Who Really Wrecked the Economy?

[william the wie]

I think we oughta move away from pointing fingers at who to blame and concentrate on what to do to get out of this mess. Sure, we don't want to make the same mistakes, but the name calling and demagoguery has got to stop.

Why, the miscalculation of market size and consumer wealth was so bad that the shoes won't stop dropping until 2013 at the earliest. House prices kept rising until 2006 and sold reasonably well through 2007. Option ARMs with 5 year resets are still in their teaser rates and it takes 2 years for foreclosure proceeding to work their way through the courts. Therefore it will be at least two years before damage assessment can begin in the meantime bitching and moaning warns people away from jumping back into the real estate market.

 

[Bern80]

deregulation caused this mess.

If Glass steagal had remained intact this never would have happened

Yeah because they held a gun to your head and made you spend all that money.

 

[California Girl]

If only people could see past the boring blame game and recognize, honestly, that both Dems and GOPers were responsible.

 

[Truthmatters]

The blame for the loins share of this lies on the republican side.

Its their lack of inforcement of the laws that did this.

 

[Truthmatters]

http://edgar.sec.gov/news/speech/spch022603cag.htm


Speech by SEC Commissioner:
SEC Initiatives Under Sarbanes-Oxley
and Gramm-Leach-Bliley
by
Commissioner Cynthia A. Glassman
U.S. Securities and Exchange Commission

ABA Trust, Wealth Management and Marketing Conference
Tampa, Florida
February 26, 2003


And it is in this spirit of "doing the right thing" that we will approach the next phase of the implementation of Gramm-Leach-Bliley. As a starting point, we recognize that there are important distinctions between the main goal of banking regulation - which is safety and soundness - and the purpose of securities and broker-dealer regulation - which is investor protection. Congress' goal in enacting Gramm-Leach-Bliley was to ensure that U.S. investors receive the protections of the securities laws -- whether they purchase securities from a bank or a broker-dealer -- and the law made the Commission responsible for adopting rules that will achieve the goal of functional regulation.

When I began to work with the staff on this, the first thing I wanted to do was to improve the process and - hopefully - the outcome. The Commission's interim final rules were not well received -- an understatement, I know -- and we wanted to get back on a more positive, interactive track with the banks and the banking regulators. The problem was not just the substance of the rules, but also how we got there. To improve the process, we decided to tackle the bank dealer rules first. We reached out to the banks and held numerous meetings not just with lawyers, but with the banks' operational personnel as well to understand the practical business problems banks would face in complying with the new definition of "dealer" under Gramm-Leach-Bliley. It took us a long time to figure out what different banks do and how they do it, assess their transactions under the statutory framework, and develop proposals that would accommodate bank securities transactions.

After drafting rule proposals, the staff met with the bank industry groups and bank regulatory agencies to describe the new proposals and gauge the extent to which they met the needs of the banking industry. This process permitted the staff to make adjustments to accommodate industry concerns before presenting them to the Commission to be published for comment. On the whole, the bank representatives gave us very positive feedback. Feedback from the bank regulators was slightly less positive, but I think that everyone was pleased with our more transparent and interactive process.

 

[CrusaderFrank]

Been the topic of debate here on the board for a couple of years....

Well...here it is! Just published:
"‘Reckless Endangerment’ by Gretchen Morgenson and Joshua Rosner

1. 'In “Reckless Endangerment,” Gretchen Morgenson and Joshua Rosner argue that cozy connections between government and the financial industry were the primary cause of the financial crisis. In a series of clearly written narratives with many names, dates and figures, they show that government officials took actions that benefited well-connected individuals, who in turn helped the government officials. This mutual support system thwarted good economic policies and encouraged reckless ones. It thereby brought on the crisis, sending the economy into a tailspin.'
‘Reckless Endangerment’ by Gretchen Morgenson and Joshua Rosner - The Washington Post

2. "The Republican Party and especially its Tea Party wing have just acquired a new weapon of mass destruction — and it has nothing to do with any of Congressman Wiener’s rogue body parts. If they deploy this weapon effectively in the next election cycle — a big if — then they have the biggest opportunity to move the country rightward since Ronald Reagan took the oath of office back in 1981.

3. The Tea Party WMD stockpile is currently stored in book form: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. By Gretchen Morgenson, one of America’s best business journalists who is currently at The New York Times, and noted financial analyst Joshua Rosner, Reckless Endangerment gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two.

