A reminder of what caused the economic collapse of 2008: Democrat policies

[NYcarbineer]

If you can refute even one sentence in the post you quoted, I shall hear it gratefully.

Otherwise, I urge you to consider what a person who falsely accuses others of "lying", is called.

Back to the subject:
The pattern of Democrats overwhelmingly pushing for people unable to pay back housing loans, and consistently blocking Republicans from doing anything to stop them, is long, clear, and well estableshed, as I have documented.

And now we are seeing the current Democrat administration re-doing many of those exact actions they used in years past to cast this nation into one of the longest, deepest economic crashes in living memory.

http://www.usmessageboard.com/polit...e-loans-to-people-with-weak-credit-again.html

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Won't these people ever learn?

The radical right wing filth are 100% responsible for the economic crash. They let their big banker cronies run wild

Have you noticed that the people who call the most names, spew the most smears, and tell the most lies, also offer the fewest facts (usually zero)?

Poor libbies - on the losing side of the argument evey time, with no relevant facts to support their agenda, so they do the most screaming instead. Who can blame the poor dears?

You've already been proven a liar, what more do you want.

 

[Little-Acorn]

A summary I wrote more than four years ago. Even more timely today, with the Democrats re-starting the same policies that led to the economic crash of 2008: Millions of risky housing loans to people unlikely to be able to pay them back.

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An hour-long program on the origins of the current financial crisis, was put together by Fox News in 2008. It contains a great many clips from various officials who were involved, interviews by news people, etc. They called it "Saving Our Economy". Someone put it on YouTube, in six segments. Go there and do a search on that title, and you should get all six segments. They vary from 5 to 10 minutes each, about 45 minutes running time total (no commercials).

It's an excellent explanation of how the crisis started, who did what, what the results were, etc. A real must-see.

Here's a summary:

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Sept. 23, 2008: Treasury Secretary Henry Paulson: "The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking up mortgages they couldn't afford."

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The Federal National Mortgage Association (FNMA, or "Fannie Mae") was created in 1938 during the Great Depression, to create a market for mortgages where they could be bought and sold.

In 1968, Lyndon Johnson and a Democratic Congress spun off Fannie Mae so that it would not show up in the Federal budget. But the Federal govt was always there, ready to bail out Fannie Mae if problems happened. This enables Fannie Mae to offer lower rates for the mortgages it bought, since it was not taking the risks that other banks and institutions had to. In 1970, the Federal Home Loan Mortgage Corporation ("Freddie Mac") was formed, to create competition for Fannie Mae, since ordinary banks could NOT compete with the government-backed rates they offered.

The Community Reinvestment Act (CRA) was passed by a Democrat Congress and signed by Jimmy Carter in 1977. It made sure banks were lending to people of all colors and income levels. But things quickly began going off the rails, as activist groups found a new weapon in the law: The could start suing lenders for discrimination if they didn't lend to enough minority families, regardless of the families' ability to pay the loans back as promised. Banks began making riskier and riskier loans for fear of having to fight expensive lawsuits.

Community groups began bullying the banks, especially one called the Association of Community Organizers for Reform Now ("ACORN"). It hired several specialized lawyers, including a young man named Barack Obama, to teach its employees how to go to the homes of bank CEOs and senior officers, harassing and publicly embarrassing them while remaining within the limits of local law to avoid prosecution. At one point, ACORN brought a lawsuit against a thrift merger in Illinois, insisting that the lending institutions had not made as many loans to minorities as ACORN thought they should. The bank replied that such loans would be financially irresponsible, and would put ALL the bank's customers at unacceptable risk. ACORN prevailed in court, and banks began making more and more risky loans to home buyers who could have never qualified for those loans under ordinary circumstances.

In late 2000, in the last days of the Clinton administration, the government ordered Fannie and Freddie to increase the numbers of these risky ("sub-prime") mortgages they were buying from banks and lending institutions across the country. They did, lowering their rates and buying more and more, until fully half their portfolios consisted of these risky sub-prime mortgages, combined and packaged in various ways.

The Bush administration raised red flags starting in April 2001. Their 2002 Budget Request declared that the size of mortgage giants Freddie Mac and Fannie Mae is "a potential problem" because financial trouble in either one of them "could cause strong repercussions in financial markets".

In 2003, the White House warning about Fannie and Freddie, was upgraded to a "Systemic Risk that could spread beyond just the housing sector".

As Fannie and Freddie continued to lower their rates and buy mortgages, lenders made more and more mortgages to buyers with questionable ability to pay, safe in the knowledge that they could immediately turn around and sell the mortgages to the government-sponsored Fannie and Freddie, thus avoiding any consequences if the loans were later defaulted. They were happy to make more and more such mortgages, collecting fees for each and selling the mortgages to F&F.

