What caused the Economic recession/depression?

[Sweet Willy]

Can anyone provide us with a cite for a single bank that made the choice NOT to follow these regulations? Is there one bank out there that weighed this out and said "too risky, we just can't do it" and closed the doors, safely returned their investors money?

Wells Fargo and USBancorp didn't lower their standards and consequently are not having solvency problems.

That's two.

So then, you mean that no one forced these two to make risky loans? How can that be? And they managed to stay in business?

Amazing.

 

[PixieStix]

The creation of Freddy Mac was a good start, for the destruction of our economy

 

[Oddball]

Can anyone provide us with a cite for a single bank that made the choice NOT to follow these regulations? Is there one bank out there that weighed this out and said "too risky, we just can't do it" and closed the doors, safely returned their investors money?

Wells Fargo and USBancorp didn't lower their standards and consequently are not having solvency problems.

That's two.

So then, you mean that no one forced these two to make risky loans? How can that be? And they managed to stay in business?

Amazing.

They may have in fact made some risky loans, yet dumped them ASAP on the secondary market.

Besides that, you don't have to force banks to make risky loans when the reserve requirements are lowered....Some will do so and some won't. The force part comes when "community organizer" thugs like ACORN use the threat of racism charges, that got some banks to make high risk loans.

 

[Sweet Willy]

Wells Fargo and USBancorp didn't lower their standards and consequently are not having solvency problems.

That's two.

So then, you mean that no one forced these two to make risky loans? How can that be? And they managed to stay in business?

Amazing.

They may have in fact made some risky loans, yet dumped them ASAP on the secondary market.

Besides that, you don't have to force banks to make risky loans when the reserve requirements are lowered....Some will do so and some won't. The force part comes when "community organizer" thugs like ACORN use the threat of racism charges, that got some banks to make high risk loans.

So the banks were so irresponsible that you couldn't rely on them to protect your money from thugs?

I thought that's what banks were supposed to do.

But hey, it all comes back to personal responsibility, right? None of this was top secret, in fact, it was all public. So, the individuals who, in the name of profit, sent their money out to be loaned, took the risk. No one forced anyone. Perhaps the banks and investors greed was turned on them, but that's all.

 

[PoliticalChic]

I am curious how many people can explain what the understand our current economic problems to be without a partisan stance.

Here is what you need to do:

1) Using your own words, tell us why we are in Economic decline.
2) You cannot simply blame Bush, Obama, Democrats, Republicans or any other person. However, you can cite policies without specific reference to who authored them.

Good luck.

Short version: Good intentions, that is to help folks own homes.

Bit longer? Pols saw a bandwagon going their way.

Detailed:
a. Congress passed a bill in 1975 requiring banks to provide the government with information on their lending activities in poor urban areas. Two years later, it passed the Community Reinvestment Act (CRA), which gave regulators the power to deny banks the right to expand if they didn’t lend sufficiently in those neighborhoods. In 1979 the FDIC used the CRA to block a move by the Greater NY Savings Bank for not enough lending.
b. In 1986, when the Association of Community Organizations for Reform Now (Acorn) threatened to oppose an acquisition by a southern bank, Louisiana Bancshares, until it agreed to new “flexible credit and underwriting standards” for minority borrowers—for example, counting public assistance and food stamps as income.
c. In 1987, Acorn led a coalition of advocacy groups calling for industry-wide changes in lending standards. Among the demanded reforms were the easing of minimum down-payment requirements and of the requirement that borrowers have enough cash at a closing to cover two to three months of mortgage payments (research had shown that lack of money in hand was a big reason some mortgages failed quickly).

d. ACORN then attacked Fannie Mae, the giant quasi-government agency that bought loans from banks in order to allow them to make new loans. Its underwriters were “strictly by-the-book interpreters” of lending standards and turned down purchases of unconventional loans, charged Acorn. The pressure eventually paid off. In 1992, Congress passed legislation requiring Fannie Mae and the similar Freddie Mac to devote 30 percent of their loan purchases to mortgages for low- and moderate-income borrowers.

