Should the Glass Steagall Act be brought back?

[Dad2three]

The biggest culprits in the housing fiasco came from the private sector, and more specifically from a mortgage industry that was out of control. These included lenders who originated home loans, investment bankers who packaged them into securities, rating agencies that misjudged these securities, and global investors who bought them without much, if any, study.

In other words, America’s mortgage securitization machine was fundamentally broken. It created millions of mortgage loans that, even under reasonable economic assumptions, stood little chance of being repaid — and were not.




Also to blame, of course, were regulators, who gave the private mortgage market little, if any, oversight. The market’s watchdogs were lulled to sleep by a misplaced view that self-interested private financial institutions would regulate themselves.

By Mark Zandi, GOPer and McCain adviser 2008


Fannie and Freddie don’t deserve blame for bubble


Fannie and Freddie don?t deserve blame for bubble - The Washington Post

 

[Dad2three]

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.”

 

[Mac1958]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

 

[Contumacious]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would have not been made

ABOLISH THE FEDERAL RESERVE BOARD and things will get fixed.

"The only way these borrowers could qualify for their mortgage loans (even ignoring their bad credit ratings) was to take out adjustable rate mortgages, some of which had astonishingly low first-year rates in the 3 percent range, and sometimes lower. This is what has largely fueled the subprime mortgage meltdown — the inability of thousands of subprime borrowers to afford their mortgages now that their rates have adjusted upward. Thus, the combination of the Fed’s enforcement of the CRA (with the help of political pressure groups like ACORN) and its post 9/11 monetary policy in general are the reasons for the bursting real estate bubble and the "subprime" mortgage meltdown."

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

"The sub-prime loans would not made if there were not consumers willing to sign on the dotted line."



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.”


DUBYA FOUGHT ALL 50 STATE AG'S IN 2003, INVOKING A CIVIL WAR ERA RULE SAYING FEDS RULE ON "PREDATORY" LENDERS!

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

Eliot Spitzer - Predatory Lenders' Partner in Crime



"The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's."


WHO WAS IN CHARGE IN THIS PERIOD? WHO HAD THE SEC, FBI, GSE'S, ETC AS PART OF THEIR EXECUTIVE BRANCH OVERSIGHT?


"The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence." William K. Black Sr. regulator during S&L debacle



“When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions,”...“If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.”

http://www.nytimes.com/2011/04/14/business/14prosecute.html?pagewanted=all

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources.

FBI saw threat of loan crisis - Los Angeles Times

Shockingly, the FBI clearly makes the case for the need to combat mortgage fraud in 2005, the height of the housing crisis:

Financial Crimes Report to the Public 2005

FBI ? Financial Crimes Report 2005

The Bush Rubber Stamp Congress ignored the obvious and extremely detailed and well reported crime spree by the FBI.

THE BUSH ADMINISTRATION and CONGRESS stripped the White Collar Crime divisions of money and manpower.

http://www.nytimes.com/2008/10/19/washington/19fbi.html?pagewanted=all



"Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves."


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

The SEC Rule That Broke Wall Street

The SEC Rule That Broke Wall Street


Agency's '04 Rule Let Banks Pile Up New Deb


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


BUSH REGULATORS ON WALL STREET IN 2004 WITH A CHAINSAW 'CUTTING' REGULATIONS

“We certainly don't want there to be a fine print preventing people from owning their home,” the President(DUBYA) said in a 2002 speech. “We can change the print, and we've got to.”




NO, IT WASN'T ONE TYPE OF IDEOLOGY THAT SET US UP TO FAIL, IT WASN'T DUBYA ACTING AS HEAD CHEERLEADER TO THE BANKSTERS, 'MANY' PEOPLE WERE 'INVOLVED'

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would have not been made

ABOLISH THE FEDERAL RESERVE BOARD and things will get fixed.

"The only way these borrowers could qualify for their mortgage loans (even ignoring their bad credit ratings) was to take out adjustable rate mortgages, some of which had astonishingly low first-year rates in the 3 percent range, and sometimes lower. This is what has largely fueled the subprime mortgage meltdown — the inability of thousands of subprime borrowers to afford their mortgages now that their rates have adjusted upward. Thus, the combination of the Fed’s enforcement of the CRA (with the help of political pressure groups like ACORN) and its post 9/11 monetary policy in general are the reasons for the bursting real estate bubble and the "subprime" mortgage meltdown."

lol

Examining the big lie: How the facts of the economic crisis stack up


The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.” It is highly unlikely that a simultaneous boom and bust everywhere else in the world was caused by one set of factors (ultra-low rates, securitized AAA-rated subprime, derivatives) but had a different set of causes in the United States. Indeed, this might be the biggest obstacle to pushing the false narrative. How did U.S. regulations against redlining in inner cities also cause a boom in Spain, Ireland and Australia? How can we explain the boom occurring in countries that do not have a tax deduction for mortgage interest or government-sponsored enterprises? And why, after nearly a century of mortgage interest deduction in the United States, did it suddenly cause a crisis?

These questions show why proximity and statistical validity are so important. Let’s get more specific.The Community Reinvestment Act of 1977 is a favorite boogeyman for some, despite the numbers that so easily disprove it as a cause.It is a statistical invalid argument, as the data show.

