Central Banking stimulating the economy with unrealistically low interest rates and the silly notion that house loans should be made to people with no real means to pay them back.
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QW -
I agree that all of the factors listed share some responsibility, but it is so clearly established that the lack of regulation over 30 years sparked the rush of greed and fraud that I don't know why anyone would suggest otherwise.
Bush was on watch at the time, and holds massive responsibility for ignoring the warnings that were being made by experts. Martin Wolffe in the Financial Times outlined the crisis in great detail three months before it happened - Bush ignored that information.
Rabbi -
Actually the lack of regulation dates back to Reagan. While it is a bit of a stretch to blame Reagan for the actual crash, he did remove oversight in a way that helped move some of the chest pieces into the positions which would contribute to the crisis.
There was no lack of regulation in banking under Reagan. You are simply misinformed. Nor is there any regulation that would have prevented the meltdown. You have failed to make your case every time here. Quit while you're behind.
Ah - so the material I linked before was faked?
That is good to know.
Here is more faked information on that deregulation that never happened:
This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot. So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.
http://www.nytimes.com/2009/06/01/opinion/01krugman.html
G overnment mishandling
R etirement fund mismanagement
E conomists with their heads up their derrières
E nthusiasm for profit at any moral cost
D erivatives
Some of the reasons.
Did greedy people not exist before 2002?
People blame bankers. It isn't so. They were given certain incentives and they followed them. Anyone would.
In this case unrealistically low interest rates made real estate loans very profitable. Property values rose consistently and people pointed out that real estate always goes up (which isnt true now and wasnt then but so what). Since rising property values enhanced security on loans lenders could afford to take more risk. This created the up cycle. But as loan quality deteriorated, it was only a matter of time before the junkier ones would default. About 18 months to be exact. Once that happened the cycle reversed itself, with falling property values creating larger risk, leading to tighter criteria, leading to lower sales.
You absolve bankers as being like anyone else, then point out they disregarded the obvious, that real estate does not and CAN not go up indefinitely. These guys were the experts, and still persisted with erroneous presumptions.
But bankers are not the only guilty ones. Those behind the infernal 'derivatives' have sold not only their own souls, but everyone else's as well.
Lack of proper, prudent regulations contributed. In general, however, it was and is GREED and the love of money (i.e., the slavering, voracious appetite for more and greater profits at any cost to anyone else). That realization does not make me a communist, by the way, so don't 'go there'.
So an act signed in the early 1980s dealing with Savings and Loans was responsible for the meltdown 30 years later?
Do you ever think about things before you post them?
Let's be honest with ourselves here, Kiddies...
Both parties jumped on the "everyone should be able to buy their own house!" bandwagon and passed legislation that pressured banks to make loans to people who were not in any way shape or form qualified to receive them. Then what should have been just another recession knocked the whole house of cards down.
Sound fiscal policy for your household...sound fiscal policy for banks...sound fiscal policy for nations...it's all pretty simple stuff but we try to fool ourselves into thinking we can "have it all" when anyone with even a dollop of common sense KNOWS that isn't the case.
Rabbi -
Actually the lack of regulation dates back to Reagan. While it is a bit of a stretch to blame Reagan for the actual crash, he did remove oversight in a way that helped move some of the chest pieces into the positions which would contribute to the crisis.
There was no lack of regulation in banking under Reagan. You are simply misinformed. Nor is there any regulation that would have prevented the meltdown. You have failed to make your case every time here. Quit while you're behind.
that my friends was a Bush policy and it caused the mess
QW -
I agree that all of the factors listed share some responsibility, but it is so clearly established that the lack of regulation over 30 years sparked the rush of greed and fraud that I don't know why anyone would suggest otherwise.
Bush was on watch at the time, and holds massive responsibility for ignoring the warnings that were being made by experts. Martin Wolffe in the Financial Times outlined the crisis in great detail three months before it happened - Bush ignored that information.
What was the MAIN cause of the meltdown?
The idea that everyone should be allowed to own a home -out of fairness... Even when they cannot afford to do so.
more at the sourceAgain in June 2003, the favorite of the Beltway press corps assured the public that "there is no federal guarantee" of Fan and Fred obligations.