e. Clinton Administration housing secretary, Henry Cisneros, declared that he would expand homeownership among lower- and lower-middle-income renters. His strategy: pushing for no-down-payment loans; expanding the size of mortgages that the government would insure against losses; and using the CRA and other lending laws to direct more private money into low-income programs.

f. Shortly after Cisneros announced his plan, Fannie Mae and Freddie Mac agreed to begin buying loans under new, looser guidelines. Freddie Mac, for instance, started approving low-income buyers with bad credit histories or none at all, so long as they were current on rent and utilities payments. Freddie Mac also said that it would begin counting income from seasonal jobs and public assistance toward its income minimum, despite the FHA disaster of the sixties.

g. Freddie Mac began an “alternative qualifying” program with the Sears Mortgage Corporation that let a borrower qualify for a loan with a monthly payment as high as 50 percent of his income, at a time when most private mortgage companies wouldn’t exceed 33 percent. The program also allowed borrowers with bad credit to get mortgages if they took credit-counseling classes administered by Acorn and other nonprofits. Subsequent research would show that such classes have little impact on default rates.

h. Pressuring nonbank lenders to make more loans to poor minorities didn’t stop with Sears. If it didn’t happen, Clinton officials warned, they’d seek to extend CRA regulations to all mortgage makers. In Congress, Representative Maxine Waters called financial firms not covered by the CRA “among the most egregious redliners.”

i. Mortgage Bankers Association (MBA) shocked the financial world by signing a 1994 agreement with the Department of Housing and Urban Development (HUD), pledging to increase lending to minorities and join in new efforts to rewrite lending standards. The first MBA member to sign up: Countrywide Financial, the mortgage firm that would be at the core of the subprime meltdown.

j. A 1998 sales pitch by a Bear Stearns managing director advised banks to begin packaging their loans to low-income borrowers into securities that the firm could sell. Forget traditional underwriting standards when considering these loans, the director advised. For a low-income borrower, he continued in all-too-familiar terms, owning a home was “a near-sacred obligation. A family will do almost anything to meet that monthly mortgage payment.” Bunk, says Stan Liebowitz, a professor of economics at the University of Texas: “The claim that lower-income homeowners are somehow different in their devotion to their home is a purely emotional claim with no evidence to support it.”

k. Any concern was quickly dismissed. When in early 2000 the FDIC proposed increasing capital requirements for lenders making “subprime” loans—loans to people with questionable credit, that is—Democratic representative Carolyn Maloney of New York told a congressional hearing that she feared that the step would dry up CRA loans. Her fellow New York Democrat John J. LaFalce urged regulators “not to be premature” in imposing new regulations.

l. In July 1999, HUD proposed new levels for Fannie Mae’s and Freddie Mac’s low-income lending; in September, Fannie Mae agreed to begin purchasing loans made to “borrowers with slightly impaired credit”—that is, with credit standards even lower than the government had been pushing for a generation.

m. In 2004 Congress pressed new affordable-housing goals on the two mortgage giants, which through 2007 purchased some $1 trillion in loans to lower- and moderate-income buyers. The buying spree helped spark a massive increase in securitization of mortgages to people with dubious credit.

n. In October 1994, Fannie Mae head James Johnson had reminded a banking convention that mortgages with small down payments had a much higher risk of defaulting. (A Duff & Phelps study found that they were nearly three times more likely to default than conventional mortgages.) Yet the very next month, Fannie Mae said that it expected to back loans to low-income home buyers with a 97 percent loan-to-value ratio—that is, loans in which the buyer puts down just 3 percent—as part of a commitment, made earlier that year to Congress, to purchase $1 trillion in affordable-housing mortgages by the end of the nineties. According to Edward Pinto, who served as the company’s chief credit officer, the program was the result of political pressure on Fannie Mae trumping lending standards.

o. In 1992, the Boston Fed produced an extraordinary 29-page document that codified the new lending wisdom. Conventional mortgage criteria, the report argued, might be “unintentionally biased” because they didn’t take into account “the economic culture of urban, lower-income and nontraditional customers.” Lenders should thus consider junking the industry’s traditional income-to-payments ratio and stop viewing an applicant’s “lack of credit history” as a “negative factor.” Further, if applicants had bad credit, banks should “consider extenuating circumstances”—even though a study by mortgage insurance companies would soon show, not surprisingly, that borrowers with no credit rating or a bad one were far more likely to default. If applicants didn’t have enough savings for a down payment, the Boston Fed urged, banks should allow loans from nonprofits or government assistance agencies to count toward one. A later study of Freddie Mac mortgages would find that a borrower who made a down payment with third-party funds was four times more likely to default, a reminder that traditional underwriting standards weren’t arbitrary but based on historical lending patterns.