For example, if the CRA was to blame, the housing boom would have been in CRA regions; it would have made places such as Harlem and South Philly and Compton and inner Washington the primary locales of the run up and collapse. Further, the default rates in these areas should have been worse than other regions.

CRA were less likely to default than Subprime Mortgages — Source: University of North Carolina at Chapel Hill

What occurred was the exact opposite: The suburbs boomed and busted and went into foreclosure in much greater numbers than inner cities. The tiny suburbs and exurbs of South Florida and California and Las Vegas and Arizona were the big boomtowns, not the low-income regions. The redlined areas the CRA address missed much of the boom; places that busted had nothing to do with the CRA.



The market share of financial institutions that were subject to the CRA has steadily declined since the legislation was passed in 1977.




•Private lenders not subject to congressional regulations collapsed lending standards. Taking up that extra share were nonbanks selling mortgages elsewhere, not to the GSEs.




A study by the Federal Reserve shows that more than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.



Examining the big lie: How the facts of the economic crisis stack up | The Big Picture

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would have not been made

ABOLISH THE FEDERAL RESERVE BOARD and things will get fixed.

"The only way these borrowers could qualify for their mortgage loans (even ignoring their bad credit ratings) was to take out adjustable rate mortgages, some of which had astonishingly low first-year rates in the 3 percent range, and sometimes lower. This is what has largely fueled the subprime mortgage meltdown — the inability of thousands of subprime borrowers to afford their mortgages now that their rates have adjusted upward. Thus, the combination of the Fed’s enforcement of the CRA (with the help of political pressure groups like ACORN) and its post 9/11 monetary policy in general are the reasons for the bursting real estate bubble and the "subprime" mortgage meltdown."

CRA AROUND FOR 20+ YEARS (LIKE ACORN)

GOV'T BACKED (MAINLY GSE F/F) VERSUS NON AGENCY PLS (PRIVATE LABEL SECURITIZATION)

MBS by group

 

[Andylusion]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

And even there you have problems.

For example, who created Mortgage Backed Securities? Government.

Who created derivatives? Government.

Who gave sub-prime mortgage backed securities a AAA rating? Government.

The left doesn't even bother to try an isolate out, when the problem began. When did this whole sub-prime loan bubble, and housing price bubble start?

Well it's pretty clear that something happened in 1997. Because before 1997, there were barely any sub-prime mortgage backed securities.

Of course the left now claims that's all bogus. But when did the housing price bubble start?

Well looky there! Let me blow that up for you.

That's 1997 when housing prices started to rise.

So according to trade publications, the documented expansion of sub-prime mortgages, coincides with the start of the housing bubble..... what a coincidence....

And wait a second... didn't the repeal of Glass Steagall happen in 1999? Two full years AFTER the dramatic raise in sub-prime mortgage backed securities, and the start of the housing bubble? Why yes that's true!

Which leads me to what I personally believe is the smoking gun...

First Union Capital Markets Corp., Bear, Stearns & Co. Price Securities Offering... -- re> CHARLOTTE, N.C., Oct. 20 /PRNewswire/ --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union
Corporation and subsidiaries. Customers will experience no impact - they will
continue to make payments to and be serviced by First Union Mortgage Corp. CRA
loans are loans targeted to low and moderate income borrowers and
neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy
capital back into our communities and to expand our ability to provide credit
to low and moderate income individuals," said Jane Henderson, managing
director of First Union's Community Reinvestment and Fair Lending Programs.
"First Union is committed to promoting home ownership in traditionally
underserved markets through a comprehensive line of competitive and flexible
affordable mortgage products. This transaction enables us to continue to
aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation (NYSE: FTU).

Now let's review the highlights.... FIRST securitization of sub-prime loans.

Before 1997, I can not find a single example of a sub-prime loan being guaranteed by Freddie or Fannie.

Note.... securitizing, does not mean buying. Freddie and Fannie did not buy the loan, they stamped their approval on the loan. So when leftists look at the balance sheets of Freddie or Fannie, they don't see the sub-prime loans, but in reality their are directly and intimately involved in the sub-prime loans.

They gave the loan an implied AAA rating. Before 1997, I can find no record of any rating agency given a sub-prime loan any rating, let alone a AAA rating.

Rating agencies tend to not bother to rate something they know, will not score high enough to be above junk status. They only give junk status to something that prior to, had a higher rating.

All of that was the carrot.... where the stick? Here's the stick.

[ame=http://youtu.be/gpj4gcdm_JQ]HowThe Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama - YouTube[/ame]

Andrew Cuomo of the Clinton administration, in 1998 suing banks to make bad loans. He openly admits these are loans to people who are not qualified, and that defaults will be higher.

So on the one hand, we're securitizing bad loans with Freddie Mac, and on the other we're taking banks to court for not making those loans.

Then we look at the sub-prime loans shooting off in 1997, and the housing bubble starting in 1997, and we're just SHOCKED! SHOCKED I SAY! That banks agreed to engage in the sub-prime market?

It doesn't seem that hard to figure out to me.

 

[Mac1958]

.

Dad2three:

Brevity is the soul of wit. I'm not going to read through that mess.