Countrywide Financial chairman Angelo Mazzillo literally started screaming at Wall Street Journal editor Paul Gigot, when Gigot asked him about the wisdom of making so many loans to buyers unlikely to pay them back. Mazzillo insisted loudly that Gigot had no idea what he was talking about, did not understand the first thing about mortgage lending, etc., etc. He failed, however, to answer any of Gigot's questions in even the simplest terms or explain why they were "wrong".


(to be continued)

You lie.

If you can refute even one sentence in the post you quoted, I shall hear it gratefully.

Otherwise, I urge you to consider what a person who falsely accuses others of "lying", is called.

Back to the subject:
The pattern of Democrats overwhelmingly pushing for people unable to pay back housing loans, and consistently blocking Republicans from doing anything to stop them, is long, clear, and well estableshed, as I have documented.

And now we are seeing the current Democrat administration re-doing many of those exact actions they used in years past to cast this nation into one of the longest, deepest economic crashes in living memory.

Obama Urges Banks to Make Home Loans to People With Weak Credit... Again US Message Board - Political Discussion Forum

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Won't these people ever learn?

You lied in your thread title you imbecile.

As I thought: You can't refute anything I said. Nothing but keep mindlessly repeating "Liar! Liar!" about anything and everything you don't like.

 

[g5000]

The CRA myth was invented by idiots in the early days of the crash who had no understanding of the situation. It is a completely bogus myth invented by idiots for idiots.

 

[g5000]

Tell me something. As you drove around your white suburban town and noticed all the For Sale signs on all those foreclosed houses, did you look at your neighbor and think to yourself, "I had no idea Biff was a Negro!"?

When Iceland's banking system totally collapsed, did you think it was the negroes of Iceland who caused it?

When the Royal Bank of Scotland sank under the waves, did you blame Jesse Jackson?

When Ireland's banks collapsed, did you think, "Oh my God, those fuggin negroes are taking down the Micks!"?

When Spain's banks went down, did you start to think to CRA tards at Fox News were really onto something?

Jesus H. Christ, you have to have seven pounds of brain damage to believe the global derivatives crash was caused by darkies.

 

[g5000]

[Lenders were forced to write sub-prime paper

Nope.

 

[Papageorgio]

If people can't see that both parties were responsible for the collapse of 2008, then we will be doomed to repeat it. We need to learn by our mistakes.

 

[g5000]

If people can't see that both parties were responsible for the collapse of 2008, then we will be doomed to repeat it. We need to learn by our mistakes.

Ayup.

 

[g5000]

Fannie and Freddie were in the same secondary market as Lehman Brothers, competing for market share. The GSEs used to make up 90 percent of the secondary market, but due to deregulation, and the fortuitous timing of some internal scandals at the GSEs, coupled with the invention of newer and more powerful financial deriviatives, Wall Street was able to start edging the GSEs out of the market, and that is when the secondary market began exploding.

GSE market share was less than 50 percent by 2005. That same year, the Bush Administration tried to force their portfolios even smaller, which would have given Wall Street an even bigger market share, but Bush's moves were blocked by Barney Frank and Chris Dodd. Even though the Democrats were the minority party, they were able to block the shrinkage of the GSEs portfolios.

This was a period of extreme competition in the secondary market. Wall Street was making a killing selling financial derivatives, and the fuel for these derivatives was loans. Not just mortages, but any kind of debt. Auto loans, credit cards, HELOCs, student loans, etc.

The demand for these derivative products was astronomical. There was $70 trillion of investor cash out there.

When there is that much cash looking for a place to invest, you just aren't going to find enough low risk borrowers to meet that astronomical demand. Read that again until you get it.

Wall Street makes its money through fees. If they can't connect an investor to a borrower, they lose fees. And so the underwriting laws of the Universe were thrown out the window just so they could keep making their fees. Wall Street lowered borrowing standards in order to feed the derivatives machine. It is as simple as that.

At the beginning of the food chain were the brokers. Those who arranged the loans and then sold them into the secondary market pipeline.

The reason Dick Fuld said his exposure to the GSEs was "de minimus" is because Lehman Brothers bought up a bunch of brokers to ensure their derivative machine would always have a fuel source. This made his company completely independent of the GSEs.

The result of Wall Street lowering its standards of what it wanted from brokers is that any "honest broker" quickly learned that if they tried to stay honest and keep up their high standards, they were going to be run out of business. This is how the attitude of "if we don't do it, someone else will" began in the mortgage broker industry. The demand was so explosive that brokers began hiring bartenders or any johnny-come-lately who walked through their doors. The people arranging your home loans didn't know shit from shinola.

So all the brokers gave in to the demands of the bigger players of the secondary market. Which means the GSEs, who were competing in the same market, were being fed the same trash as the rest of the secondary market.

