O....M....G....DJIA Hits 50,000 Another huge win for Trump

[JonKoch]

That bubble was created by laws put in place during Clinton's era. I watched it occur in CA and I wish I had a dime for every time I asked "where's the money coming from?" as the banks--spurred by the Clinton era laws, loaned money for half million dollar homes to minimum wage earners. Your graph clearly shows the trend. It started in 2001 and it didn't get better until the bubble burst in 2006. The ill effects of those terrible decisions are still being felt in the market today.

View attachment 1237398

''Your graph clearly shows the trend. It started in 2001 and it didn't get better until the bubble burst in 2006.''

THE GRAPH ABOVE SHOWS THAT? REALLY? 8.3% IN THE MIDDLE OF 2003 TO 23.5% IN THE END OF 2006 BEING SUBPRIME MEANS IT WAS CLINTON? lol

Private lenders not subject to congressional regulations collapsed lending standards


Unregulated private lenders, often referred to as "shadow banks," played a significant role in the 2008 financial crisis by aggressively lowering lending standards. These non-bank entities—including mortgage brokers and private equity firms—operated outside the jurisdiction of federal regulators like the FDIC, enabling them to expand subprime mortgage credit rapidly.
Key Factors and Impacts:


Rapid Growth and Risk: Private-label securitization, which funded most subprime mortgages, exploded from 2001 to 2007, often eclipsing traditional government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac.


Unregulated Market: Many subprime lenders were not subjected to the same strict regulations or oversight as traditional, chartered banks. Over 84% of subprime mortgages in 2006 were issued by these private, non-bank lenders.


Lowered Standards: These lenders often utilized "loan-to-own" approaches, creating mortgage products with risky features, such as "no doc" (no documentation) loans. These lowered standards meant high-risk borrowers with limited credit options were given loans that ultimately contributed to high default rates when housing prices fell.


Exemption from Lending Laws: A significant portion of subprime loans came from lenders not subject to the Community Reinvestment Act (CRA) or similar federal oversight



While some argues that increased regulation can sometimes drive lenders away from the market, studies of the 2008 crisis generally show that the absence of regulation in the shadow banking sector allowed for unchecked risks that fueled the collapse.

Google Search

 

[Zincwarrior]

WTI is at $106 a barrel and climbing.

 

[JonKoch]

Neither Bush nor any other republican lobbied Clinton to pass the Community Reinvestment Act that destroyed credit standards in mortgage lending that led to the financial collapse of 2008.

CRA DID THAT? How?

Dissecting the Big Lie About the Economic Crisis​

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
• CRA mandated loans would have defaulted at higher rates;
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
• Local lenders making these mortgages should have failed at much higher rates;
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA — from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’sdirector of Consumer and Community Affairs — and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right — those countries didn’t have the CRA.


What’s more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankruptsoon after housing began to wobble.

No, the CRA Did Not Cause the Financial Crisis - The Big Picture

Lending to Poor People Didn’t Cause the Financial Crisis Look elsewhere for the sources of the meltdown. Bloomberg, June 22, 2016 Two of Donald Trump’s economic advisers, Lawrence Kudlow and Stephen Moore, have revived an idea about the source of the financial crisis that really should...

ritholtz.com

 

[markef]

1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here's some data to back that up: More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.



2. The government's affordability mission didn't cause the crisis




3. There is a lot of research to back this up and little against it

https://www.researchgate.net/publication/228165356_The_Great_Collapse_How_Securitization_Caused_the_Subprime_Meltdown

4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.


MY FAV, ED PINTO'S PARTNER IN CRIME (AEI, RECKLESS ENDANGERMENT CRAP)


Peter Wallison in 2004: "In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing."

Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data) - The Big Picture

Mike Konczal is a fellow with the Roosevelt Institute, and is a blogger at the Rortybomb Blog and New Deal 2.0. ~~~ Sigh. Mayor Bloomberg: “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were...

ritholtz.com

WORLD WIDE CREDIT BUBBLE AND BUST



GOV'T BACKED LOANED PERFORMED 450%-600% BETTER THAN PRIVATE MARKETS. Fannie and Freddie FOLLOWED them down the hole BECAUSE they were losing market share!