And second, that whole mess appears to be concentrating on just one (1) of my points. It's pretty clear that you're a partisan ideologue who simply wants to point the finger at the "other guys", regardless of any mitigating or contrary information. That's fine, there's plenty of that here. But such shallow and transparent discussions don't interest me.

Play with someone else, thanks.

.

 

[zeke]

.

Dad2three:

Brevity is the soul of wit. I'm not going to read through that mess.

And second, that whole mess appears to be concentrating on just one (1) of my points. It's pretty clear that you're a partisan ideologue who simply wants to point the finger at the "other guys", regardless of any mitigating or contrary information. That's fine, there's plenty of that here. But such shallow and transparent discussions don't interest me.

Play with someone else, thanks.

.

You got your ass handed to you AGAIN didn't you MAc? Now you're gonna go play some where else. LMAO.
Nice job again Dad23.

Androw, you are clueless. Sub prime loans had been originated and closed since way back in the early 1980ties. Maybe before. But in the early 1980ties when I first started writing loans, there were sub prime mortgages. And they actually served a good, necessary purpose in limited quantities.

Funny how you all leave out the loan officers manning the phone banks dialing zip codes which pretty much assured the loan officer they wouldn't find any real knowledgeable borrowers at those addresses. Made it easier to make a killing when the borrower has no knowledge pf the lending process.

And the Realtors. Who do you think it was that steered the home buyers to the sub prime loan officers after they had been denied a conforming loan?

Mac seems to think this was an "organic" event. It just happened.

I can assure you that this was a very well planned event. If on the street loan officers KNEW that we were originating "bad loans", how could anyone figure that the executives of all these banks and mortgage companies didn't know they were making bad loans? They knew. That's why the were packaged and sold so fast. Let some other sucker take the hit was the idea. We already got our money.

Greed is a tremendous motivator.

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

And even there you have problems.

For example, who created Mortgage Backed Securities? Government.

Who created derivatives? Government.

Who gave sub-prime mortgage backed securities a AAA rating? Government.

The left doesn't even bother to try an isolate out, when the problem began. When did this whole sub-prime loan bubble, and housing price bubble start?

Well it's pretty clear that something happened in 1997. Because before 1997, there were barely any sub-prime mortgage backed securities.

Of course the left now claims that's all bogus. But when did the housing price bubble start?

Well looky there! Let me blow that up for you.

That's 1997 when housing prices started to rise.

So according to trade publications, the documented expansion of sub-prime mortgages, coincides with the start of the housing bubble..... what a coincidence....

And wait a second... didn't the repeal of Glass Steagall happen in 1999? Two full years AFTER the dramatic raise in sub-prime mortgage backed securities, and the start of the housing bubble? Why yes that's true!

Which leads me to what I personally believe is the smoking gun...

First Union Capital Markets Corp., Bear, Stearns & Co. Price Securities Offering... -- re> CHARLOTTE, N.C., Oct. 20 /PRNewswire/ --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union
Corporation and subsidiaries. Customers will experience no impact - they will
continue to make payments to and be serviced by First Union Mortgage Corp. CRA
loans are loans targeted to low and moderate income borrowers and
neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy
capital back into our communities and to expand our ability to provide credit
to low and moderate income individuals," said Jane Henderson, managing
director of First Union's Community Reinvestment and Fair Lending Programs.
"First Union is committed to promoting home ownership in traditionally
underserved markets through a comprehensive line of competitive and flexible
affordable mortgage products. This transaction enables us to continue to
aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation (NYSE: FTU).

Now let's review the highlights.... FIRST securitization of sub-prime loans.

Before 1997, I can not find a single example of a sub-prime loan being guaranteed by Freddie or Fannie.

Note.... securitizing, does not mean buying. Freddie and Fannie did not buy the loan, they stamped their approval on the loan. So when leftists look at the balance sheets of Freddie or Fannie, they don't see the sub-prime loans, but in reality their are directly and intimately involved in the sub-prime loans.

They gave the loan an implied AAA rating. Before 1997, I can find no record of any rating agency given a sub-prime loan any rating, let alone a AAA rating.

Rating agencies tend to not bother to rate something they know, will not score high enough to be above junk status. They only give junk status to something that prior to, had a higher rating.

All of that was the carrot.... where the stick? Here's the stick.

[ame=http://youtu.be/gpj4gcdm_JQ]HowThe Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama - YouTube[/ame]

Andrew Cuomo of the Clinton administration, in 1998 suing banks to make bad loans. He openly admits these are loans to people who are not qualified, and that defaults will be higher.

So on the one hand, we're securitizing bad loans with Freddie Mac, and on the other we're taking banks to court for not making those loans.

Then we look at the sub-prime loans shooting off in 1997, and the housing bubble starting in 1997, and we're just SHOCKED! SHOCKED I SAY! That banks agreed to engage in the sub-prime market?

It doesn't seem that hard to figure out to me.

Got it, You'll hang onto LONG refuted AEI , Ed Pinto and Peter Wallison TALKING POINTS


The left doesn't even bother to try an isolate out, when the problem began. When did this whole sub-prime loan bubble, and housing price bubble start?[/B]


The "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," the President's Working Group on Financial Markets OCT 2008

“Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006.