p. The Congressional Hispanic Caucus launched Hogar in 2003, an initiative that pushed for easing lending standards for immigrants, including touting so-called seller-financed mortgages in which a builder provided down-payment aid to buyers via contributions to nonprofit groups. As a result, mortgage lending to Hispanics soared. And today, in districts where Hispanics make up at least 25 percent of the population, foreclosure rates are now nearly 50 percent higher than the national average, according to a Wall Street Journal analysis.

q. Republicans and Democrats, meanwhile, have scrambled to reignite the housing market through ill-conceived tax credits and renewed federal subsidies for mortgages, including the Obama administration’s mortgage bailout plan, which recalls the New Deal’s HOLC. Behind these efforts is a fundamental misconception among politicians that housing drives the American economy and therefore demands subsidy at virtually any cost.
Our praiseworthy initial efforts—to eliminate housing discrimination and provide all Americans an equal opportunity to buy a home—were eventually turned on their heads by advocates and politicians, who instead tried to ensure equality of outcomes.

Obsessive Housing Disorder by Steven Malanga, City Journal Spring 2009

And, if you need it in partisan terms, 90% Democrat caused.

Poppy cock.


The government has not, can not, force anyone to loan money. They can regulate you if you do, but you don't have to be in the business of loaning money, do you? If the regulations are unacceptable and pose too much risk, you are free to pursue another line of business, no?

Banks are private and they are responsible for their own decisions to loan money. If unreasonable or risky regulations come to bear, they are responsible for the decision to meet these regulations or not. They may remove themselves.

Can anyone provide us with a cite for a single bank that made the choice NOT to follow these regulations? Is there one bank out there that weighed this out and said "too risky, we just can't do it" and closed the doors, safely returned their investors money?

Or is it that banks had no choice, not because of the regulations, but because they had no option to leave? They couldn't act independently because they couldn't just close up shop in protest of unjust regulations. They were in a pyramid scheme with no option to behave in a responsible manner. They had not the money on hand at that point to close up and pay out the investors and depositors.

The banking system was a ponzi scheme before these regulations. These regulations just demanded that you either let everyone play in the scheme or you have to stop expanding. And everyone knows that a ponzi scheme must expand or it implodes.

No regulation can ever relieve a private organization for responsibility for it's actions. No regulation exist that says "YOU MUST LOAN MONEY". If the regs do not jibe with your responsibility to yourself and your investors, you are absolutely free to refuse. Even if it means coming clean and letting your investors find out you've been a ponzi scheme all along.

Listen, poppy, you're obviosly a product of the public school system, so see if you can have someone with a bit more in the way of critical thinking skills read and explain the post to you.

A, B, and C are exactly the kind of pressure that was forced on banks to loosen requisites: they had to provide data on how many of these loans they gave, how many to 'minorities'.

The meaning was clear, to everyone- except you, obviously: give the loans or we file discrimination charges, we begin hearings, we apply all the pressure of the federal government. Get it?

Now try to find any inaccuracy in any of the items. Can't?

Still with me? Now lace all of them together as a timeline, and you'll find the pot of gold in the form of a solution as to why the housing, and ultimately the financial crisis occurred.

I can understand your reluctance to admit that you see the writing on the wall: you must be a Democrat.

 

[Oddball]

So then, you mean that no one forced these two to make risky loans? How can that be? And they managed to stay in business?

Amazing.

They may have in fact made some risky loans, yet dumped them ASAP on the secondary market.

Besides that, you don't have to force banks to make risky loans when the reserve requirements are lowered....Some will do so and some won't. The force part comes when "community organizer" thugs like ACORN use the threat of racism charges, that got some banks to make high risk loans.

So the banks were so irresponsible that you couldn't rely on them to protect your money from thugs?