The deregulation of banks initiated by the 2000 Community Reinvestment Act opened the door to all sorts of very bad banking schemes that contributed to the inevitable crash.

 

[markef]

LMAOROG, Yeah a 1977 law in the US did this


View attachment 1237380
The banks have known for 30 years the risks involved on the loan products they sold. This is why they lobbied so hard to allow them to sell the bad products to investors so they would not be holding the bad paper or the risks. The developed the products like stated income stated assets then bundled them to make it appear they were blended risks and then sold them to multiple investors. Who bought these high risk loans? Mostly pension funds and Insurances seeking higher returns who lost almost half of the pension funds value and the public that depended on those funds for retirement.

By drastically lowering mortgage lending standards in 2000 all sorts of investors clamored for homes to buy, many just as investments, which drove home prices through the roof.

 

[markef]

World wide huh? lmaorog

Had a profound impact on many nations

Did​

The 2008 financial crisis had a profound impact on many nations, particularly those in Eastern Europe and trade-dependent advanced economies. Countries like Estonia and Ukraine experienced significant economic downturns, with their GDP levels remaining depressed 5 years later, 5-7% below pre-crisis levels. In contrast, African countries and China were less affected, growing by 75% and 60%, respectively, over the same period. The crisis's severity varied by country, with advanced economies like the US and Germany taking longer to recover, only returning to 2007 levels by 2010. The crisis's effects were also felt globally, with countries relying on exporting products or raw materials and those exporting tourism being particularly impacted.

Council on Foreign Relations

 

[JonKoch]

The deregulation of banks initiated by the 2000 Community Reinvestment Act opened the door to all sorts of very bad banking schemes that contributed to the inevitable crash.

LMAOROG, Yes ignore DATA and FACTS go by gut or right wing BS. Which investment bank (5 that are all gone today) or the 24 of the 25 of the biggest mortgage originators in 2006 were governed by that rule change?

Come on it's pretty simple. Show me

Lehman Brothers, Bear Stearns, Merrill Lynch, Goldman Sachs, and Morgan Stanley ALL 5 were investment banks in 2008, ALL either collapsed or changed their charters afterwards. Show me where anyone of them blamed CRA or ANY Gov't regulations?


STOP WITH THE BS. IT WASN'T MINORITY LENDING. IT WAS GREED OF THE BANKSTERS AND DUBYA IGNORING FBI WARNINGS THAT STARTED IN 2003 "EPEDEMIC OF MORTGAGE FRAUD". HE HAD ZERO GROWTH WITHOUT THE BUBBLE!

 

[markef]

Good, you have right wingers LYING. THINK


Dubya could get TWO UNFUNDED WARS, TWO UNFUNDED TAX CUTS, UNFUNDED MEDICARE EXPANSION, BUT COULDN'T GET THE GOP HOUSE OR SENATE TO "REFORM" GSE'S THAT HE WAS ALREADY IN CHARGE OF???



Right-wingers Want To Erase How George Bush's "Homeowner Society" Helped Cause The Economic Collapse


2004 Republican Convention:

Another priority for a new term is to build an ownership society, because ownership brings security and dignity and independence.
...

Thanks to our policies, home ownership in America is at an all- time high.

(APPLAUSE)

Tonight we set a new goal: 7 million more affordable homes in the next 10 years, so more American families will be able to open the door and say, "Welcome to my home."


June 17, 2004


Builders to fight Bush's low-income plan


NEW YORK (CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.


Home builders fight Bush's low-income housing - Jun. 17, 2004


Predatory Lenders' Partner in Crime

Predatory lending was widely understood to present a looming national crisis.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge?

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative

https://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

Agency's Rule Let Banks Pile Up New Debt

2004 Dubya allowed the leverage rules to go from 12-1 to 35-1+ which flooded the market with cheap money!


After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed.