Economist's View: FRB Dallas: The Rise and Fall of Subprime Mortgages


“In dollar terms, nonprime mortgages represented 32 percent of all mortgage originations in 2005, more than triple their 10 percent share only two years earlier


"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN’T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.

Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.



" Before 1997, I can not find a single example of a sub-prime loan being guaranteed by Freddie or Fannie."


YOU KNOW WHAT A GSE GUARANTEE IS RIGHT?MEANS BANKS WOULDN'T HAVE LOST MONEY RIGHT?



12/19/2006

The Center for Responsible Lending has released a new report: Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners.


Report: 2.2 Million Subprime Borrowers Face Foreclosure

Calculated Risk: Report: 2.2 Million Subprime Borrowers Face Foreclosure


Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners

Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners

November 27, 2007

A Snapshot of the Subprime Market

Dollar amount of subprime loans outstanding:

2007 $1.3 trillion

Dollar amount of subprime loans outstanding in 2003: $332 billion

Percentage increase from 2003: 292%


Number of subprime mortgages made in 2005-2006 projected to end in foreclosure:

1 in 5



Proportion of subprime mortgages made from 2004 to 2006 that come with "exploding" adjustable interest rates: 89-93%


Proportion approved without fully documented income: 43-50%


Proportion with no escrow for taxes and insurance: 75%



Proportion of completed foreclosures attributable to adjustable rate loans out of all loans made in 2006 and bundled in subprime mortgage backed securities: 93%


Subprime share of all mortgage originations in 2006: 28%


Subprime share of all mortgage origination in 2003: 8%

Subprime share of all home loans outstanding:
14%


Subprime share of foreclosure filings in the 12 months ending June 30, 2007: 64%


The negative effects of subprime foreclosures are spreading.

Nearly 45 million homes NOT facing foreclosure will decline in value by an estimated $233 billion with most of the decline hitting in 2008 and 2009 as subprime foreclosures lower the prices of surrounding homes


Subprime foreclosures will rise even higher


A Snapshot of the Subprime Market



CLINTON HUH?


"(In 2000, CLINTON) HUD restricted Freddie and Fannie, saying it would not credit them for loans they purchased that had abusively high costs or that were granted without regard to the borrower's ability to repay."

How HUD Mortgage Policy Fed The Crisis

"In 2004 (BUSH) , the 2000 rules were dropped and high‐risk loans were again counted toward affordable housing goals."


http://www.prmia.org/sites/default/files/references/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf

A McKinsey Global Institute report noted “from 2000 through 2007, a remarkable run-up in global home prices occurred.”

Examining the big lie: How the facts of the economic crisis stack up | The Big Picture




2/20/2008

Subprime loans defaulting even before resets



Many of these loans are defaulting well before their rates increase.

Defaults for subprime loans issued in 2007 - none of which have reset yet - hit 11.2 percent in November. That represents perhaps 300,000 households, and is twice the default rate that 2006 loans had 10 months after being issued, according to Friedman, Billings Ramsey analyst Michael Youngblood.

Defaults are spiking well before resets come into play thanks to the lax lending environment of the past few years. Many borrowers were approved for mortgages that they had little chance of affording, even at the low-interest teaser rates .

"I was rather shocked by the characteristics of the 2007 loans," said Youngblood.



For instance, in both 2006 and 2007, well over 40 percent of subprime borrowers were awarded mortgages with either little or no documentation of their ability to pay. With these so-called "liar loans," borrowers did not have to show proof of either earnings or assets.


The Residential Real Estate Crash Index | Stock Discussion Forums





In 2000, securitization vehicles (entities classified as asset
-backed security issuers and finance companies by the Federal Reserve) financed $572 billion in residential mortgages, equal to nearly 12% of all household mortgage debt outstanding. By the end of 2006, the volume of outstanding mortgages financed by PLS had grown to over $2.6 trillion, or more than 27% of all residential mortgage debt. The most explosive growth occurred in 2004 and 2005 when the outstanding mortgage debt financed by PLS increased by 49% and 44% respectively.


It is important to note that these growth rates reflect net annual changes in total mortgage debt; when refinancings of existing PLS - funded mortgages are included, the growth rates on gross PLS issuance during these years exceed 90%


http://business.gwu.edu/creua/research-papers/files/fannie-freddie.pdf


The dramatic growth in PLS issuance was the capital markets manifestation of the increase in the origination of nontraditional mortgage products outside of the GSE channel. According to the Government Accounting Office (GAO), “nonprime” mortgage loans (subprime plus Alt-A) accounted for 34% of the overall mortgage market in 2006. From 2001 to 2005, the dollar volume of subprime mortgages increased from $100 billion to $600 billion, while Alt - A mortgages grew from $25 billion to $400 billion over roughly the same period

http://business.gwu.edu/creua/research-papers/files/fannie-freddie.pdf


KEEP UP YOUR BULLSHIT BUBBA

 

[Dad2three]

.

Dad2three:

Brevity is the soul of wit. I'm not going to read through that mess.

And second, that whole mess appears to be concentrating on just one (1) of my points. It's pretty clear that you're a partisan ideologue who simply wants to point the finger at the "other guys", regardless of any mitigating or contrary information. That's fine, there's plenty of that here. But such shallow and transparent discussions don't interest me.