I thought that's what banks were supposed to do.

But hey, it all comes back to personal responsibility, right? None of this was top secret, in fact, it was all public. So, the individuals who, in the name of profit, sent their money out to be loaned, took the risk. No one forced anyone. Perhaps the banks and investors greed was turned on them, but that's all.

All the while the political and bureaucratic facilitators, enablers, and regulators, who looked the other way while lining their pockets, get a free pass.

Typical partisan hackery.

 

[Toro]

Can anyone provide us with a cite for a single bank that made the choice NOT to follow these regulations? Is there one bank out there that weighed this out and said "too risky, we just can't do it" and closed the doors, safely returned their investors money?

Wells Fargo and USBancorp didn't lower their standards and consequently are not having solvency problems.

That's two.

I have a list of 540 banks that I follow. 70% of those banks made money in 2008. 64% of the banks with broker estimates are expected to make money in 2009.

Most banks are solvent. In aggregate, the banking system may be insolvent, but that is because the losses are concentrated. Most banks will survive this crisis.

 

[Oddball]

Well, there you have it.

Yet ol' Willy has to change the subject when only two were named.

 

[Paulie]

I'm a little late on this, but I'll chime in anyway.

The policy of artificially adjusting interest rates to spur or slow economic growth is mainly what caused the problem. Money is created out of thin air on the Federal Reserve's balance sheet, and then it is entered into banks' reserves to be lent out in the hopes that it will spur economic growth, because there's more money in the system to be spent.

It works great for a while, until the misallocation of that money eventually begins to rear its ugly head. People, and businesses as well, have been conditioned to think it's ok to literally survive on credit. You can only survive on that credit as long as there's enough money in the system chasing goods and services. When the time comes that too much resources have been misallocated, a correction inevitably happens, and that's what we're seeing today.

I also happen to think the packaging of mortgages into securities was a bad idea that played a huge part in this mess, but if banks hadn't been so easy about lending money to anyone with a pulse, those securities wouldn't have been full of so much bad debt, and would instead have been earning returns, rather than huge losses on bank balance sheets.

The biggest problem this time around was that there was simply too much debt to be sustained any longer. So what's the solution? Lower interst rates to zero, create hundreds of billions of dollars to add to bank reserves, and hope they lend it out and people start the cycle all over again.

Does anyone else see a problem with this ridiculous pattern?

 

[Sweet Willy]

I'm a little late on this, but I'll chime in anyway.

The policy of artificially adjusting interest rates to spur or slow economic growth is mainly what caused the problem. Money is created out of thin air on the Federal Reserve's balance sheet, and then it is entered into banks' reserves to be lent out in the hopes that it will spur economic growth, because there's more money in the system to be spent.

It works great for a while, until the misallocation of that money eventually begins to rear its ugly head. People, and businesses as well, have been conditioned to think it's ok to literally survive on credit. You can only survive on that credit as long as there's enough money in the system chasing goods and services. When the time comes that too much resources have been misallocated, a correction inevitably happens, and that's what we're seeing today.

I also happen to think the packaging of mortgages into securities was a bad idea that played a huge part in this mess, but if banks hadn't been so easy about lending money to anyone with a pulse, those securities wouldn't have been full of so much bad debt, and would instead have been earning returns, rather than huge losses on bank balance sheets.

The biggest problem this time around was that there was simply too much debt to be sustained any longer. So what's the solution? Lower interst rates to zero, create hundreds of billions of dollars to add to bank reserves, and hope they lend it out and people start the cycle all over again.

Does anyone else see a problem with this ridiculous pattern?

Good post.

For these numb nuts to claim that lenders were forced to loan money is ridiculous. They extended credit to "anyone with a pulse", as you put it, and no one forced them to do it. IF the regulations presented extraordinary risk, the banks surely recognized it and the decision to continue with the business of taking that risk was solely theirs. No one put a gun to anyones head and robbed them. They chose to loan the money and loan it freely.

This is similar to blaming the health department for shutting down my restaraunt on account of rat shit in the soup.

 

[Sweet Willy]

Short version: Good intentions, that is to help folks own homes.

Bit longer? Pols saw a bandwagon going their way.