In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms; own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.

Over the following months and years, each of the firms would take advantage of the looser rules.

http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=all


Bush drive for home ownership fueled housing bubble


He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend as much as $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for government insured mortgages with no money down

Thread 'FACTS on Dubya's great recession'

Jul 2, 2014

Q When did the Bush Mortgage Bubble start?

A The general timeframe is it started late 2004.

From Bush’s President’s Working Group on Financial Markets October 2008

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”



Q Did the Community Reinvestment Act under Carter/Clinton caused it?


A "Since 1995 there has been essentially no change in the basic CRA rules or...

• Dad2three
• Replies: 481
• Forum: Economy

• 

Letter: The housing bubble was mandated by the government, Barney Frank

In response to the letter by Joanne DelSolar: I just wanted to comment about her insinuation that this economic disaster was Presidents Bush’s fault. Because President Bush was the sitting

www.lodinews.com

Letter: The housing bubble was mandated by the government, Barney Frank​

• Sep 8, 2015

In response to the letter by Joanne DelSolar: I just wanted to comment about her insinuation that this economic disaster was Presidents Bush’s fault. Because President Bush was the sitting president at that time doesn’t mean his policies caused the economic disaster that we are still in.

In 1992 the Democratic Congress approved the Affordable Housing Act. This act eventually led to a lot of bad loans to people that should have never been able to enter the housing market. Government-sponsored enterprises Fannie Mae and Freddie Mac were to become deeply involved in this, the Affordable Housing Act, and were pushing bad loans to comply with the government mandate. Democrats Rep. Barney Frank and Sen. Chris Dodd were the leaders for this mandate.

Barney Frank, a Democrat, was chairman of the House Financial Services Committee and a longtime supporter of Fannie Mae and Freddie Mac. Because of the housing crisis, Barney Frank later admitted it was a mistake to force home ownership on people that couldn’t afford it. Renting would have been preferable. Now he tells us.


President Bush in 2003 proposed a bill to strengthen Freddie Mac and Fannie Mae regulation. But Rep. Barney Frank and Sen. Chris Dodd both stated Fannie and Freddie were not facing any financial crisis.

In 2005, the Bush administration made another attempt to downsize Freddie Mac and Fannie Mae, the bill got through the House committee, despite unanimous Democratic opposition. A vote was blocked by Democrats on the floor of the Senate.


By 2008 President Bush called for Freddie Mac and Fannie Mae reform, 17 times, the 18th time was the charm. In July (too late) Congress passed a reform bill that contained key elements of what the Bush administration had proposed five years earlier. The Democrats just kept denying there was a housing bubble that was about to burst. If the Democrats would have taken President Bush’s advice five years before, they may have prevented the housing crisis, or certainly would have lessened the financial impact on our nation.

I just wanted to inform the public of the real sequence of events that caused the housing bubble to burst. And it was a democratic problem, just ask Barney Frank.

 

[JonKoch]

Had a profound impact on many nations

Did​

The 2008 financial crisis had a profound impact on many nations, particularly those in Eastern Europe and trade-dependent advanced economies. Countries like Estonia and Ukraine experienced significant economic downturns, with their GDP levels remaining depressed 5 years later, 5-7% below pre-crisis levels. In contrast, African countries and China were less affected, growing by 75% and 60%, respectively, over the same period. The crisis's severity varied by country, with advanced economies like the US and Germany taking longer to recover, only returning to 2007 levels by 2010. The crisis's effects were also felt globally, with countries relying on exporting products or raw materials and those exporting tourism being particularly impacted.
Council on Foreign Relations

Got it so you don't know that there was a WORLD WIDE CREDIT BUBBLE AND BUST. Thanks for playing

Jun 16th 2005

In come the waves​

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops​

NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.

https://www.economist.com/special-report/2005/06/16/in-come-the-waves

NO PAYWALL

https://archive.ph/8Wb5V

NOW IF WE HAD ANYONE WHO COULD WATCH THE BANKSTERS WHEN HE WAS PREZ IN 2001-2009? HMM

 

[markef]

Come on, GET SERIOUS

Nobody forced the big five investment banks to do what they did; they were not subject to CRA or other regulations common to depository banks. In fact, they mainly bought and sold loans rather than originate them. They did it because they thought they would make money.