Play with someone else, thanks.

.

"Bush’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. "

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

And even there you have problems.

For example, who created Mortgage Backed Securities? Government.

Who created derivatives? Government.

Who gave sub-prime mortgage backed securities a AAA rating? Government.

The left doesn't even bother to try an isolate out, when the problem began. When did this whole sub-prime loan bubble, and housing price bubble start?

Well it's pretty clear that something happened in 1997. Because before 1997, there were barely any sub-prime mortgage backed securities.

Of course the left now claims that's all bogus. But when did the housing price bubble start?

Well looky there! Let me blow that up for you.

That's 1997 when housing prices started to rise.

So according to trade publications, the documented expansion of sub-prime mortgages, coincides with the start of the housing bubble..... what a coincidence....

And wait a second... didn't the repeal of Glass Steagall happen in 1999? Two full years AFTER the dramatic raise in sub-prime mortgage backed securities, and the start of the housing bubble? Why yes that's true!

Which leads me to what I personally believe is the smoking gun...

First Union Capital Markets Corp., Bear, Stearns & Co. Price Securities Offering... -- re> CHARLOTTE, N.C., Oct. 20 /PRNewswire/ --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union
Corporation and subsidiaries. Customers will experience no impact - they will
continue to make payments to and be serviced by First Union Mortgage Corp. CRA
loans are loans targeted to low and moderate income borrowers and
neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy
capital back into our communities and to expand our ability to provide credit
to low and moderate income individuals," said Jane Henderson, managing
director of First Union's Community Reinvestment and Fair Lending Programs.
"First Union is committed to promoting home ownership in traditionally
underserved markets through a comprehensive line of competitive and flexible
affordable mortgage products. This transaction enables us to continue to
aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation (NYSE: FTU).

Now let's review the highlights.... FIRST securitization of sub-prime loans.

Before 1997, I can not find a single example of a sub-prime loan being guaranteed by Freddie or Fannie.

Note.... securitizing, does not mean buying. Freddie and Fannie did not buy the loan, they stamped their approval on the loan. So when leftists look at the balance sheets of Freddie or Fannie, they don't see the sub-prime loans, but in reality their are directly and intimately involved in the sub-prime loans.

They gave the loan an implied AAA rating. Before 1997, I can find no record of any rating agency given a sub-prime loan any rating, let alone a AAA rating.

Rating agencies tend to not bother to rate something they know, will not score high enough to be above junk status. They only give junk status to something that prior to, had a higher rating.

All of that was the carrot.... where the stick? Here's the stick.

[ame=http://youtu.be/gpj4gcdm_JQ]HowThe Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama - YouTube[/ame]

Andrew Cuomo of the Clinton administration, in 1998 suing banks to make bad loans. He openly admits these are loans to people who are not qualified, and that defaults will be higher.

So on the one hand, we're securitizing bad loans with Freddie Mac, and on the other we're taking banks to court for not making those loans.

Then we look at the sub-prime loans shooting off in 1997, and the housing bubble starting in 1997, and we're just SHOCKED! SHOCKED I SAY! That banks agreed to engage in the sub-prime market?

It doesn't seem that hard to figure out to me.

One more real-world fact for you to explain; if the loans the banks were making were conforming and thus guaranteed by FF, the private sector banks would not have lost any money on them. That's what a guarantee means. What blew up the finance firms were the risky, subprime loans they made which FF wouldn't guarantee. That right there proves that FF were marginal players in the subprime bubble, even if you ignore all the other facts.


Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.



The historical "originate and hold" mortgage model was replaced with the "originate and distribute" model. Incentives were such that you could get paid just to originate and sell the mortgages down the pipeline, passing the risk along. The big investment banks simply connected the investors to the originators, helped by the AAA ratings.


Big Lie is, blaming someone else. Then you activate your PR groups, starting with Fox and the RW think tanks. Then you go further and have the Wallisons of the world throw pure bs into the mix. Stir frequently.


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.


http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf




The biggest culprits in the housing fiasco came from the private sector, and more specifically from a mortgage industry that was out of control. These included lenders who originated home loans, investment bankers who packaged them into securities, rating agencies that misjudged these securities, and global investors who bought them without much, if any, study.

[SIZE="4"[COLOR="Blue"]]In other words, America’s mortgage securitization machine was fundamentally broken. It created millions of mortgage loans that, even under reasonable economic assumptions, stood little chance of being repaid — and were not.[[/COLOR]/SIZE]




Also to blame, of course, were regulators, who gave the private mortgage market little, if any, oversight. The market’s watchdogs were lulled to sleep by a misplaced view that self-interested private financial institutions would regulate themselves. .



By Mark Zandi, GOPer- McCain 2008 adviser


Fannie and Freddie don?t deserve blame for bubble - The Washington Post

 

[Dad2three]

.

The sub-prime loans would not made if there were not consumers willing to sign on the dotted line.

The sub-prime loans would not have been made if there were not buyers and sellers for them on secondary markets via MBS's.

The MBS's would not have existed if regulators had taken a look at them, realized pretty much no one knew what the hell they were, and acted accordingly.