Their investors didn't want to lose out on the boom any more than a Goldman Sachs investor did.

That alone would have been enough to crash our entire financial system. But Wall Street had to go even further once Wall Street realized the gig was up. Once they realized just how far down the rabbit hole they had gone, they chose not to turn around. Not only did they choose not to turn around, they chose to start ripping the faces off their investors before everything blew up.

Their investors. You. Your 401k, Your health insurance company. Your college's endowment fund. Your city treasurer. EVERYONE. They stole from everyone on the planet.

Your money managers at your 401k and your insurance company and your college endowment fund and in your city treasury think proximity to your money makes them smart. Well, they aren't. They were wooed with box seats and hookers and blow into buying this toxic shit.

Which is why whenever I see someone defending or blowing off Wall Street's crimes, I am amused. The idiot ignorant victim is defending the person who stole from them.

 

[g5000]

Wall Street was deregulated. Thoroughly. The repeal of Glass-Stiegal and the complete deregulation of derivatives with the CFMA and the FSMA. That's why we are where we are today.

Section 117 of the CFMA:

This Act shall supersede and preempt the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops

Why does a bank need exemptions from state gaming laws? Why does a bank need to be exempted from laws prohibiting bucket shops?

This type of legislation led to the outright fraud we saw leading up to the crash.

Where were all the States Rights advocates screaming about this blatant federal pre-emption of state laws? Why was Fox News not ranting about this?

Things that make you go hmmmmm...

 

[g5000]

The banks were not forced to make these bad loans. They were doing flips and twists to get the government to give them permission to make the bad loans. To deregulate.

Anyone who claims the banks were forced is exposing their massive ignorance of the nature of the global derivatives crisis. You cannot be more wrong than to believe they were forced. It was the exact opposite of that.

 

[g5000]

Lehman Brothers was not subject to the CRA. Neither was Bear Stearns, Goldman Sachs, or JP Morgan, or Morgan Stanley, or Merrill Lynch or the banks of Ireland, Iceland, Spain, Germany, or England.

 

[JakeStarkey]

Anyone who thinks the Great Recession was caused by Democrats is a loon.

 

[g5000]

Anyone who thinks the Great Recession was caused by Democrats is a loon.

It was a collective effort.

Clinton's cabinet was just as much in the pocket of Wall Street as the GOP congress and George Bush were.

The ratings agencies sold their souls.

Money fund managers were ignorant, and swallowed the piss poured for them by Wall Street. They were seduced by box seats and hookers and blow.

Mortgage brokers sold their toxic shit up the food chain before the ink was even dry so when that shit blew up, none of the stains got on them. It all blew up in the investors' hands at the end of the pipeline. The end users. That would be YOU.

 

[Dragonlady]

The CRA was enacted under the Carter Administration to increase lending to minorities. It functioned for more than 2 decades with no ill effects on the economy.

The banks weren't "forced" to write subprime mortgages to anyone, much less minorities. What the banks discovered was that writing subprime mortgages was highly profitable, since they could charge higher interest rates. When you add in the ridiculously low mortgage rates established by Bush after 911, which opened up the housing market to a lot of people who couldn't previously qualify for mortgages, it was a recipe for disaster.

Banks and other lenders openly encouraged their brokers to write sub-prime mortgages because of the high profits involved. Deregulation, passed by the Republican Congress and Senate, and signed into law by Bill Clinton, ensured that nobody was watching what was going on.

Freddie and Fanny Mae had little to do with it, and in fact paid back all of the money given to them in the bailouts.

It was greed, which caused the real estate market collapse.

 

[Little-Acorn]

The CRA was enacted under the Carter Administration to increase lending to minorities. It functioned for more than 2 decades with no ill effects on the economy.

Until two things happened:

1.) In a lawsuit, a court ruled that a bank was guilty of discrimination when it refused to write a greater percentage of mortgages for minorities than it did for whites. This despite the fact that higher percentages of minorities were unlikely to repay the mortgages. The case was driven by various community-action groups, including one who hired a young and upcoming lawyer named Barack Obama. Banks and other lenders then started writing more and more mortgages to borrowers who were unlikely to repay them, rather than spend huge sums on lawyers to fight the inevitable lawsuits they might lose.

2.) Government entities such as FNMA ("Fannie Mae") and started offering to buy risky subprime mortgages despite their high risk of nonpayment. This enabled banks and other lenders to write more and more such risky loans, safe in the knowledge they could then pass the risk on to the government and not take the fall themselves when the borrowers defaulted.

Technically this did not amount to "forcing" the lenders to write more risky subprime mortgages to people unlikely to repay them. It simply made it more profitable for them to write them, and more risky to not write them.

How that's different from "forcing" them, is a distinction that exists only in the strange minds of the leftist fanatics who are defending the process.