Regulators and policymakers enabled this process at virtually every turn. Part of the reason they failed to understand the housing bubble was willful ignorance: they bought into the argument that the market would equilibrate itself. In particular, financial actors and regulatory officials both believed that secondary and tertiary markets could effectively control risk through pricing.

tobinproject.org/sites/default/files/assets/Fligstein_Catalyst%20of%20Disaster_0.pdf



View attachment 1237382

You meant he 'warned' GOP Congress 17 times on GSE reforms, but blocked the only bill to get out of the GOP House with bipartisan support?



Bush talked about reform. He talked and he talked. And then he stopped reform. (read that as many times as necessary. Bush stopped reform). And then he stopped it again

Testimony from W's Treasury Secretary John Snow to the REPUBLICAN CONGRESS concerning the 'regulation of the GSE's 2004

Mr. Frank: ...Are we in a crisis now with these entities?

Secretary Snow. No, that is a fair characterization, Congressman Frank, of our position. We are not putting this proposal before you because of some concern over some imminent danger to the financial system for housing; far from it

- THE TREASURY DEPARTMENT'S VIEWS ON THE REGULATION OF GOVERNMENT SPONSORED ENTERPRISES

October 26, 2005

STATEMENT OF ADMINISTRATION POLICY

The Administration strongly believes that the housing GSEs should be focused on their core housing mission, particularly with respect to low-income Americans and first-time homebuyers. Instead, provisions of H.R. 1461 that expand mortgage purchasing authority would lessen the housing GSEs' commitment to low-income homebuyers.

George W. Bush: Statement of Administration Policy: H.R. 1461 - Federal Housing Finance Reform Act of 2005

Yes, he said he was against it because it "would lessen the housing GSEs' commitment to low-income homebuyers"


June 17, 2004

(CNN/Money) - Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.


Home builders fight Bush's low-income housing - Jun. 17, 2004


BUT NO, THOUGH BUSH CRUSHED F/F (AS REGULATOR), THE GSE'S DIDN'T CAUSE THE BUSH SUBPRIME CRISIS
Private sector loans, not Fannie or Freddie, triggered crisis

Bankers were almost forced by government regulators to make home loans available to more blacks with poor credit scores. Banks, facing pressures to stay afloat did find creative ways to manage risky mortgages they knew would have a high degree of defaults, such as credit default swaps, mortgage-backed securities, derivatives, and the like, but I believe the greatest mistake bankers made was believing that Fannie Mae and Freddie Mac would back home loans by blacks who had to default.

These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.

Barney Frank

 

[JonKoch]

Letter: The housing bubble was mandated by the government, Barney Frank

In response to the letter by Joanne DelSolar: I just wanted to comment about her insinuation that this economic disaster was Presidents Bush’s fault. Because President Bush was the sitting

www.lodinews.com

Letter: The housing bubble was mandated by the government, Barney Frank​

• Sep 8, 2015

In response to the letter by Joanne DelSolar: I just wanted to comment about her insinuation that this economic disaster was Presidents Bush’s fault. Because President Bush was the sitting president at that time doesn’t mean his policies caused the economic disaster that we are still in.

In 1992 the Democratic Congress approved the Affordable Housing Act. This act eventually led to a lot of bad loans to people that should have never been able to enter the housing market. Government-sponsored enterprises Fannie Mae and Freddie Mac were to become deeply involved in this, the Affordable Housing Act, and were pushing bad loans to comply with the government mandate. Democrats Rep. Barney Frank and Sen. Chris Dodd were the leaders for this mandate.

