Phil Gramm and the Subprime Financial Crisis

[Alpha1]

The mortgage brokers were selling mortgages to people who could not afford it when the adjustable rate goes up....they TOLD these people that when the adjustable rate goes up, they could refinance in to a conventional mortgage.

I heard mortgage brokers at least 10 TIMES on the show house hunters on hgtv tell this to young white couples that were buying their first home the last 3 years....talking the home owners in to going in to the adjustable rate mortgage or a baloon morgage for the first few years of their ownership.

New home buyers HAD TRUST IN THEIR BANKS AND BROKERS, that the mortgage companies would NOT lend to people that they knew would fail.

If thats what yu heard on HGTV you need your TV fixed...spin the Gramm crap all you want...it will not change the facts of this present problem...
Your left wing blogs will not give you the truth, you should be wise to that by now....
This present problem can be laid at the feet of those that almost broke their necks getting to the TV cameras to deny culpability....the Democrats....

Racist banks ? bullshit...any bank that questioned the borrower about their income or ability to pay a mortgage, or buying a property in slum land that was worth nothing to begin with was labeled racist....that wasn't the doing of cons....

 

[Alpha1]

These people did not come in to banks on their own to buy a house, the mortgage lenders ADVERTISED HEAVILY to bring these people in to get a mortgage for a home.

Tobacco Companys advertise too...does that cause YOU to smoke...no...?

Not you, of course....but I'll bet you blame those ads as being the cause of everyone else smoking, right?

As usual, personal responsibility is just ignored, its the banks fault, its the tobacco co.s fault....

 

[Shadow]

The mortgage brokers were selling mortgages to people who could not afford it when the adjustable rate goes up....they TOLD these people that when the adjustable rate goes up, they could refinance in to a conventional mortgage.

I heard mortgage brokers at least 10 TIMES on the show house hunters on hgtv tell this to young white couples that were buying their first home the last 3 years....talking the home owners in to going in to the adjustable rate mortgage or a baloon morgage for the first few years of their ownership.

New home buyers HAD TRUST IN THEIR BANKS AND BROKERS, that the mortgage companies would NOT lend to people that they knew would fail.

Well thanks to your buddy Jimmy Carter Banks were forced to loan money to people who could not afford housing.

Community Reinvestment Act of 1977 forced banks to lend to uncreditworthy borrowers, mostly in minority areas. Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.

These rules were then heightenend in the 90's by President Clinton. Despite warnings from GOP members of Congress.

And you folks want to visit this crap again with Obama.

 

[Care4all]

Well thanks to your buddy Jimmy Carter Banks were forced to loan money to people who could not afford housing.

Community Reinvestment Act of 1977 forced banks to lend to uncreditworthy borrowers, mostly in minority areas. Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.

These rules were then heightenend in the 90's by President Clinton. Despite warnings from GOP members of Congress.

And you folks want to visit this crap again with Obama.

gosh almighty, do all of you conservatives get your info to churn out from the same ill informed blog or something?

have you even read the context of the bill that required what you say it did?

it was posted on one of these threads on the topic and i did.

it FORCED NO BANK OR THRIFT to loan money to very high risk of defaulting people...it only requested that banks and thrifts servicing a community, offer services to the full community and not just service the wealthy.

the bill did not tell these banks to have 5% or 40% or 70% of their loans issued to lower income people at higher risk , it did not tell these banks to use the kind of ridiculous subprime terms they used with those they were loaning to....these decisions were made by these banks.

and slighty over 50% of these subprime adjustable rate/no money down mortgages were made by financial institutions that were NOT EVEN COVERED by the legislation congress put out on this to encourage homeownership....

this had NOTHING to do with the congressional bill encouraging home ownership....we've been encouraging homeownership for decades upon decades....VA loans for the military as an example....it is important to own a home, it was the ONE WAY that people were able to accumilate any wealth in this country, it also was a common denominator in less crime and better schools in a community....helping all americans.

this had to do with the bad decisions at the very top, of these financial institutions to gamble their companies away for the immediate dollar in the hand, and the tools to be able to be this reckless with stock holders money, due to deregulations....

care

 

[dilloduck]

gosh almighty, do all of you conservatives get your info to churn out from the same ill informed blog or something?