A month later, Freddie Mac's multibillion-dollar accounting scandal broke into the open. But Mr. Frank was sanguine. "I do not think we are facing any kind of a crisis," he said at the time.
Three months later he repeated the claim that Fannie and Freddie posed no "threat to the Treasury." Even suggesting that heresy, he added, could become "a self-fulfilling prophecy."
In April 2004, Fannie announced a multibillion-dollar financial "misstatement" of its own. Mr. Frank was back for the defense. Fannie and Freddie posed no risk to taxpayers, he said, adding that "I think Wall Street will get over it" if the two collapsed. Yes, they're certainly "over it" on the Street now that Uncle Sam is guaranteeing their Fannie paper, and even Fannie's subordinated debt.
By early 2007, Mr. Frank was in charge of the House Financial Services Committee, arguing that he had long favored some kind of reform. "What blocked it [reform] last year," Mr. Frank said then, "was the insistence of some economic conservative fundamentalists in the Bush Administration who, to be honest, don't think there should be a Fannie Mae or a Freddie Mac." What really blocked it was Mr. Frank's insistence that any reform be watered down and not include any reduction in their MBS holdings.
In January of last year, Mr. Frank also noted one reason he liked Fannie and Freddie so much: They were subject to his political direction. Contrasting Fan and Fred with private-sector mortgage financers, he noted, "I can ask Fannie Mae and Freddie Mac to show forbearance" in a housing crisis. That is to say, because Fannie and Freddie are political creatures, Mr. Frank believed they would do his bidding.
What a complete load of racist bullshit.It's a combination of things.
A huge combination
But I'd say the main contributor was clinton forcing banks to loan money to people they would Never consider before so they could buy houses, or allow people into bigger homes than they could afford.
That forced banks to shuffle money around in phoney ways.
Anyone that says it's just Bushs fault is lying and/or running for President.
Clinton required banks to make loans to QUALIFIED minorities that banks would never consider not because thy were not qualified, but because they were minorities. To a racist no minority is ever qualified for a loan. Making loans to the unqualified did not happen until Bush's Dec 2003 ADDI. Starting in 2004 everything went to hell.
Banks shuffled money around in phony ways out of pure greed and nothing else.
The primary cause of the tech and housing bubbles is not politics but central banks. Politics played a role but both the housing and tech bubbles were driven by the excess creation of money and lax lending standards. When credit becomes too abundant, it can feed into asset markets and create bubbles. This wasn't the only reason - there were many - but it was the primary reason. And both the tech and housing bubbles are linked.
People trying to blame Democrats or Republicans or the GSEs or the CRA or whatever are missing the point. This was a global issue, not simply an American issue.
Cause ---> effect.
Effect = housing bubbles in many countries across the globe.
Ergo, the cause is global, and you must look for global causes.
Of course, politics in America had an affect, but the CRA or George Bush didn't cause housing bubbles in Spain, Australia, Canada, Ireland, etc.
Central Banking stimulating the economy with unrealistically low interest rates and the silly notion that house loans should be made to people with no real means to pay them back.
The CRA only supported loans to QUALIFIED minorities. Again we see the racist view that no minority is qualified for a loan therefore any program that prevented discrimination against minorities forced banks to make loans to the unqualified.QW -
I agree that all of the factors listed share some responsibility, but it is so clearly established that the lack of regulation over 30 years sparked the rush of greed and fraud that I don't know why anyone would suggest otherwise.
Bush was on watch at the time, and holds massive responsibility for ignoring the warnings that were being made by experts. Martin Wolffe in the Financial Times outlined the crisis in great detail three months before it happened - Bush ignored that information.
Not so much lack of regulation as wrong headed regulation. Both the CRA and community agitators like obama blackmailed banks into loaning money to those with little hope of repaying it.
Yes, Bush was in the oval office when the defecation hit the whirling blades, but as you will remember, Pelosi and Reid held Congress.
Bush and the GOP did try to rein in Fannie and Freddie, but were assured by Franks and Dodd that everything was fine.
I contend that (faulty) "regulation", not the lack of regulation is more to blame.