McSame is pro sub prime mess, wants more

[Truthmatters]

http://www.nationalmortgagenews.com/premium/archive/?ts=1034092803

This is a Mortgage news site. Its serves the mortgage industry insiders.

This little artcle reports on the retirement from congress and move to UBS Warberg of a little guy named Phil Gramm. Phil wrote a little piece of legislation call Gramm Leach Bliely act of 1999. This little piece of legislation was touted as a consumer information protection act. Stuffed in it was the repeal of Glass Steagall which lasted for 60+ years and protected the housing market from consolidations of all types of banking. He was lobbied by the industry to write this little piece of work and was then rewarded with a cushy job. This little piece of work gave us the sub prime mess.

So hwat does McSame do? He hires the guy to advise him on the economy.
If you like the sub prime mess you will love the McSame economic plan.





Sen. Phil Gramm, R-Texas, a one-time chairman of the Senate Banking Committee, is joining UBS Warburg as its vice chairman. Sen. Gramm, who will retire early next year, co-authored the Gramm-Leach-Bliley Act, which eliminated legal barriers that separated banks from securities firms. A frequent critic of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, Sen. Gramm will be joining a firm that has made quite a bit of money the past two years off the mortgage market, especially in regard to subprime lending/securitization.

 

[Truthmatters]

Pretty damning huh?

Im not surprized the right will not touch this one.

If you want more economic disastor like Gramm gave us in the past then McSame is your man.

McSame old shit eating grin while they screw America.

 

[AllieBaba]

What is the problem with making money?

That's how ppl come out of imaginary recessions. You guys whine when there's recession, and you whine when there's progress. Make up your minds.

Of COURSE people are making profits. I intend to make a tidy profit, using my tax money to buy a house that I wouldn't have been able to afford or qualify for 3 years ago. OH NO!

And of course it happens at all levels.

 

[Shogun]

I'm not sure if throwing out the McSame is a worthwhile effort. dude. We can choose to be better than the "heusein obama" types, eh?

 

[Truthmatters]

There is nothing wrong with pointing out that John will be the McSame as a bush third term.

Its a fact.

Obamas middle name is husain so it does not bother me if they use it.

Its a fact.

 

[Truthmatters]

http://www.sec.gov/news/press/2005-130.htm

after the bill passed in 1999 the republican Congress which came after did not inforce the Broker rules for almost 7 years.

They just kept upping the amount of time the industry had to comply.

They completely abandoned any oversite of the industry which caused this mess.

 

[AllieBaba]

Somebody call the wahmbulance.

People are accountable to themselves for themselves. It isn't always somebody else's fault.

 

[Shogun]

i dunno man.. I think that there is something to be said for rising above during this election, dude. Regardless of his supporters, Mccain is not Bush. I think you shoot yourself in the foot trying to justify rovian politics.

 

[Truthmatters]

Somebody call the wahmbulance.

People are accountable to themselves for themselves. It isn't always somebody else's fault.

Wow the no facts zone inside your little head might just explode if you had to really read and understand the implications of legislation huh?

Facts are stuborn.

 

[AllieBaba]

Legislation and facts don't always go hand in hand. Just as science and facts don't always go hand in hand. Or politics and facts.

 

[TopGunna]

Ugh. This is like blaming your sunburn on the teacher who allowed you to go outside for recess.

I'm going to post my take on the situation that no one has responded to yet (it's effectively killed two threads to this point). If you can respond to it, truthmatters, I'd appreciate your thoughts.

1) Businesses recognized an opportunity to expand the mortgage market by offering mortgages to poorer, riskier borrowers and managing the risk by securitizing these loans and reselling them in the increasingly robust institutional market for such loan packages. While certainly in it for the profit, this move was consistent with the long-term trend in the US to wider home ownership. It turned out, however, that almost everyone involved were working off some poor assumptions. Borrowers over-estimated their ability to pay and counted too much on the continued upward trajectory of real estate values. Lenders made a number of bad credit decisions, something not wholly surprising in a new market. And institutions and other investors under-estimated the risk in these packages, particularly the systematic risk associated with falling housing prices. The sub-prime market will likely re-emerge, but with everyone smarter the next time around. Huge losses give lenders and institutions all the incentive they need to change their behavior in the future.
-- OR --
2) Unscrupulous lenders created the sub-prime market as a way to make a quick buck off of naive and inexperienced borrowers. They tricked these borrowers into taking on more debt than they could handle in order to get large up-front fees. Institutions were not arms-length investors, but were explicitly knowledgeable and "in on" this con. Their goal was to sell worthless bonds to unsuspecting investors. The fact that the lenders and institutions are taking the biggest losses in the market collapse is not a sign that they are innocent, but that the market fell apart faster than they expected, so they had not had the chance to unload the securities on duped individual investors. Without regulation, lenders and institutions will continue committing these same crimes and poor people have proven that they need outside help to make good decisions with their money. Congress needs to step in and prevent poorer borrowers from being offered mortgages in the future, and institutional investors need to be held financially accountable when borrowers take on more debt than they can handle.