Barney Frank, a Democrat, was chairman of the House Financial Services Committee and a longtime supporter of Fannie Mae and Freddie Mac. Because of the housing crisis, Barney Frank later admitted it was a mistake to force home ownership on people that couldn’t afford it. Renting would have been preferable. Now he tells us.


President Bush in 2003 proposed a bill to strengthen Freddie Mac and Fannie Mae regulation. But Rep. Barney Frank and Sen. Chris Dodd both stated Fannie and Freddie were not facing any financial crisis.

In 2005, the Bush administration made another attempt to downsize Freddie Mac and Fannie Mae, the bill got through the House committee, despite unanimous Democratic opposition. A vote was blocked by Democrats on the floor of the Senate.


By 2008 President Bush called for Freddie Mac and Fannie Mae reform, 17 times, the 18th time was the charm. In July (too late) Congress passed a reform bill that contained key elements of what the Bush administration had proposed five years earlier. The Democrats just kept denying there was a housing bubble that was about to burst. If the Democrats would have taken President Bush’s advice five years before, they may have prevented the housing crisis, or certainly would have lessened the financial impact on our nation.

I just wanted to inform the public of the real sequence of events that caused the housing bubble to burst. And it was a democratic problem, just ask Barney Frank.

ONCE MORE. You do understand how the US House works right? The MAJORITY party runs the House, the minority party can scream, shout and put out press releases, but have NO POWER TO STOP THE MAJORITY. But Barney Frank, minority member of the House 1995-Jan 2007 somehow had super powers when it came to housing and the GSE's? LMAOROG. Sure, sure. I bet he could stop the wars and block tax cuts too?

 

[markef]

Barney Frank blocked Dubya in the House? How? PLEASE explain? HE COULD BE ON FIRE, AND HE COULDN'T STOP A SINGLE THING IN THE GOP MAJORITY HOUSE!. Dems FINALLY won the House back in Jan 2007 remember?

The Fall of the House of Frank

www.smu.edu

Congressman Frank provides his own convoluted review of this crisis on his congressional homepage. In his account, the Bush administration took the inexplicable view of opposing regulation from 2001 to 2007 and then endorsed regulation in 2007, when Frank took leadership of the important housing issues relating to Fannie Mae and Freddie Mac. According to Frank, the regulations passed in 2007 by himself and President Bush were "too late." Outside the reactionary left's mythmaking offered by Congressman Frank, the Bush administration repeatedly called for heightened congressional oversight and regulation of Fannie Mae and Freddie Mac throughout both terms of the Bush presidencies. In reality, the Bush proposals to treat GSEs like Fannie Mae and Freddie Mac the same as private banks in the regulatory world, were termed "inane" in 2005 by Congressman Frank. The reforms passed by Frank came in 2008 -- after the industry had collapsed -- despite Frank's 2005 assurance that Fannie Mae and Freddie Mac were "fundamentally sound." The GSEs purchased considerable political sway in fall of 2006 to prevent the regulatory leveling sought by the Bush administration. Democratic senators such as Chris Dodd and Barack Obama received considerable financial support from the GSEs in a landslide sweep for Democrats in Congress that functionally guaranteed that the GSEs would fend off future regulatory reforms pushed by the president.

 

[JonKoch]

Bankers were almost forced by government regulators to make home loans available to more blacks with poor credit scores. Banks, facing pressures to stay afloat did find creative ways to manage risky mortgages they knew would have a high degree of defaults, such as credit default swaps, mortgage-backed securities, derivatives, and the like, but I believe the greatest mistake bankers made was believing that Fannie Mae and Freddie Mac would back home loans by blacks who had to default.

These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.

Barney Frank

STOP THE GAWDAMN COPYING AND PASTING CRAP YOU JUST DON'T EVEN UNDERSTAND!


One president controlled the regulators that not only let banks stop checking income but cheered them on. And as president Bush could enact the very policies that caused the Bush Mortgage Bubble and he did. And his party controlled Congress.