4. The villains? An unholy alliance between Wall Street, the Democratic establishment, community organizing groups like ACORN and La Raza, and politicians like Barney Frank, Nancy Pelosi and Henry Cisneros. (Frank got a cushy job for a lover, Pelosi got a job and layoff protection for a son, Cisneros apparently got a license to mint money bilking Mexican-Americans of their life savings in cheesy housing developments.)

5. If the GOP can make this narrative mainstream, and put this picture into the heads of voters nationwide, the Democrats are toast.

6. If Morgenstern and Rosner are to be believed, the American dream didn’t die of old age; it was murdered and most of the fingerprints on the corpse come from Democratic insiders. Democratic power brokers stoked the housing bubble and turned a blind eye to the increasingly rampant corruption and incompetence at Fannie Mae and the associated predatory lenders who sheltered under its umbrella; core Democratic ideas may well be at fault.

7. Big government, affirmative action and influence peddling among Democratic insiders came within inches of smashing the US economy.

8. The Great Villain, the man who almost ruined America according to the book, is James Johnson, long one of the most important members of the Democratic establishment. ...Barack Obama, impressed by this track record of discernment, reportedly asked him to lead Obama’s search in 2008 ...

9. Politically, this story is a killer app for the GOP. It demonizes Dems, lends itself to attack ads, divides Democrats between their Wall Street and union bases, and combines GOP hate figures in ways calculated to unify the GOP and heighten the intensity of the faithful. The story illustrates everything the Tea Party thinks about the corrupt Washington establishment and the evils of big government. It demonstrates the limits on the ability of government programs to help the poor.

10. ...if the GOP plays its cards right, Fanniegate could push this country into a new political era."
Fanniegate: Gamechanger For The GOP? | Via Meadia

Obama & the Democrats

China ratings house says US defaulting: report - Yahoo! News

 

[CrusaderFrank]

Palin and Ron Paul are the only 2 people on the R side who will speak up about this

 

[iamwhatiseem]

We all did.
Period

It was EVERYONE.

Including you.

 

[Truthmatters]

I did nothing to cause this mess and warned of it before it happened.

The right pretended everything was great.

 

[iamwhatiseem]

I did nothing to cause this mess and warned of it before it happened.

The right pretended everything was great.

Yeah right...your perfect.

 

[California Girl]

The blame for the loins share of this lies on the republican side.

Its their lack of inforcement of the laws that did this.

You really wanna keep up the partisan bullshit?

OK.

1977: Community Reinvestment Act: Passed by Dems, signed into law by Carter. That pushed financial institutions to loan money to the 'entire community', basically scrapping mean testing to qualify for mortgages. (Democrats fucked up)

1989: GHW Bush signed the Financial Institutions Reform Recovery and Enforcement Act. That put in place greater oversight of issuing CRA ratings to banks, because of the total debacle of the S&L crisis in the 80s. (Republicans did the right thing)

1994: Clinton signed the US on to the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. Article V(e)(iii) of that treaty states all people have a "right" to housing.

Because of Clinton signing the above, (and might I add, in a blatant effort to secure the low income voting block), Democrats re-wrote the CRA lending rules, creating Freddie and Fannie. That opened the 'sub prime' mortgages floodgate.

(In other words, Clinton - a Democrat - took the leash off the dogs of the banking industry, and coerced the banks to lend to people who could not afford to borrow. In an obscene and disgraceful 'affirmative action' to the mortgage industry.)

So the banks - being profit driven - started bundling these debts to sell on to make money. Color me shocked. Business is profit driven and not a charity!! No one could see that coming, right?

2002: GW Bush raised concerns about the mortgage bubble - specifically Freddie and Fannie. It was Franks (a Democrat) who is on the record as saying in response to repeated questions from Bush and other Republicans:

The issues were "overblown," and "there is no federal liability there whatsoever." and "I do not regard Fannie Mae and Freddie Mac as problems."

2003: Bush again raised his concern, and asked for more robust oversight.The Treasury Secretary John Snow, said "We need a strong, world-class regulatory agency to oversee the prudential operations of the GSEs and the safety and the soundness of their financial activities."

The NYT in Sept 2003 called Bush's plan "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago,"

It was Democrats that would not support that oversight. In Sept 2003 Barney Frank told the congressional hearings: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. And even if there were a problem, the federal government does not bail them out."