There would not have been buyers for the MBS's if the ratings agencies had given them appropriate ratings, such as S&P's CCC, about where they should have been.

Those selling the MBS's would not have been able to move risk off their books if someone not been willing to sell them CDS's.

Those selling the CDS's would not have been able to sell them if they had been required by regulators to maintain standard insurance reserves.

On and on. All kinds of different people, all over the freakin' place.

But instead, let's just simplistically and transparently point the finger at those guys, over there. Yeah, those guys. Oh look, they just happen to have (R)'s after their name.

Yeah, that's easier.

.

And even there you have problems.

For example, who created Mortgage Backed Securities? Government.

Who created derivatives? Government.

Who gave sub-prime mortgage backed securities a AAA rating? Government.

The left doesn't even bother to try an isolate out, when the problem began. When did this whole sub-prime loan bubble, and housing price bubble start?

Well it's pretty clear that something happened in 1997. Because before 1997, there were barely any sub-prime mortgage backed securities.

Of course the left now claims that's all bogus. But when did the housing price bubble start?

Well looky there! Let me blow that up for you.

That's 1997 when housing prices started to rise.

So according to trade publications, the documented expansion of sub-prime mortgages, coincides with the start of the housing bubble..... what a coincidence....

And wait a second... didn't the repeal of Glass Steagall happen in 1999? Two full years AFTER the dramatic raise in sub-prime mortgage backed securities, and the start of the housing bubble? Why yes that's true!

Which leads me to what I personally believe is the smoking gun...

First Union Capital Markets Corp., Bear, Stearns & Co. Price Securities Offering... -- re> CHARLOTTE, N.C., Oct. 20 /PRNewswire/ --

First Union Capital Markets Corp.
and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of
securities backed by Community Reinvestment Act (CRA) loans - marking the
industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union
Corporation and subsidiaries. Customers will experience no impact - they will
continue to make payments to and be serviced by First Union Mortgage Corp. CRA
loans are loans targeted to low and moderate income borrowers and
neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy
capital back into our communities and to expand our ability to provide credit
to low and moderate income individuals," said Jane Henderson, managing
director of First Union's Community Reinvestment and Fair Lending Programs.
"First Union is committed to promoting home ownership in traditionally
underserved markets through a comprehensive line of competitive and flexible
affordable mortgage products. This transaction enables us to continue to
aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac
and have an implied "AAA" rating. First Union Capital Markets Corp. is the
investment banking subsidiary of First Union Corporation (NYSE: FTU).

Now let's review the highlights.... FIRST securitization of sub-prime loans.

Before 1997, I can not find a single example of a sub-prime loan being guaranteed by Freddie or Fannie.

Note.... securitizing, does not mean buying. Freddie and Fannie did not buy the loan, they stamped their approval on the loan. So when leftists look at the balance sheets of Freddie or Fannie, they don't see the sub-prime loans, but in reality their are directly and intimately involved in the sub-prime loans.

They gave the loan an implied AAA rating. Before 1997, I can find no record of any rating agency given a sub-prime loan any rating, let alone a AAA rating.

Rating agencies tend to not bother to rate something they know, will not score high enough to be above junk status. They only give junk status to something that prior to, had a higher rating.

All of that was the carrot.... where the stick? Here's the stick.

[ame=http://youtu.be/gpj4gcdm_JQ]HowThe Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama - YouTube[/ame]

Andrew Cuomo of the Clinton administration, in 1998 suing banks to make bad loans. He openly admits these are loans to people who are not qualified, and that defaults will be higher.

So on the one hand, we're securitizing bad loans with Freddie Mac, and on the other we're taking banks to court for not making those loans.

Then we look at the sub-prime loans shooting off in 1997, and the housing bubble starting in 1997, and we're just SHOCKED! SHOCKED I SAY! That banks agreed to engage in the sub-prime market?

It doesn't seem that hard to figure out to me.

" So according to trade publications, the documented expansion of sub-prime mortgages, coincides with the start of the housing bubble..... what a coincidence..."

November 27, 2007

A Snapshot of the Subprime Market

Dollar amount of subprime loans outstanding:

2007 $1.3 trillion

Dollar amount of subprime loans outstanding in 2003: $332 billion

Percentage increase from 2003: 292%




Proportion of subprime mortgages made from 2004 to 2006 that come with "exploding" adjustable interest rates: 89-93%


Proportion approved without fully documented income: 43-50%


Proportion with no escrow for taxes and insurance: 75%



Proportion of completed foreclosures attributable to adjustable rate loans out of all loans made in 2006 and bundled in subprime mortgage backed securities: 93%


Subprime share of all mortgage originations in 2006: 28%


Subprime share of all mortgage origination in 2003: 8%



Bush’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. "

 

[Mac1958]

.

Dad2three:

Brevity is the soul of wit. I'm not going to read through that mess.

And second, that whole mess appears to be concentrating on just one (1) of my points. It's pretty clear that you're a partisan ideologue who simply wants to point the finger at the "other guys", regardless of any mitigating or contrary information. That's fine, there's plenty of that here. But such shallow and transparent discussions don't interest me.

Play with someone else, thanks.

.

"Bush’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. "

I've been unable to locate this report.