have you even read the context of the bill that required what you say it did?

it was posted on one of these threads on the topic and i did.

it FORCED NO BANK OR THRIFT to loan money to very high risk of defaulting people...it only requested that banks and thrifts servicing a community, offer services to the full community and not just service the wealthy.

the bill did not tell these banks to have 5% or 40% or 70% of their loans issued to lower income people at higher risk , it did not tell these banks to use the kind of ridiculous subprime terms they used with those they were loaning to....these decisions were made by these banks.

and slighty over 50% of these subprime adjustable rate/no money down mortgages were made by financial institutions that were NOT EVEN COVERED by the legislation congress put out on this to encourage homeownership....

this had NOTHING to do with the congressional bill encouraging home ownership....we've been encouraging homeownership for decades upon decades....VA loans for the military as an example....it is important to own a home, it was the ONE WAY that people were able to accumilate any wealth in this country, it also was a common denominator in less crime and better schools in a community....helping all americans.

this had to do with the bad decisions at the very top, of these financial institutions to gamble their companies away for the immediate dollar in the hand, and the tools to be able to be this reckless with stock holders money, due to deregulations....

care

you have to check code words like--meet community needs.

here try this
http://www.fdic.gov/regulations/community/community/12c30.html

 

[Care4all]

you have to check code words like--meet community needs.

here try this
FDIC: COMMUNITY REINVESTMENT - 12 USC CHapter 30

you mean like these code words....

meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

 

[dilloduck]

you mean like these code words....

meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

intentionally ignorant ? You just missed the parts referring to minorities and women ?

 

[Care4all]

intentionally ignorant ? You just missed the parts referring to minorities and women ?

dillo, this ACT was instituted in 1977...

tell me what logic you have on why this Act which had been in effect for 31 years, now, the past 5 years ONLY, has become the problem, according to you, and allie, and shadow and the person or party that showed you this ''rule'' to pass around the net as the culpret of this mess we are in?

come onnnnnnnnnnnnn.....

certainly you can see there is no logic in such a premise....

OTHER things that CHANGED ON WALL STREET with banks allowed this to happen...enough of this illogical crap that ya'll are trying to politically spin!!!! honestly, geez!!!!! just plain crazy to try to spin it in to this 31 year old Act...don't you think?

 

[dilloduck]

dillo, this ACT was instituted in 1977...

tell me what logic you have on why this Act which had been in effect for 31 years, now, the past 5 years ONLY, has become the problem, according to you, and allie, and shadow and the person or party that showed you this ''rule'' to pass around the net as the culpret of this mess we are in?

come onnnnnnnnnnnnn.....

certainly you can see there is no logic in such a premise....

OTHER things that CHANGED ON WALL STREET with banks allowed this to happen...enough of this illogical crap that ya'll are trying to politically spin!!!! honestly, geez!!!!! just plain crazy to try to spin it in to this 31 year old Act...don't you think?

It's been changed several times in 31 years. Several times people tried to fix it. They were thwarted. Read the changes and tell me it was a great idea.

 

[Care4all]

It's been changed several times in 31 years. Several times people tried to fix it. They were thwarted. Read the changes and tell me it was a great idea.

several? only 2 major that i read about, in 1995 to tighten some things up with the regulators and one in 2005 which i haven't found out what that was about yet, but still searching....???

why don't you cut and paste what yur mentioning, so i can understand instead of me having to guess what to look for to make yur point!!! lol

 

[Care4all]

It's been changed several times in 31 years. Several times people tried to fix it. They were thwarted. Read the changes and tell me it was a great idea.

btw, does this comment address why this crisis is happening NOW and not 25 years ago or 15 years ago if this legislation is the problem????? huh?

 

[dilloduck]

btw, does this comment address why this crisis is happening NOW and not 25 years ago or 15 years ago if this legislation is the problem????? huh?

no--maybe you can figure out why the bubble popped exactly at this point in time after only expanding for several years.

 

[Chris]

no--maybe you can figure out why the bubble popped exactly at this point in time after only expanding for several years.

Because Gramm's legislation paved the way for lending with no risk.

Phil Gramm created this whole problem. Just ask Warren Buffet.

 

[jreeves]

here some more pertinent info:

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

On July 18, 2008 Gramm stepped down from his position with the McCain campaign.