Detailed:
a. Congress passed a bill in 1975 requiring banks to provide the government with information on their lending activities in poor urban areas. Two years later, it passed the Community Reinvestment Act (CRA), which gave regulators the power to deny banks the right to expand if they didn’t lend sufficiently in those neighborhoods. In 1979 the FDIC used the CRA to block a move by the Greater NY Savings Bank for not enough lending.
b. In 1986, when the Association of Community Organizations for Reform Now (Acorn) threatened to oppose an acquisition by a southern bank, Louisiana Bancshares, until it agreed to new “flexible credit and underwriting standards” for minority borrowers—for example, counting public assistance and food stamps as income.
c. In 1987, Acorn led a coalition of advocacy groups calling for industry-wide changes in lending standards. Among the demanded reforms were the easing of minimum down-payment requirements and of the requirement that borrowers have enough cash at a closing to cover two to three months of mortgage payments (research had shown that lack of money in hand was a big reason some mortgages failed quickly).

d. ACORN then attacked Fannie Mae, the giant quasi-government agency that bought loans from banks in order to allow them to make new loans. Its underwriters were “strictly by-the-book interpreters” of lending standards and turned down purchases of unconventional loans, charged Acorn. The pressure eventually paid off. In 1992, Congress passed legislation requiring Fannie Mae and the similar Freddie Mac to devote 30 percent of their loan purchases to mortgages for low- and moderate-income borrowers.

e. Clinton Administration housing secretary, Henry Cisneros, declared that he would expand homeownership among lower- and lower-middle-income renters. His strategy: pushing for no-down-payment loans; expanding the size of mortgages that the government would insure against losses; and using the CRA and other lending laws to direct more private money into low-income programs.

f. Shortly after Cisneros announced his plan, Fannie Mae and Freddie Mac agreed to begin buying loans under new, looser guidelines. Freddie Mac, for instance, started approving low-income buyers with bad credit histories or none at all, so long as they were current on rent and utilities payments. Freddie Mac also said that it would begin counting income from seasonal jobs and public assistance toward its income minimum, despite the FHA disaster of the sixties.

g. Freddie Mac began an “alternative qualifying” program with the Sears Mortgage Corporation that let a borrower qualify for a loan with a monthly payment as high as 50 percent of his income, at a time when most private mortgage companies wouldn’t exceed 33 percent. The program also allowed borrowers with bad credit to get mortgages if they took credit-counseling classes administered by Acorn and other nonprofits. Subsequent research would show that such classes have little impact on default rates.

h. Pressuring nonbank lenders to make more loans to poor minorities didn’t stop with Sears. If it didn’t happen, Clinton officials warned, they’d seek to extend CRA regulations to all mortgage makers. In Congress, Representative Maxine Waters called financial firms not covered by the CRA “among the most egregious redliners.”

i. Mortgage Bankers Association (MBA) shocked the financial world by signing a 1994 agreement with the Department of Housing and Urban Development (HUD), pledging to increase lending to minorities and join in new efforts to rewrite lending standards. The first MBA member to sign up: Countrywide Financial, the mortgage firm that would be at the core of the subprime meltdown.

j. A 1998 sales pitch by a Bear Stearns managing director advised banks to begin packaging their loans to low-income borrowers into securities that the firm could sell. Forget traditional underwriting standards when considering these loans, the director advised. For a low-income borrower, he continued in all-too-familiar terms, owning a home was “a near-sacred obligation. A family will do almost anything to meet that monthly mortgage payment.” Bunk, says Stan Liebowitz, a professor of economics at the University of Texas: “The claim that lower-income homeowners are somehow different in their devotion to their home is a purely emotional claim with no evidence to support it.”

k. Any concern was quickly dismissed. When in early 2000 the FDIC proposed increasing capital requirements for lenders making “subprime” loans—loans to people with questionable credit, that is—Democratic representative Carolyn Maloney of New York told a congressional hearing that she feared that the step would dry up CRA loans. Her fellow New York Democrat John J. LaFalce urged regulators “not to be premature” in imposing new regulations.

l. In July 1999, HUD proposed new levels for Fannie Mae’s and Freddie Mac’s low-income lending; in September, Fannie Mae agreed to begin purchasing loans made to “borrowers with slightly impaired credit”—that is, with credit standards even lower than the government had been pushing for a generation.