I found one that discusses the instability of money market funds during the crisis, that's it.

Do you have a link?

UPDATE, found it. I'll look at it.

.

 

[Mac1958]

.

From the referenced PWG report:

While no single measure can be expected to place financial markets on a sound footing, implementation of the PWG’s comprehensive and complementary set of recommendations is an
important step in addressing these identified weaknesses. The PWG’s recommendations include measures for implementation by government authorities and market participants to:

• reform key parts of the mortgage or igination process in the United States;
• enhance disclosure and improve the practices of sponsors, underwriters, and investors with respect to securitized credits, thereby imposing more effective market discipline;
• reform the credit rating agencies’ processes for and practices regarding rating structured credit products to ensure integrity and transparency;
• ensure that global financial institutions take appropriate steps to address the weaknesses in risk management and reporting practices that the market turmoil has exposed; and
• ensure that prudential regulatory policies applicable to banks and securities firms, including capital and disclosure requirements, provide strong incentives for effective risk management practices.

Not a lot of simplistic finger-pointing at one place, just as I have been saying.

Just as I have been saying.

Excellent report, good stuff.

.

 

[Dad2three]

Myth 1

There has been no official bipartisan consensus on the causes of the financial crisis: An official government report was produced in April 2011 by the Senate Permanent Subcommittee on Investigations, led by Chairman Carl Levin (D-MI) and Ranking Member Tom Coburn (R-OK), titled Wall Street and the Financial Crisis: Anatomy of a Financial Collapse. The “Levin-Coburn Report,” a 639-page document, including 2,849 footnotes unanimously and unambiguously concluded that “the [2008] crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”




Myth 2

The financial crisis was brought about because the Community Reinvestment Act of 1977 forced banks to lend to people with low incomes who could not afford to pay back their mortgages: The FCIC Majority and Primary Dissent (3 GOPers) roundly reject this myth, leaving the Solo Dissent (Peter Wallison, GOPer AEI STOOGE) as the lone proponent of this shaky story.

Primary Dissent (3 GOPers) explicitly states that the Community Reinvestment Act was not a “significant cause.” Many government officials and scholars have also rejected this myth. In contrast, the Solo Dissent (PETER WALLISON, AEI STOOGE) singles out U.S. government housing policy, including the CRA, as the sine qua non of the financial crisis.

THIS was the LONE DISSENTERS OPINION IN 2004:

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.”



SAME GUY WHO BLAMES GOV'T POLICY OF CRA AND F/F FOR THE CRISIS? LOL








Big Lie is, blaming someone else. Then you activate your PR groups, starting with Fox and the RW think tanks. Then you go further and have the Wallisons of the world throw pure bs into the mix. Stir frequently.

 

[Dad2three]

.

From the referenced PWG report:

While no single measure can be expected to place financial markets on a sound footing, implementation of the PWG’s comprehensive and complementary set of recommendations is an
important step in addressing these identified weaknesses. The PWG’s recommendations include measures for implementation by government authorities and market participants to:

• reform key parts of the mortgage or igination process in the United States;
• enhance disclosure and improve the practices of sponsors, underwriters, and investors with respect to securitized credits, thereby imposing more effective market discipline;
• reform the credit rating agencies’ processes for and practices regarding rating structured credit products to ensure integrity and transparency;
• ensure that global financial institutions take appropriate steps to address the weaknesses in risk management and reporting practices that the market turmoil has exposed; and
• ensure that prudential regulatory policies applicable to banks and securities firms, including capital and disclosure requirements, provide strong incentives for effective risk management practices.

Not a lot of simplistic finger-pointing at one place, just as I have been saying.

Just as I have been saying.

Excellent report, good stuff.

.

You mean the report from Oct 2008, BEFORE all the other reports came out and point to the breakdown between late 2004- extending into 2007?


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."



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 Why is it commonly called the “subprime bubble” ?

A Because the Bush Mortgage Bubble coincided with the explosive growth of Subprime mortgage and politics. Also the subprime MBS market was the first to collapse in late 2006. In 2003, 10 % of all mortgages were subprime. In 2006, 40 % were subprime. This is a 300 % increase in subprime lending. (and notice it coincides with the dates of the Bush Mortgage bubble that Bush and the Fed said)

“Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006"

https://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages." (Fed link above)

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN’T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.

Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.



Q Why would Bush’s regulators let banks lower their lending standards?

A. Federal regulators at the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision work for Bush and he was pushing his “Ownership Society” programs that was a major and successful part of his re election campaign in 2004. And Bush’s regulators not only let banks do this, they attacked state regulators trying to do their jobs. Bush’s documented policies and statements in timeframe leading up to the start of the Bush Mortgage Bubble include (but not limited to)



Wanting 5.5 million more minority homeowners
Tells congress there is nothing wrong with GSEs
Pledging to use federal policy to increase home ownership
Routinely taking credit for the housing market
Forcing GSEs to buy more low income home loans by raising their Housing Goals
Lowering Invesntment bank’s capital requirements, Net Capital rule (Going from 12-1 to 35+-1 in 2004, flooded the market cheap money)
Reversing the Clinton rule that restricted GSEs purchases of subprime loans
Lowering down payment requirements to 0%
Forcing GSEs to spend an additional 440 billion in the secondary markets
Giving away 40,000 free down payments
PREEMPTING ALL STATE LAWS AGAINST PREDATORY LENDING

But the biggest policy was regulators not enforcing lending standards.