Couple that with the fact that foreclosure is usually a net loss for all parties to the transaction - I can't see how anyone can think scenario #2 is what's really at work here.

 

[Truthmatters]

Glass Steagall was in place for over 60 years. It wasw adopted in reaction to the nefarious dealings in the great depression. It made it so that banking could not own all aspects of the industry at once (lending , securites and insurance). This kept the lenders from from dumping quickly the product they sell. In the sub prime instance they would have not been able to write these loans and quickly package them off for sale. When a lender call quickly sell off the loans they make then they have much less incentive to make sure the loan is "good".

They were able to make money writing the loan and then made money packaging it with other loans and then selling it. It was win win for them.
They also did not give a rats ass if the person could pay the loan long term.

If GLBact of 1999 had not been written and passed then Glass Steagall would have stood in the way of these profits because the lender would have had to sell the loan its self to the securities entity instead of just owning the securites entity.

They would not have purchaced them without looking them over to make sure they were profitable and sound.

Now face reality this legislation was the major cause and it was written by Phil Gramm who is McCains right hand man on economics.

If you like the sub prime results then you will get more of it woth McCain in office.

 

[AllieBaba]

Sorry, I go with door No. 1.

 

[Truthmatters]

Can you explain why or is it just to keep backing the people who sold you as well as the rest of this country out in this endevor?

 

[TopGunna]

I'm sticking with my analogy from before - you don't blame your sunburn on someone for allowing you to go outside.

Likewise, the legislation can be blamed for facilitating the creation of the subprime lending market - not for the failure(s) of that market in its infancy.

The biggest error in this new market was the assumption that home values would continue to appreciate. That is ultimately what is preventing the borrowers from refinancing and leaving them trapped - forcing them into foreclosure. But it doesn't matter to the greedy, right? They've made their huge up front fees so what do they care?

To date, UBS has reported $37.7 billion in losses. For profit seekers, that's an awfully expensive price to pay just to screw over poor people.

 

[Truthmatters]

Then you are not capable of understanding the complex world of high finance?

I think you are plenty smart enough to understand it you just choose to pretend these facts dont count.

 

[LordBrownTrout]

WASHINGTON — On the campaign trail, Democrats Hillary Rodham Clinton and Barack Obama have proposed cracking down on the predatory lending that they say helped fuel the foreclosure crisis.
Both presidential candidates, however, rely on close advisers who had oversight roles at financial institutions that went bust because of subprime loans.
Clinton's campaign manager, Maggie Williams, earned at least $175,000 serving from 2000-07 on the board of Long Island-based Delta Financial, which filed for bankruptcy last year after a history of high-cost loans to low-income borrowers, according to public records.
Obama's national finance chairwoman, Penny Pritzker, was chairwoman of the board of a Chicago-area bank in 1993 when it adopted a subprime business strategy that regulators say ultimately led it to collapse in 2001.

Don't forget about Clinton and Obama. *


Clinton,Obama advisors tied to subprime lending crisis

 

[TopGunna]

Then you are not capable of understanding the complex world of high finance?

I think you are plenty smart enough to understand it you just choose to pretend these facts dont count.

My point was that the "complex world of high finance" isn't driven by a single variable, like a piece of legislation.

Allowing the formation of a new market does not cause the success or failure of that new market.

 

[Truthmatters]

This legislation made it possible for the lending industry to consolidate and Profit from writting and then selling the sub prime loans.

You see regulations do change how people do business otherwise the Rs would not always be trying to deregulate on behalf of the corporations.

You can pretend it means nothing. Its doesnt make it true.

 

[Alpha1]

This legislation made it possible for the lending industry to consolidate and Profit from writting and then selling the sub prime loans.

You see regulations do change how people do business otherwise the Rs would not always be trying to deregulate on behalf of the corporations.

You can pretend it means nothing. Its doesnt make it true.

Ugh. This is like blaming your sunburn on the teacher who allowed you to go outside for recess.

Thats pretty damn funny and fits this asinine claim of desh's

Almost as funny as thinking she understands the "complex world of high finance"...