m. In 2004 Congress pressed new affordable-housing goals on the two mortgage giants, which through 2007 purchased some $1 trillion in loans to lower- and moderate-income buyers. The buying spree helped spark a massive increase in securitization of mortgages to people with dubious credit.

n. In October 1994, Fannie Mae head James Johnson had reminded a banking convention that mortgages with small down payments had a much higher risk of defaulting. (A Duff & Phelps study found that they were nearly three times more likely to default than conventional mortgages.) Yet the very next month, Fannie Mae said that it expected to back loans to low-income home buyers with a 97 percent loan-to-value ratio—that is, loans in which the buyer puts down just 3 percent—as part of a commitment, made earlier that year to Congress, to purchase $1 trillion in affordable-housing mortgages by the end of the nineties. According to Edward Pinto, who served as the company’s chief credit officer, the program was the result of political pressure on Fannie Mae trumping lending standards.

o. In 1992, the Boston Fed produced an extraordinary 29-page document that codified the new lending wisdom. Conventional mortgage criteria, the report argued, might be “unintentionally biased” because they didn’t take into account “the economic culture of urban, lower-income and nontraditional customers.” Lenders should thus consider junking the industry’s traditional income-to-payments ratio and stop viewing an applicant’s “lack of credit history” as a “negative factor.” Further, if applicants had bad credit, banks should “consider extenuating circumstances”—even though a study by mortgage insurance companies would soon show, not surprisingly, that borrowers with no credit rating or a bad one were far more likely to default. If applicants didn’t have enough savings for a down payment, the Boston Fed urged, banks should allow loans from nonprofits or government assistance agencies to count toward one. A later study of Freddie Mac mortgages would find that a borrower who made a down payment with third-party funds was four times more likely to default, a reminder that traditional underwriting standards weren’t arbitrary but based on historical lending patterns.

p. The Congressional Hispanic Caucus launched Hogar in 2003, an initiative that pushed for easing lending standards for immigrants, including touting so-called seller-financed mortgages in which a builder provided down-payment aid to buyers via contributions to nonprofit groups. As a result, mortgage lending to Hispanics soared. And today, in districts where Hispanics make up at least 25 percent of the population, foreclosure rates are now nearly 50 percent higher than the national average, according to a Wall Street Journal analysis.

q. Republicans and Democrats, meanwhile, have scrambled to reignite the housing market through ill-conceived tax credits and renewed federal subsidies for mortgages, including the Obama administration’s mortgage bailout plan, which recalls the New Deal’s HOLC. Behind these efforts is a fundamental misconception among politicians that housing drives the American economy and therefore demands subsidy at virtually any cost.
Our praiseworthy initial efforts—to eliminate housing discrimination and provide all Americans an equal opportunity to buy a home—were eventually turned on their heads by advocates and politicians, who instead tried to ensure equality of outcomes.

Obsessive Housing Disorder by Steven Malanga, City Journal Spring 2009

And, if you need it in partisan terms, 90% Democrat caused.

Poppy cock.


The government has not, can not, force anyone to loan money. They can regulate you if you do, but you don't have to be in the business of loaning money, do you? If the regulations are unacceptable and pose too much risk, you are free to pursue another line of business, no?

Banks are private and they are responsible for their own decisions to loan money. If unreasonable or risky regulations come to bear, they are responsible for the decision to meet these regulations or not. They may remove themselves.

Can anyone provide us with a cite for a single bank that made the choice NOT to follow these regulations? Is there one bank out there that weighed this out and said "too risky, we just can't do it" and closed the doors, safely returned their investors money?

Or is it that banks had no choice, not because of the regulations, but because they had no option to leave? They couldn't act independently because they couldn't just close up shop in protest of unjust regulations. They were in a pyramid scheme with no option to behave in a responsible manner. They had not the money on hand at that point to close up and pay out the investors and depositors.

The banking system was a ponzi scheme before these regulations. These regulations just demanded that you either let everyone play in the scheme or you have to stop expanding. And everyone knows that a ponzi scheme must expand or it implodes.