 

[Dad2three]

.

From the referenced PWG report:

While no single measure can be expected to place financial markets on a sound footing, implementation of the PWG’s comprehensive and complementary set of recommendations is an
important step in addressing these identified weaknesses. The PWG’s recommendations include measures for implementation by government authorities and market participants to:

• reform key parts of the mortgage or igination process in the United States;
• enhance disclosure and improve the practices of sponsors, underwriters, and investors with respect to securitized credits, thereby imposing more effective market discipline;
• reform the credit rating agencies’ processes for and practices regarding rating structured credit products to ensure integrity and transparency;
• ensure that global financial institutions take appropriate steps to address the weaknesses in risk management and reporting practices that the market turmoil has exposed; and
• ensure that prudential regulatory policies applicable to banks and securities firms, including capital and disclosure requirements, provide strong incentives for effective risk management practices.

Not a lot of simplistic finger-pointing at one place, just as I have been saying.

Just as I have been saying.

Excellent report, good stuff.

.

"Not a lot of simplistic finger-pointing at one place,just as I have been saying"

Got it, you want it boiled down to 'simplistic (see bumper sticker) 'all share equally' garbage



Weird how GOP was in charge when the GOP great depression happened, Reagan ignored regulator warnings from Mr Gray, that started in 1984 , that would've stopped 90% + of Ronnie's S&L crisis AND then Dubya had his 'home ownership society' where he was head cheerleader for the Bankster and actively fought to keep standards low, and as Executive Branch, was in charge of and used policies to inflate HIS bubble. But lets try the 'simplistic' no one at all was really at fault, just a bunch of 'bad actors' that Dubya COULDN'T have really stopped IF he believed in Gov't and/Or regulators

 

[Andylusion]

Androw, you are clueless. Sub prime loans had been originated and closed since way back in the early 1980ties. Maybe before. But in the early 1980ties when I first started writing loans, there were sub prime mortgages. And they actually served a good, necessary purpose in limited quantities.

Funny how you all leave out the loan officers manning the phone banks dialing zip codes which pretty much assured the loan officer they wouldn't find any real knowledgeable borrowers at those addresses. Made it easier to make a killing when the borrower has no knowledge pf the lending process.

And the Realtors. Who do you think it was that steered the home buyers to the sub prime loan officers after they had been denied a conforming loan?

Mac seems to think this was an "organic" event. It just happened.

I can assure you that this was a very well planned event. If on the street loan officers KNEW that we were originating "bad loans", how could anyone figure that the executives of all these banks and mortgage companies didn't know they were making bad loans? They knew. That's why the were packaged and sold so fast. Let some other sucker take the hit was the idea. We already got our money.

Greed is a tremendous motivator.

The problem with the 'greed' theory is this.... Has anything changed in human nature over the last 100 years?

I never suggested that sub-prime didn't exist prior to 1997, only that they were not sold as mortgage backed securities on the open market. They were a very small niche market.

So why didn't the bankers go crazy in the 70s? Or 80s? Or early 90s? Were all the bankers benevolent altruistic people back then? And what happened? Did a greed virus get released in the water? Did martians beam down, and zap them all with greed guns?

Why 1997? Why didn't the sub-prime loans take off in the 80s? Or even 2004, like the partisan hacks here claim?

See, the housing mortgage market was stable for decades. Then suddenly in 1997, sub-prime loans shot off, and the housing bubble started.

That can't be random. People don't just wake up one morning, and decide "hey everything we thought was too risky for the last 30 years, is magically safe from now on!"

There had to be a trigger.

And isn't it interesting that the two biggest crashed, were also to of the original companies involved in making Sub-prime Freddie Mac Securitized loans? First Union, which became Wachovia, and Bear Stearns.

Coincidence? I don't think so.

The difference between me and Captain Party Hack over there (whose spam I have on ignore forever more), is that I don't deny that Bush continued bad policies. Absolutely he did. But the truth is, even if Bush had not, we would still be where we are right now. By 2004, the price bubble was already massive. That's why Barney Frank was denying there was a bubble in 2005.

But again, I go back to the cause. Something happened in 1997, that fundamentally changed the market.

The evidence shows that for the first time in US history, the Federal Government, through Freddie Mac, placed their seal of approval on Sub-prime loans, at the same time they were suing banks to make those loans.

Last note... I even agree that some people played the game to earn a quick buck. Absolutely, some banks knew those loans were bad, and made them anyway, because they knew they could make a buck before the market crashed. Absolutely.

Still doesn't change the start. What was the cause? Because they could have done that 30 years ago. Why did it start in 1997? Again, Freddie Mac, and the Federal government, pushing those bad loans.

Read the book, The Financial Crisis and the Free Market Cure, by John A. Allison.

Allison was CEO of BB&T bank, when the regulators showed up and demanded they lower their lending standards in the late 1990s. They said their lend standards were 'discriminator' but yet couldn't describe how, and only required they be lowered.

The Government pushed this. That's all there is to it.