell them started being told by the big banks (who they were borrowing money from to buy the loans in the first place) no more money, pay us what you already owe us. But they couldn't, because they'd never used their own money to begin with, they'd only used borrowed money. So they started defaulting on their loans, too.

And here we are.

 

[Valerie]

Charles, can you show me where this is written:

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The bill you are talking about made it illegal for banks to charge more bank fees and to charge higher interest rates to people that didn't happen to be white. Show me where banks were forced to do anything.

If you are interested in knowing what led to this crisis, read my short explanation here: http://www.usmessageboard.com/curre...-ing-deregulation-you-peons-3.html#post808614.

It saddens me dillo, that you buy into this shit. But I guess it doesn't really surprise me.

Remember the old Saturday Night Live skit from the 70's where one of the women comediens played a telephone operator......? She ended every phone call with something like - "We're your phone company, we don't care 'cause we don't have to."

The NINA lenders didn't care and they didn't have to. Recognizing that doesn't mean you don't care about the borrower. The fed should be freezing the interest rates to a managable level and protecting the borrower, not the lender. The lender took the closing costs and then sold the risk to someone else. The banks were counting on money they should have never been allowed to count on. No documents, no income verification adjustable loans were not reliable, yet they were treated by the market as if they were.

 

[AllieBaba]

You will probably be ignored like everyone else who has pointed out the disaster caused by affirmative action lending.

Funny, I just repped him and said the exact same thing!

 

[Charles_Main]

You will probably be ignored like everyone else who has pointed out the disaster caused by affirmative action lending.

Yep Ignored just like the Bush administration and Greenspan were repeatedly Ignored by the Dems when they said Fanny and Freddie were heading for trouble.

Like I said in my original Post. I did not expect any of the Libs on this board to actually admit the Dems caused a lot of this mess. So I am not surprised they just either wrote this post off as nonsense or ignored it all together. After all it does not fit into their blame the Republicans for everything Idea.

Facts are Facts.

The Fact is the Dems pushed for Fanny and Freddie to make questionable loans to low income people.
The Fact is the Dems get way more in money from fanny and Freddie.
The Fact is the Dems ignored repeated warnings from Bush, and McCain and Others that Fanny and Freddie were heading for trouble and needed better over sight.
The Fact is the Dems in fact as recently as 2006 told us there was nothing to worry about and claimed the Republicans were just trying to stand in the way of "affordable housing"
The Fact is Obama in a short time has become the 2nd biggest receiver of Donations for Fanny and Freddie.

Ignore the facts all you want they will still be facts.

 

[AVG-JOE]

While there are many causes of the current problems we face. A large part of the root cause of the credit crisis is the Community Reinvestment Act.

A high minded law wrote and passed into law by Democrats, and Pushed on lenders. Billed as help for the poor and minorities to get a home, and to stop what the Dems called unfair lending policies.

Basically what it did was force lenders to make bad loans to people who could not afford them, in the name of fairness.

The Dems claimed the Banks were only lending to the wealthy. Of course what this ignores is that for the most part they were only lending to "the wealthy" was because those are the people who can afford to pay back loans.

Now I know on this Liberal dominated board I will simply be dismissed and attacked for this post, but I suggest any of you who are open minded google the CRA and really read about it.

If you do you will see that it is really a map of point to Point of how we got to the place we are now. The instructions it made to Fanny and Freddy are the smoking gun. It instructed them to do what ever it took to enable low income people to secure loans for homes. It also laid out the instructions on how to put those loans into securities to be traded on the market.

The CRA is why when Nancy Pelosi says the Dems hold no responsibility in this Crisis she is telling you a bold faced lie. The CRA is surely a large part of the cause.

Dude,

The problem was not the attempt at public assistance...

The problem was letting private interests try to profit from it.

Public assistance in not inherently evil, but profiting from it is.

If I did not have the asset base to purchase a house on the open market using traditional methods, I would much rather receive a reasonable loan from the rest of you than a gift. American pride and all...

-Joe

 

[Paulie]

Dude,

The problem was not the attempt at public assistance...

The problem was letting private interests try to profit from it.

Public assistance in not inherently evil, but profiting from it is.

If I did not have the asset base to purchase a house on the open market using traditional methods, I would much rather receive a reasonable loan from the rest of you than a gift. American pride and all...

-Joe

Joe I definitely do like your idea of citizens issuing loans to banks and other companies. That would be a very big step towards turning the system around to benefit the CITIZENS.

But NOTHING will work without a sound currency.

 

[AVG-JOE]

Joe I definitely do like your idea of citizens issuing loans to banks and other companies. That would be a very big step towards turning the system around to benefit the CITIZENS.

But NOTHING will work without a sound currency.

Agreed.

I favor returning to a gold (or other hard asset) standard for currency, but that medicine will be very bitter for the generation either forced to implement it, or courageous enough to willingly implement it.

-Joe

 

[Paulie]

Agreed.

I favor returning to a gold (or other hard asset) standard for currency, but that medicine will be very bitter for the generation either forced to implement it, or courageous enough to willingly implement it.

-Joe

At this point, it would probably require a total collapse of the US Dollar first, followed by a tough depression.

What's scary, is that I think that's going to happen ANYWAY, only the government is going to use their "order out of chaos" tactic and swoop in to reap the rewards of taking another precious part of our original independence.

I smell "Problem-Reaction-Solution".

Read about that. And read about the "Totalitarian Tip Toe", too. It's quite eerie, when you compare it what's been going on over the last 10 years specifically.