No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data)​

1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here’s some data to back that up: “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions… Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”
2. The government’s affordability mission didn’t cause the crisis
3. There is a lot of research to back this up and little against it
4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.

Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data) - The Big Picture

Mike Konczal is a fellow with the Roosevelt Institute, and is a blogger at the Rortybomb Blog and New Deal 2.0. ~~~ Sigh. Mayor Bloomberg: “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were...

ritholtz.com

 

[markef]

CRA DID THAT? How?

Dissecting the Big Lie About the Economic Crisis​

Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?

Here’s what we should have seen:

• Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
• CRA mandated loans would have defaulted at higher rates;
• Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
• Local lenders making these mortgages should have failed at much higher rates;
• Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
• Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
• Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.

Yet none of these things happened. And they should have, if the CRA was at fault. It’s no surprise that in congressional testimony, various experts were asked about the CRA — from former Federal Deposit Insurance Corp. Chairman Sheila Bair to the Federal Reserve’sdirector of Consumer and Community Affairs — and none blamed the crisis on the CRA.

If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?

It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.

Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right — those countries didn’t have the CRA.


What’s more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankruptsoon after housing began to wobble.

No, the CRA Did Not Cause the Financial Crisis - The Big Picture

Lending to Poor People Didn’t Cause the Financial Crisis Look elsewhere for the sources of the meltdown. Bloomberg, June 22, 2016 Two of Donald Trump’s economic advisers, Lawrence Kudlow and Stephen Moore, have revived an idea about the source of the financial crisis that really should...

ritholtz.com

Even though lawmakers like Barney Frank later admitted they had been mistaken to open the floodgates to bad mortgages, democrats still claim bad mortgages had nothing to do with the democrat deregulation of mortgage banking standards in 2000 that resulted in the 2008 collapse.

 

[markef]

LMAOROG, Yes ignore DATA and FACTS go by gut or right wing BS. Which investment bank (5 that are all gone today) or the 24 of the 25 of the biggest mortgage originators in 2006 were governed by that rule change?

Come on it's pretty simple. Show me

Lehman Brothers, Bear Stearns, Merrill Lynch, Goldman Sachs, and Morgan Stanley ALL 5 were investment banks in 2008, ALL either collapsed or changed their charters afterwards. Show me where anyone of them blamed CRA or ANY Gov't regulations?


STOP WITH THE BS. IT WASN'T MINORITY LENDING. IT WAS GREED OF THE BANKSTERS AND DUBYA IGNORING FBI WARNINGS THAT STARTED IN 2003 "EPEDEMIC OF MORTGAGE FRAUD". HE HAD ZERO GROWTH WITHOUT THE BUBBLE!

Th big mortgage banks were brought down by bad mortgages made possible because of lowered lending standards enacted in the 2000 banking deregulation bill.

 

[markef]

Got it so you don't know that there was a WORLD WIDE CREDIT BUBBLE AND BUST. Thanks for playing

Jun 16th 2005

In come the waves​

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops​

NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.

https://www.economist.com/special-report/2005/06/16/in-come-the-waves

NO PAYWALL

https://archive.ph/8Wb5V

NOW IF WE HAD ANYONE WHO COULD WATCH THE BANKSTERS WHEN HE WAS PREZ IN 2001-2009? HMM

Because incompetent lawmakers in Congress lowered lending standards in 2000 the resulting housing boom caused home prices to rise above sustainable levels. When the economy blinked in 2007 and 2008, home prices tanked causing tens of millions of mortgage holdrers to default on their loans and that brought financial institutions down all over the world.