Democrat Maxine Waters said "We do not have a crisis at Freddie Mac and particularly Fannie Mae under the outstanding leadership of Frank Raines." (He's the guy to made huge contributions to the campaign of then candidate Barack Obama.)

2004: While Greenspan etc were desperately trying to keep the wheels on this fiasco, Barney Franks said "Wall Street will get over it."

2005: Greenspan, Snow and a variety of others were warning of the potential collapse. McCain sponsored the Federal Housing Enterprise Regulatory Reform Act (S. 190).

The Democrats on the Senate Banking Committee stopped the effort to bring in better accountability of GSEs.

2006: McCain warned again of the need to reform GSEs. Every Democrat on the Senate Banking Committee voted against.

I could go on but I really hate to spoon feed fools who won't even bother to research the facts for themselves.... I have no doubt that ******* idiots will demand 'links'.

 

[editec]

Who wrecked the economy?

Ask yourselves this question -> WHO was in the position TO WRECK it?

Jesus! ~ some of you folks must thinl that people with no authority over the economy are somehow responsible for it.

How forking stupid does one have to be to miss something so VERY obvious?

As stupid as you maybe? Cause you don't get the prize for the right answer either. No one entity or person is in charge of the economy.

I didn't remotely suggest that anyone is IN CHARGE of the economy, lad. The economy reacts to changes in circumstance and if those changes are vast enough the economy will impove or not

There were/are policy in place which caused the economic meltdown.

Most significant among those many policies SNAFUS were the regulations which allowed banks and other financial organizations to place bets in HIGH RISK investments.

That is misconception number one; that someone runs the economy and that's the person we should blame.

You really do need to READ A BOOK OR TWO about the specific events leading up to the meltdown.

You also might consider learning something about MACRO-economic.
CLEARLY your knowlege on that subject is pretty whimsical.

I would go with pretty much everyone. Because very few people in this country (which would include politicians) are educated about money. Personal finance isn't exactly taught in school and as a result most american aren't all that financially responsible. When most american's carry at least some credit card debt it should be little surprise that our government would reflect that in it's massive debt and the way it spends money.

Nice try, but nothing above is germane to the issue at hand.

 

[CrusaderFrank]

I did nothing to cause this mess and warned of it before it happened.

The right pretended everything was great.

"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis" Democrats in 2008

 

[iamwhatiseem]

.

 

[iamwhatiseem]

Perhaps the single largest lie in history of America...

[ame=http://www.youtube.com/watch?v=xC9k3oB83z4&feature=related]YouTube - ‪Barney Frank: I Didn't Push Home Ownership‬‏[/ame]

 

[California Girl]

We all did.
Period

It was EVERYONE.

Including you.

Well, yes.... that is true... but if idiots are gonna keep lying about the GOP being responsible, it is my civic duty to demonstrate how completely ******* stupid they are.

 

[Truthmatters]

HUD Archives: President George W. Bush Speaks to HUD Employees on National Homeownership Month (6/18/02)


So I've set this goal for the country. We want 5.5 million more homeowners by 2010 -- million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home. That is our goal. It is a realistic goal. But it's going to mean we're going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well.

 

[CrusaderFrank]

I blame Bush...he should have arrest Dodd and Frank and shipped them off to Gitmo

 

[iamwhatiseem]

HUD Archives: President George W. Bush Speaks to HUD Employees on National Homeownership Month (6/18/02)


So I've set this goal for the country. We want 5.5 million more homeowners by 2010 -- million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home. That is our goal. It is a realistic goal. But it's going to mean we're going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well.

What...you wanna play Tic Tac Toe simpleton?

1994...Bill Clinton..

To reverse this trend, President Clinton directed HUD Secretary Henry
G. Cisneros to work with leaders in the housing industry,
representatives of nonprofit groups, and officials at all levels of
government to develop a National Homeownership Strategy that would
increase ownership opportunities among populations and commu-nities
with lower than average homeownership rates.

This unprecedented public-private partnership is founded on a deeply
rooted and almost universally held belief that homeownership provides
important advantages that merit continued public support. The National
Homeown-ership Strategy cites four fundamental benefits:

"Through homeownership, a family...invests in an
asset that can grow in value and...generate financial
security."

"Homeownership enables people to have greater
control and exercise more responsibility over their
living environment."

"Homeownership helps stabilize neighborhoods and
strengthen communities."

"Homeownership helps generate jobs and stimulate
economic growth."