 

[Care4all]

On July 18, 2008 Gramm stepped down from his position with the McCain campaign.

good!

are you sure he is not still behind the scenes? heard he was mccains favorite for treasury secretary....of course this could be just partisan rumors spread by the other side, i'm honestly not certain.

 

[Care4all]

Because Gramm's legislation paved the way for lending with no risk.

Phil Gramm created this whole problem. Just ask Warren Buffet.

yes, there is no doubt that his amendment for this deregulation, that was slipped in to a must pass appropriations bill, is the cause of this mess. This does not mean that Phil Gramm knew what the outcome of his bill would be though...

also, even though the dems initially voted down phil gramm's amendment, which passed on a straight party line vote, all repubs saying yes and all dems saying no, when the appropriations bill got out of conference, the dems near unanimously joined with the repubs to pass the appropriations bill that had this amendment in it.....

 

[jreeves]

good!

are you sure he is not still behind the scenes? heard he was mccains favorite for treasury secretary....of course this could be just partisan rumors spread by the other side, i'm honestly not certain.

He isn't one of Mccain's paid economic advisors I am certain of that.

 

[Chris]

I think they are in love....

 

[jreeves]

I think they are in love....

If that's true then these two must be legal domestic partners.

 

[editec]

Editec I have two children, one 4.5 years and one 14 months. I'm 28, relatively debt-free, and saving to buy a house in the next couple years.

Yeah, and you make a decent living and your job is secure and as yet you haven't had one of those life changing disasters which put you back to the wall. I know you won't believe me, but I am happy for your fortune to date, and hope it never changes.

No matter HOW bad my finances got, I would NEVER borrow to pay bills. I'd cancel cable, I'd cancel phones, I'd bundle up inside and avoid using the heat unless it was MANDATORY. I'd get hired at McDonalds if I had to, because there's no shortage of SOME kind of job in this country.

Yes you would. I know you cannot possisbly image circumstances that might make you do that, but believe me I can.

You do what you have to do to provide. Borrowing to pay bills is the stupidest thing a person can do, and under no circumstances should it be considered NECESSARY.

You child is sick. You suddely need $100,000 to save his life. Do you borrow that money or do you let him die?

Do you suppose that second job you're so bravely going to take (the one you think nobody but you is ambitious enough to take) at McDonalds is going to save him?

There's a bull market SOMEWHERE, editec. There's employment that's in demand SOMEWHERE.

Somewhere over the rainbow?

For ANYONE in the early part of this decade when money was not exactly hard to come by, to have thought that borrowing money to pay bills was a good idea, is PATHETIC.

Money was not hard to come by for you, you mean?

I'm not saying every single person could have made do. I'm saying MOST COULD HAVE.

I know you are. You are simply wrong.

My friend, every single bit of economic wit you have around here is completely flushed down the toilet by suggesting that anyone could have been better off by indebting themselves more to pay bills. That is the epidome of ridiculous.

I haven't said that people are better off by indebting themselves...I said they often have NO CHOICE.

Big difference.

Oh yeah, one more point...people are often better indebting themselves IF by doing so they can protect an asset they value more, and IF they can pay off that debt.

People borrow money because they are optomistic enough to imagine that tomorrow will be a better day. there are all sorts of good reasons to take on debt if you have good reason to think you can pay it back, and the money you are borrowing serves a better purpose.

When they are right, they were right to borrrow.

When they are wrong, (as for example, when the market they depended on for their investment to work, goes south) they are wrong.

None of us have a crystal ball, champ.

Life, including borrowing, is a risky venture.

Now you and I both know that some people who are going to lose their homes were risking foolishly. They couldn't possibly have paid thier VRMs when the rates changed.

What they were counting on was that before their rates changed, they'd be able to get into a fixed rate mortgage based on the fact that the value of their homes had risen fast enough for them to have the equity position they needed for that fixed rate mortgage.

But the market went south and those people are screwed.

Were they stupid?

Well, a LOT of people now securely in their homes are there precisely because that plan worked for THEM.

They DID manage to own the home long enough for the market value of their home to rise enough that they had the equity to get tht fixed rate so they refi'ed and can pay off their current mortgage.

What is the difference between those two families?

Intelligence?

No...timing.