No regulation can ever relieve a private organization for responsibility for it's actions. No regulation exist that says "YOU MUST LOAN MONEY". If the regs do not jibe with your responsibility to yourself and your investors, you are absolutely free to refuse. Even if it means coming clean and letting your investors find out you've been a ponzi scheme all along.

Listen, poppy, you're obviosly a product of the public school system, so see if you can have someone with a bit more in the way of critical thinking skills read and explain the post to you.

A, B, and C are exactly the kind of pressure that was forced on banks to loosen requisites: they had to provide data on how many of these loans they gave, how many to 'minorities'.

The meaning was clear, to everyone- except you, obviously: give the loans or we file discrimination charges, we begin hearings, we apply all the pressure of the federal government. Get it?

Now try to find any inaccuracy in any of the items. Can't?

Still with me? Now lace all of them together as a timeline, and you'll find the pot of gold in the form of a solution as to why the housing, and ultimately the financial crisis occurred.

I can understand your reluctance to admit that you see the writing on the wall: you must be a Democrat.

No one forced them to make the loans. If the demands or regulations were too risky or unreasonable, they were free to not expand, not acquire other banks, not move into these areas, or even the extreme of deciding that the business of loaning money was becoming too risky.

No one is forced to loan money for profit. No one. They chose to do so. They take the risk. As hard as you may try, you can never blame anyone for making a loan except the person who made it. All the muddy poppy cock aside, there are some fundamentals that you can not change.

 

[cutecub00]

Like so many people right now, me and my husband where about to lose our home but we went through a company to lower our mortgage payment, they also helped with our finances (debt consolidation). I will give you the company that we used, very reputable and i have a good friend who is going through the same process. Hope this helps

 

[Neubarth]

I, along with many others. was loudly ballyhooing the coming economic collapse in late 2007. On other boards, I was posting as "It's 1929 All Over Again." At the time I did not blame Republican or Democrat, because both endorsed the easy credit policy that was duplicating the problems in place in the late 1920's.

I am an historian and look at history to see the repeating aspects of it, especially in the economy. In the 1920's we had easy credit. Mortgages were being loaned in fairly new farm land that was subject to wide fluctuations in weather (wet and dry cycles, like in eastern Colorado, Kansas, Nebraska, Oklahoma.....) If a dry cycle came in, there was room for massive banking disaster as the farms became non productive and the banks pulled those mortgages back for non payment. Damn, if it did not happen in 1930.

There was easy credit on Wall Street and many were buying stocks on margin. (After all, stocks only go up, right?) Real estate was appreciating right along with the stocks. There were land booms, like in Florida, and building booms in New York and other "growing" cities and so on. Too much easy money and many people were way over extended.

When most of those conditions presented their ugly selves again, I knew that we were ripe for a fall and prepared accordingly. I told people around me that they should pull their money out of their mutual funds. By January 2008 there were people telling me that I was crazy to think that our boom economy was in trouble. "After all," they said, "Inflation was normal, and house prices were catching up to inflation."

All I knew was that the value of my land and the value of the components of my house added up to about one tenth of what I was told my house could sell for. The cost of labor was not ninety percent of the house, so I knew that my house was way overvalued. I wanted to sell and take advantage of the outrageously inflated price, but my wife said no, and we stayed and now the house is worth about one half of what I could have sold it for. Obviously I was a failure at convincing my wife that everything was going to go boom. She had raised thirty children in that house, so I can understand why she did not want to sell.

The second issue regarding the economic collapse is that there are waves in the ocean, and waves of sound, and waves of light, and waves in the economy. When one of those negative waves coincides with an easy credit situation like in 1929 or 2008, you end up with what happened in both cases. No political party is responsible for the waves or the weather or the global waves of violent behavior that seem to sweep the globe, too.

By the way, those violent waves are a reality, too, and we are in a build up phase right now. Should I try to warn people about the coming violence, just let them blunder into it? When an economic collapse wave coincides with a violence wave, we usually have global war. History has recorded it over and over and over again. There is increasing potential for riots in the US cities as violence becomes more acceptable as a means of expression.

I will tell my friends to "Prepare Yourselves" as we can not control it. It just comes at you in waves. Sometimes Big and sometimes small.