 

[JonKoch]

The Fall of the House of Frank

www.smu.edu

Congressman Frank provides his own convoluted review of this crisis on his congressional homepage. In his account, the Bush administration took the inexplicable view of opposing regulation from 2001 to 2007 and then endorsed regulation in 2007, when Frank took leadership of the important housing issues relating to Fannie Mae and Freddie Mac. According to Frank, the regulations passed in 2007 by himself and President Bush were "too late." Outside the reactionary left's mythmaking offered by Congressman Frank, the Bush administration repeatedly called for heightened congressional oversight and regulation of Fannie Mae and Freddie Mac throughout both terms of the Bush presidencies. In reality, the Bush proposals to treat GSEs like Fannie Mae and Freddie Mac the same as private banks in the regulatory world, were termed "inane" in 2005 by Congressman Frank. The reforms passed by Frank came in 2008 -- after the industry had collapsed -- despite Frank's 2005 assurance that Fannie Mae and Freddie Mac were "fundamentally sound." The GSEs purchased considerable political sway in fall of 2006 to prevent the regulatory leveling sought by the Bush administration. Democratic senators such as Chris Dodd and Barack Obama received considerable financial support from the GSEs in a landslide sweep for Democrats in Congress that functionally guaranteed that the GSEs would fend off future regulatory reforms pushed by the president.

So no, you'll keep up with BS talking points. Got it


June 17, 2004

Home builders, realtors and others are preparing to fight a Bush administration plan that would require Fannie Mae and Freddie Mac to increase financing of homes for low-income people, a home builder group said Thursday.

Home builders fight Bush s low-income housing - Jun. 17 2004


We have also relaxed some of our underwriting criteria to obtain goals-qualifying mortgage loans and increased our investments in higher-risk mortgage loan products that are more likely to serve the borrowers targeted by HUD’s goals and subgoals,

http://www.fanniemae.com/resources/file/ir/pdf/stock-info/series_T_05152008.pdf

HOLY COW! Bush forced them to lower their standards. If only somebody had warned us that Bush's policies would hurt Freddie and Fannie. Wait, somebody did.



Fannie, Freddie to Suffer Under New Rule, Barney Frank Says

Fannie Mae and Freddie Mac would suffer financially under a Bush administration requirement that they channel more mortgage financing to people with low incomes, said the senior Democrat on a congressional panel that sets regulations for the companies.


So if your narrative is "GSEs are to blame" then you have to blame Dubya


http://democrats.financialservices....s/112/06-17-04-new-Fannie-goals-Bloomberg.pdf



Conservatives deny facts and never explain their positions because they can't. Their positions have no basis in reality and are unsustainable, so the only thing they can do is obfuscate, deny, attack and deflect.




Weird you don't know the MAJORITY of loans during Dubya's bubble was in the SHADOW BANKING SECTOR (think wall street) and NOT regulated like traditional banks

 

[JonKoch]

Th big mortgage banks were brought down by bad mortgages made possible because of lowered lending standards enacted in the 2000 banking deregulation bill.

Lehman Brothers, Bear Stearns, Merrill Lynch, Goldman Sachs, and Morgan Stanley ALL 5 were investment banks

THOSE GUYS? LMAOROG. Sorry Cupcake, wrong again. LIKE the 24 of 25 biggest mortgage originators in 2006, the investment banks were NOT under CRA OR Glass Steagall's repeal. They were UNREGULATED BANKING SECTORS LIKE WALL STREET!

 

[Concerned American]

When the economy blinked in 2007 and 2008, home prices tanked causing tens of millions of mortgage holdrers to default on their loans and that brought financial institutions down all over the world.

As well as the domestic building industry which sent ripples through the supporting industries and effects the real estate market even today.

 

[markef]

ONCE MORE. You do understand how the US House works right? The MAJORITY party runs the House, the minority party can scream, shout and put out press releases, but have NO POWER TO STOP THE MAJORITY. But Barney Frank, minority member of the House 1995-Jan 2007 somehow had super powers when it came to housing and the GSE's? LMAOROG. Sure, sure. I bet he could stop the wars and block tax cuts too?

Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs | The American Presidency Project

www.presidency.ucsb.edu

George W. Bush​

43rd President of the United States: 2001 ‐ 2009

Just the Facts: The Administration's Unheeded Warnings About the Systemic Risk Posed by the GSEs​

September 19, 2008
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems.