The Great Depression - why did it end?

[Kevin_Kennedy]

Which central economic planner or regulation made the decision for the financial ?

The Fed's easy-money policies and the fact that Fannie Mae and Freddie Mac are government sponsored agencies made that possible.

How did the Fed or Freddie/Freddie require the institutions to invest so many trillions in securitized mortgage packages?

Well the Community Reinvestment Act forced banks to make higher-risk loans, which were then bought up by Fannie/Freddie.

 

[Iriemon]

The Fed's easy-money policies and the fact that Fannie Mae and Freddie Mac are government sponsored agencies made that possible.

How did the Fed or Freddie/Freddie require the institutions to invest so many trillions in securitized mortgage packages?

Well the Community Reinvestment Act forced banks to make higher-risk loans, which were then bought up by Fannie/Freddie.

That is false. CRA required no loans, only that there be no discrimination, and certainly didn't require the financial institutions to invest trillions in risky mortgages. It wasn't Freddie/Fannie that owned the trillions in mortgages that crippled the biggest financial instituions.

 

[Kevin_Kennedy]

How did the Fed or Freddie/Freddie require the institutions to invest so many trillions in securitized mortgage packages?

Well the Community Reinvestment Act forced banks to make higher-risk loans, which were then bought up by Fannie/Freddie.

That is false. CRA required no loans, only that there be no discrimination, and certainly didn't require the financial institutions to invest trillions in risky mortgages. It wasn't Freddie/Fannie that owned the trillions in mortgages that crippled the biggest financial instituions.

The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

 

[Iriemon]

Well the Community Reinvestment Act forced banks to make higher-risk loans, which were then bought up by Fannie/Freddie.

That is false. CRA required no loans, only that there be no discrimination, and certainly didn't require the financial institutions to invest trillions in risky mortgages. It wasn't Freddie/Fannie that owned the trillions in mortgages that crippled the biggest financial instituions.

The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

It doesn't say that the CRA, which was establihed 35 years ago, suddenly required giant financial institutions to invest trillions in risky mortgages in '04-07. They did that on their own to make profits. Thanks.

 

[Kevin_Kennedy]

That is false. CRA required no loans, only that there be no discrimination, and certainly didn't require the financial institutions to invest trillions in risky mortgages. It wasn't Freddie/Fannie that owned the trillions in mortgages that crippled the biggest financial instituions.

The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

It doesn't say that the CRA, which was establihed 35 years ago, suddenly required giant financial institutions to invest trillions in risky mortgages in '04-07. They did that on their own to make profits. Thanks.

Did you read the article?

Gordon is a defender of the federal government's 1977 Community Reinvestment Act (CRA) under which the Fed and other financial regulators have pressured/extorted banks into making more loans to less-than-creditworthy borrowers than they would normally be willing to risk.

At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

 

[SW2SILVERQUASI]

Yep, without a doubt, World War 2 did the trick. It started what Eisenhower called the military industrial complex, it's buku bucks. Well, we are in a war now, and it isn't helping, it is dragging down the economy. So, what's the difference between THEN and NOW? That might be a real source of debate. I have no answer to that.

 

[Iriemon]

The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

It doesn't say that the CRA, which was establihed 35 years ago, suddenly required giant financial institutions to invest trillions in risky mortgages in '04-07. They did that on their own to make profits. Thanks.

Did you read the article?

Gordon is a defender of the federal government's 1977 Community Reinvestment Act (CRA) under which the Fed and other financial regulators have pressured/extorted banks into making more loans to less-than-creditworthy borrowers than they would normally be willing to risk.

At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

 

[mash107]

It doesn't say that the CRA, which was establihed 35 years ago, suddenly required giant financial institutions to invest trillions in risky mortgages in '04-07. They did that on their own to make profits. Thanks.

Did you read the article?

Gordon is a defender of the federal government's 1977 Community Reinvestment Act (CRA) under which the Fed and other financial regulators have pressured/extorted banks into making more loans to less-than-creditworthy borrowers than they would normally be willing to risk.

At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

First, you seem a bit confused as to what happened. Federal Reserve is the cause of the inflation, not that securities were made and bought. They are responsible for the huge inflation in the housing market, creating a bubble, which inevitably had to crash. This hid decades upon decades of losing money caused by the CRA. Fannie Mae and Freddie Mac were the first to securitize mortgage debt, because of regulations passed that required them to do so. Thus began the slippery slope into this centrally planned recession (just like them all!)

 

[Kevin_Kennedy]

Yep, without a doubt, World War 2 did the trick. It started what Eisenhower called the military industrial complex, it's buku bucks. Well, we are in a war now, and it isn't helping, it is dragging down the economy. So, what's the difference between THEN and NOW? That might be a real source of debate. I have no answer to that.

There is no difference, war-time spending only hurts the economy.

 

[Kevin_Kennedy]

It doesn't say that the CRA, which was establihed 35 years ago, suddenly required giant financial institutions to invest trillions in risky mortgages in '04-07. They did that on their own to make profits. Thanks.

Did you read the article?

Gordon is a defender of the federal government's 1977 Community Reinvestment Act (CRA) under which the Fed and other financial regulators have pressured/extorted banks into making more loans to less-than-creditworthy borrowers than they would normally be willing to risk.

At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

 

[Iriemon]

Did you read the article?



At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

 

[Kevin_Kennedy]

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

Incorrect.

 

[Iriemon]

Did you read the article?

At any rate, your last sentence, "They did that on their own to make profits," is partially true. They certainly did lower their standards on their own as well, but that wouldn't have been possible had it not been for the Fed's easy-money policies.

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

First, you seem a bit confused as to what happened. Federal Reserve is the cause of the inflation, not that securities were made and bought.

Well jeez, you don't have to tell me that, that is my point. It's Kevin who is arguing the Fed caused the crappy mortgages to be bought.

They are responsible for the huge inflation in the housing market, creating a bubble, which inevitably had to crash.

No they're not. That was all the speculators watching "you too can be a millionaire with real estate videos) buying up homes to flip and make a profit.

This hid decades upon decades of losing money caused by the CRA. Fannie Mae and Freddie Mac were the first to securitize mortgage debt, because of regulations passed that required them to do so. Thus began the slippery slope into this centrally planned recession (just like them all!)

Nobody forced Citi and Goldman and everyone else to buy trillions of these things. They did it to make a profit and their shareholders did't appreciate the huge risk they were taking to make those profits everyone loved to see.

And they created a market for shitty loans that brokers gave to everyone watching make a million in real estate videos who went out and bought house on speculation.

That was what caused the recession.

 

[Iriemon]

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

Incorrect.

Correct. Sorry, but your simple "its all the fed's fault" view of things so you can get your gold standard on just doesn't fly with the facts.

 

[mash107]

Oh sure they could have. That is proved by the fact that the Fed did raise the rates thru 05-06 and the big insitutions just kept write on buying those mortgage packages. They just charged a bit more interest. Fed policies had little to do with it.

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

You just contradicted yourself. You say that they weren't forced. And you are also saying that issuing shitty loans is profitable event. Now why would CRA be at all necessary to legislate? How about Fannie Mae and Freddie Mac? If making shitty loans is a profitable scheme, why would you need government to tell you to do it? You'd be a horrible banker if you ignored a potential money maker; your competition would surely gobble it up. Because, clearly, making shitty loans loses you money... and, for political gain, the government legislated that all banks make shitty loans. It was enforced whenever banks wanted to expand, merge or otherwise conduct business. It had to prove to regulators that enough shitty loans were made. Fannie Mae and Freddie Mac carried the bulk, and that's how securitization began; to enable Fannie and Freddie to issue more and more shitty loans.

What was making everything appear black on all the banks' balance sheet was this unnatural growth in the housing market. The prices got inflated because of Federal Reserve artificially easy credit, and this made every bank seem solvent, whereas they were really not.

 

[mash107]

Nobody forced Citi and Goldman and everyone else to buy trillions of these things. They did it to make a profit and their shareholders did't appreciate the huge risk they were taking to make those profits everyone loved to see.

And they created a market for shitty loans that brokers gave to everyone watching make a million in real estate videos who went out and bought house on speculation.

That was what caused the recession.

Nobody forced Citi/Goldman/etc to buy trillions of these, correct. But the government guaranteed the securitized debt, that was largely generated from shitty loans made. That dissuades any risk associated with the securities, and the created housing boom in prices caused them to be lulled into a false sense of security, when they were seeing nothing but black ink on their balance sheets.

 

[Kevin_Kennedy]

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

Incorrect.

Correct. Sorry, but your simple "its all the fed's fault" view of things so you can get your gold standard on just doesn't fly with the facts.

It flies quite well actually, being as it's true.

 

[Iriemon]

Nobody forced Citi and Goldman and everyone else to buy trillions of these things. They did it to make a profit and their shareholders did't appreciate the huge risk they were taking to make those profits everyone loved to see.

And they created a market for shitty loans that brokers gave to everyone watching make a million in real estate videos who went out and bought house on speculation.

That was what caused the recession.

Nobody forced Citi/Goldman/etc to buy trillions of these, correct. But the government guaranteed the securitized debt, that was largely generated from shitty loans made. That dissuades any risk associated with the securities, and the created housing boom in prices caused them to be lulled into a false sense of security, when they were seeing nothing but black ink on their balance sheets.

The Govt did not guarantee the securitized debt. Where did you get that from?

It may have been that some thought the Govt would come and bail out the mortgage industry, but there was no Govt guarantee on those mortgage loans. The Govt only guaranteed a very small minority of loans which were made to low income groups under specific programs for that purpose. But that its what caused the real estate market to collapse.

 

[Iriemon]

Incorrect.

Correct. Sorry, but your simple "its all the fed's fault" view of things so you can get your gold standard on just doesn't fly with the facts.

It flies quite well actually, being as it's true.

Thanks for your opinion.

 

[Iriemon]

Well as stated before, they were coerced into making many of those loans and without being forced or the Fed's easy-money policies it wouldn't have made any sense to do so.

They weren't coerced into making loans. None of those banks had to make one damn loan if they thought it was too risky.

They made those shitty loans because they were making shitloads of money at the time and that is the only reason they did it.

You just contradicted yourself. You say that they weren't forced. And you are also saying that issuing shitty loans is profitable event. Now why would CRA be at all necessary to legislate?

The CRA was necessary because banks would just redline out entire neighborhoods, and not consider loans simply becaue black folk lived there irrespective of their income history and pay back ability. The CRA made that practice illegal and said you could not discriminate simply because someone lived in a certain neighborhood.

It did not require banks to make bad loans in the neighborhood.

How about Fannie Mae and Freddie Mac?

How about them?

If making shitty loans is a profitable scheme, why would you need government to tell you to do it? You'd be a horrible banker if you ignored a potential money maker; your competition would surely gobble it up.

Of course that is what happened. They made shitty loans because others were doing it and making beaucoup profit. They just didn't appreciate the risk.

Because, clearly, making shitty loans loses you money... and, for political gain, the government legislated that all banks make shitty loans. It was enforced whenever banks wanted to expand, merge or otherwise conduct business. It had to prove to regulators that enough shitty loans were made. Fannie Mae and Freddie Mac carried the bulk, and that's how securitization began; to enable Fannie and Freddie to issue more and more shitty loans.

Shitty loans only lose money if they go bad.

What specific government legislation required that all banks make shitty loans? It wasn't the CRA, that didn't require you make shitty loans.

What was making everything appear black on all the banks' balance sheet was this unnatural growth in the housing market. The prices got inflated because of Federal Reserve artificially easy credit, and this made every bank seem solvent, whereas they were really not.

As long as the loans were being paid everything looked peachy and everyone got big bonuses. That's why they did it, not because the Govt forced them too.