The validity of some of these assertions is so widely accepted that
economists and social scientists have seldom tested them. However, the
nature and signifi-cance of homeownership's actual benefits particularly
for lower income, minority, and younger families has profound
implications for national housing policies and programs. The following
pages will briefly review evi-dence on the four premises that undergird
the National Homeownership Strategy.

 

[Trajan]

the biggest driver, and 80% of the problem.....here ya go...plenty for everyone;

1988 Fannie Mae stock is added to the Standard & Poor's 500 stock index.

1991 James A. Johnson becomes Fannie Mae's Chairman and Chief Executive Officer. The $10 billion "Opening Doors to Affordable Housing" initiative is launched. In September, Fannie Mae promotes Lawrence M. Small to President and Chief Operating Officer.

1992 Fannie Mae becomes, for the first time, the largest issuer and guarantor of MBS, surpassing Ginnie Mae and Freddie Mac.

1993 Fannie Mae succeeds the "Opening Doors" goal of producing $10 billion in purchases for low- and moderate-income and other special housing needs by July, more than 16 months ahead of time.

1994 In an expansion of the "Opening Doors" campaign, the Trillion Dollar Commitment is launched, pledging $1 trillion in targeted housing finance that will serve 10 million low- to moderate-income families.

1996 Fannie Mae celebrates its 10th consecutive year of record earnings. Fannie Mae contributes $350 million in stock to the Fannie Mae Foundation to expand its consumer outreach efforts.

1998 James A. Johnson, Fannie Mae's Chairman and CEO, announces his intention to retire. Franklin D. Raines joins Fannie Mae as Chairman and Chief Executive Officer - Designate. In April, Fannie Mae announces the national availability of Flexible 97, a new mortgage product designed to expand home ownership through a low three percent down-payment requirement. On September 30, Fannie Mae celebrates its 30th anniversary as a private, shareholder-owned company. The corporation achieves record business volumes in purchases, commitments, MBS issued, profits, and families served. Fannie Mae reaches $1 Trillion mark in mortgage books of business outstanding.

1999 Franklin D. Raines becomes Fannie Mae's Chairman and Chief Executive Officer. Conventional loan limit increases to $240,000.

1999 Fannie Mae changes its Mission Statement to:
Our Mission is to tear down barriers, lower costs, and increase the opportunities for home ownership and affordable rental housing for all Americans. Because having a safe place to call home strengthens families, communities, and our nation as a whole.

2000 Conventional loan limit increases to $252,700.

2001 Conventional loan limit increases to $275,000.

2001 American Dream Commitment® (ADC) is launched. It is a ten-year, $2 trillion pledge to increase home ownership rates and serve 18 million American families. The project is based on a six-point plan consisting of the Mortgage Consumer Rights Agenda; the National Minority Home ownership Initiative; the Opportunity for All Strategy; the America's Living Communities Plan; eHomeownership; and the Affordable Rental Housing Leadership Initiative.

2002 Conventional loan limit increases to $300,700.

2002 As part of an ongoing commitment to transparency and financial disclosure, Fannie Mae announces it will, beginning in 2003, register its common stock with the SEC and file its periodic financial and current event disclosures with the SEC on an ongoing, required basis. Chief Executive Officer Frank Raines and Chief Financial Officer Tim Howard voluntarily follow Securities and Exchange Commission (SEC) Order No. 4-460 by certifying the company's most recent periodic financial reports.

2003 Conventional loan limit increases to $322,700.

2003 Fannie Mae voluntarily registers its common stock with the Securities and Exchange Commission (SEC) under Section 12(g) of the Securities Exchange Act of 1934.

2003 Fannie Mae debuts a Corporate Governance Web site that reiterates the cornerstones of the company's corporate governance principles and practices -- openness, integrity, responsibility, and accountability.

2003 Fannie Mae continues to enhance its mortgage-backed securities disclosures, making more information available through its corporate Web site, fanniemae.com.

2004 Conventional loan limit increases to $333,700.




note-

A) it is a GSEas in government-sponsored enterprise

B) when the dust cleared after Raines was exposed for cooking the books in 2002, that should have been a clarion call...but....see "A"

c) inho the tipping point is right here;

1972 Chairman Oakley Hunter joins Fannie Mae. On February 15, Fannie Mae makes its first conventional mortgage purchase, marking the beginning of a truly national secondary market for conventional mortgages.

1976 For the first time, Fannie Mae purchases more conventional loans than FHA and VA loans.


take the blue pill....