One Simple Question About the Crisis

[William Joyce]

What "oversight" would have stopped it?

What regulation would have stopped it?

 

[Paulie]

I think consumers properly regulating their own finances would have sufficed. I don't see why there needs to be more government regulation and intervention to do what consumers should be doing THEMSELVES.

 

[Isolde]

I agree, nobody claims responsibility for their own affairs. Everyone, from the over-extended homeowner to the Wall Street exec wants a hand out for their own stupidity.

 

[William Joyce]

Right.

I mean, the loans were taken out. The borrowers promised to pay back, and they didn't. So how, exactly, do you prevent THAT? What regulation would stop, essentially, human nature? Every time I hear that "we need more oversight", I gotta say, and then what? Don't make the loan? Because guess what? When you do that, you get called a racist.

http://www.humanevents.com/article.php?id=28714

Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.

When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.

In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

 

[dilloduck]

Right.

I mean, the loans were taken out. The borrowers promised to pay back, and they didn't. So how, exactly, do you prevent THAT? What regulation would stop, essentially, human nature? Every time I hear that "we need more oversight", I gotta say, and then what? Don't make the loan? Because guess what? When you do that, you get called a racist.

They Gave Your Mortgage to a Less Qualified Minority - HUMAN EVENTS

Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.

When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.

In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

I've alluded to it several times already as the Affirmative Action Loan fiasco.
No one wants to go there. Those "bleeding hearts" who are involved in the wealth distribution this time are big money bankers, investors and brokers and they are walking with the "assistance meant for minorities. When will we learn ?

 

[gonov4]

everyone blames everyone else.

 

[Ravi]

This is what led to the crisis:

The 1999 Gramm-Leach-Bliley Act broke down barriers between banks, securities firms, mortgage lenders and insurance companies. That deregulation repealed Great Depression-era bank regulations with the approval of former president Bill Clinton.



The Gramm bill encouraged lending during the strong housing market but has put banks, investment houses and insurance companies in peril since the housing bust which started two years ago. The measure allowed those lending money to sell off those loan portfolios to other companies, thus disconnecting the lending risk.

McCain, Obama camps point fingers in banking deregulation, mortgage messes - Phoenix Business Journal:

 

[jillian]

This is what led to the crisis:
McCain, Obama camps point fingers in banking deregulation, mortgage messes - Phoenix Business Journal:

Well, of course. But certain types would rather blame a law that did nothing but prevent DISCRIMINATION.

But we all know how they feel about anti-discrimination laws, anyway... so why not blame them for this.

I'm still waiting for one of the geniuses to show that keeping a bank from redlining and overcharging minorities somehow said they had to give money to people who couldn't pay it back, based on over-inflated property valuations.

Maybe you only hear that when you play the record backwards...

 

[Isolde]

This is what led to the crisis:
McCain, Obama camps point fingers in banking deregulation, mortgage messes - Phoenix Business Journal:

You're about 22 years late, the skids were greased by CRA.

I find it amusing that we even consider a politician's point of view in laying blame, they are the ones responsible for the policies which not only allowed it to happen, but encouraged it.

 

[editec]

What "oversight" would have stopped it?

What regulation would have stopped it?

Oversight of the BONDS RATINGS AGENCIES, of course.

Had the Bonds RATINGS AGENCIES not been pandering to their clients, had they not been understating the risks associated with those NINA bundled Bond instruments in order to get the Banks business to begin with, it is highly unlikely bond holders would have purchased those bonds.

Now if Fannie Mae couldn't sell bonds of NINA based RE loans, because the risk associated with them was too high, those high risks would likely have scared off the bond purchasers, then banks would NOT have taken that paper to begin with, because FANNIE MAE would not have taken that paper off their hands.

No mortgage originator (read banks) would have taken NINA RE loans, if they'd had to keep those mortgages on THEIR BOOKS, folks.

The ONLY reason they accepted those mortgages is because they knew they could pass them off to Fannie, who in turn passed them off as bundled Bonds which bond buyers invested in.

The people at the end of the food chain, the Bond buyers were LIED to.

They were lied to in the standard way capitalism lies...with a nod and wink.

The Rating agencies lied aobut the risk, and Fannie Me pretended to believe those understated risks were real.

And now WE THE PEOPLE, the people who made nothing on this deal, the people whose real estate prices were going thought the roof because of this LIE, are going to end up buying these crappy and wildly overpriced assets because the PRIVATE BANKING COMMUNITY was LYING and by doing so has BROKEN CAPITALISM.

What an enormous swindle this whole thing is.

If we do not go after the individuals in charge of this massive rip off, if we do not go after their PERSONAL ASSETS, then basically the government is aiding an abbetting these crimes after the fact.

And based on what I'm reading that is EXACTLY what we're planning on doing.

Crime pays..if you're a US banker and financier