USA is not Greece = cutting deficits will only weaken a still-fragile recovery

[merrill]

It was Clinton's "Community Reinvestment Act" where banks had to make loans to the unqualified, who defaulted on those loans, that created the financial crisis.

There is a lot of dumb shit being parroted out there, but this is the number one stupidest thing still going.

You are aware this was a GLOBAL credit crisis, right? You are aware that a lot of banks in other countries failed, right? And entire countries, right? You are aware that none of the five biggest broker-dealers on Wall Street were even subject to the CRA, right? Lehman Brothers, Bear Stearns, Goldman Sachs, Morgan Stanley, JP Morgan. NONE were subject to the CRA.

And I'm pretty sure negroes are thin on the ground in Iceland.


This CRA bullshit has everything completely backwards.

The reason the underwriting laws of the Universe were thrown out the window, IN MANY COUNTRIES BESIDES THE US, is because of the demand for financial derivative products. These products were based on assets. No one gives a fuck what the nature of these assets are. That's why we have the EXACT same crisis going on again with sovereign bonds.

The demand for derivatives drove the demand for the underlying assets, and when all the prime assets were packaged, the demand had not even been barely whetted. So the standards were lowered. And lowered some more. And lowered some more. The government was not making them do this. Wall Street demand was doing this.

And Wall Street quickly realized that if you take someone with a good credit rating you can get more out of them by tricking them into a sub-prime loan. The VAST majority of sub-prime loans were to middle and upper middle class. For the simple reason that the more money you make, the more debt you can get into.

"Sub-prime" is not synonomous with "negro".


Lehman Brothers, and the other broker dealers, bought up their own supply chains of mortgage brokers to keep the supply coming. By 2005, Wall Street surpassed the GSEs in the secondary market. In fact, just when things really started heating up, the GSEs began winding down their market share.

The GSEs were definitely part of the problem. A big part. But the whackjobs go too far when they try to blame the CRA (which is just a not too clever way of blaming negroes) for a worldwide crisis that brought down banks, cities, and countries around the world.

Wake the fuck up. Because the exact same derivatives are bringing the whole economic order right back to the same fucking abyss. And this time, there are no convenient negroes to blame.

Exactly...

It was the financial institutions that decided to make bad loans not Clinton or other members of congress. It was the regulatory arm which at this point time was in the jurisdiction of the GW Bush admin that in fact turned a blind eye to the risky activity.
Now the regulatory arm is in the jurisdiction of the Obama admin.

Elizabeth Warren in fact brought the matter to the attention of the Bush admin prior to 2007 when matters were beginning to unravel.

All the while bundles of worthless mortgages were being sold off to financial institutions
around the world which in effect took their economies down the tubes. These institutions will not be such willing targets ever again is my speculation.

This whole home loan mess had big time inflated prices on these homes which of course is why so many owe more than the homes are worth.

Meanwhile banks are sitting on 9-10 million foreclosed homes waiting for the market to improve according to my credit union which I believe is very very risky. These homes can be purchased at astounding values IF a realtor will track them down.