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It wasn't F&F forging do ents about those loans to make them seem better than they were. They were also not in charge of putting a rating on them.
It was certainly a fairly unregulated system open to abuse, and that's exactly what happened.
Individual loans were packaged into bulk loan packages by F&F which were then "rated" by the agencies so they could be converted to bonds. F&F was all over this. They weren't "duped" by dishonest originators. They were all dirty. Everybody got paid.
It wasn't F&F forging do ents about those loans to make them seem better than they were. They were also not in charge of putting a rating on them.
It was certainly a fairly unregulated system open to abuse, and that's exactly what happened.
Blaming the mess on public policy and GSEs is a smokescreen. They played a role, but the bust was global. The banks got too greedy and soaked us twice ---in the mortgage bubble and then in the bailout. It was financial fraud. The Commodities Modernization Act and countercyclical Fed policy had far more to do with it than unqualified buyers.
Last edited by Winehole23; 01-26-2015 at 09:27 AM.
The Community Reinvestment Act of 1977 is a favorite boogeyman for some, despite the numbers that so easily disprove it as a cause." PussyEater, you readin'?
so much for the GSEs, the CRA of 1977, irresponsible poor folks and minorities causing the Great Panic of 2008.A study by the Federal Reserve shows that more than 84 percent of the subprime mortgages in 2006 were issued by private lending ins utions. The study found that the government-sponsored enterprises were concerned with the loss of market share to these private lenders — Fannie and Freddie were chasing profits, not trying to meet low-income lending goals.
and those criminal mortgage clients, LYING on their mortgage applications! horrors!
The good-faith mortgage originators trusted the applicants on their word and whatever the they put on their applications, required no other docs, and had no way to verify any of the info.
fiduciary responsibility was not upheld, due diligence, pointedly overlooked.
the GSEs were subsequently used as a heat sink for systemic fraud.
the implicit guarantees of the government were upheld. the GSEs made all the bad paper they acquired payable.
TSA: nothing to say about his own OP or the various replies to it.
Shocking. An editorial uses a book by someone with every motive to exaggerate for sales as evidence.
I'm convinced.
New Study Shows Why It Makes Absolutely No Sense to Blame the Poor for the Financial Crisis
Irresponsible lending might have been one of the many causes of the financial crisis—but not just irresponsible lending to poor people, according to a new study.
“The large majority of mortgage dollars originated between 2002 and 2006 are obtained by middle- and high-income borrowers (not the poor),” the authors write.
“In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007.”
Rich people tend to take out larger mortgages, of course, but the fact is that the amount of money poor borrowers failed to pay back was just never that significant, as this chart from the paper shows.
In case you have a hard time believing that so many larger mortgages could have gone into default, The Washington Post just published a series of stories on subprime, sometimes predatory lending in relatively affluent places such as Prince George’s County, Md., outside Washington, D.C.
http://www.truthdig.com/eartothegrou...+the+Headlines
the 1%, VRWC, Repugs blaming the poor and the fed govt for the Banksters Great (Jobs) Depression is just one of their NON-STOP LIES that the their base swallows as Bible "truth".
I'm looking at you, Yoni!
And it definitely reflects in your postings.
Nuclear be@ner
yours continually circles the drain
Breaking Silence, Richard Fuld Speaks on Love, Putin and ‘Rocky’
‘You can say whatever you want about me. I’m O.K. because I know my mother loves me,’ ” he said to a crowd of 1,300 financial professionals. “And my mother still loves me. She’s 96.”
Explaining the origins of the financial crisis, Mr. Fuld avoided any mention of investment banks’ eagerness to issue subprime mortgages. (Lehman had an enormous portfolio of subprime loans.)
At the root of the crisis, in his view, was the government’s push for homeownership.
capitalism only works if it starts at the top and filters down.
“Lehman Brothers at the point of 2008 was not a bankrupt company.”
http://mobile.nytimes.com/2015/05/29/business/dealbook/richard-fuld-breaks-his-silence-since-lehmans-collapse.html?_r=0
trickle down works!
govt FORCED lenders, esp non-regulated/shadow-bank lenders, to write, AND FLIP, all those toxic mortgages!
He obviously, from the stupidity above, didn't get to the head of Lehman with smarts, so he must be one nasty, back-stabbing, cheating, filthy sonofa .
Last edited by boutons_deux; 05-31-2015 at 09:53 AM.
Meh. Another half-truth rehash.
"government is all to blame, and Democrats bad".
Plenty of blame to spread around for the financial crisis. Government, private sector both played a part.
If all you got is an op ed, blaming one party, and just the government, it is either being deliberately dishonest, or shockingly ignorant.
Which is it, dishonest or shockingly ignorant?
"Plenty of blame to spread around for the financial crisis. Government..."
govt? how so? F & F? they don't lend money, they insure mortgages, and buy mortgages already written by regulated and UNregulated lenders who are required to qualify borrowers against Federal regulations.
false dilemma, the two can coexist. in fact, the latter is a common precondition of the success of the latter. posters lap up newspaper lies like milk in the saucer if it flatters their political preference.Which is it, dishonest or shockingly ignorant?
yep.
Trump's economic gurus let the zombie out of the closet. It never died:
http://www.bloomberg.com/view/articl...nancial-crisisTwo of Donald Trump’s economic advisers, Lawrence Kudlow and Stephen Moore, have revived an idea about the source of the financial crisis that really should have been put to rest long ago.
In a column published and rebroadcast by many politically sympathetic sites, they lay the blame for the credit crisis and Great Recession on the Community Reinvestment Act, a 1977 law designed in part to prevent banks from engaging in a racially discriminatory lending practice known as redlining. The reality is, of course, that the CRA wasn’t a factor in the crisis.
What’s so wonderful about their article, which is an attempted take down of the Clintons, is that they miss the very obvious ways Bill Clinton’s administration did contribute to the financial crisis. But doing that would have been at odds with their anti-regulatory philosophy.
Here’s the heart of the Kudlow and Moore case:
The seeds of the mortgage meltdown were planted during Bill Clinton’s presidency. Under Clinton’s Housing and Urban Development (HUD) secretary, Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in “credit-deprived” areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. If banks didn’t comply with these rules, regulators reined in their ability to expand lending and deposits.They then argue that this was part of a broader campaign to make loans to unqualified low-income folk, which in turn caused the crisis.
Let’s just be clear about what the CRA does and doesn’t do. It simply says that if you open a branch office in a low income neighborhood and collect deposits there, you are obligated to do a certain amount of lending in that neighborhood. In other words, you can’t open a branch office in Harlem and use deposits from there to only fund loans in high-end Tribeca. A bank must make credit available on the same terms in both neighborhoods. In other words, a “red line” can’t be drawn around Harlem, a term that dates to when banks supposedly used colored pencils to draw no-loan zones on maps.
Showing that the CRA wasn’t the cause of the financial crisis is rather easy. As Warren Buffett pal Charlie Munger says, “Invert, always invert.” In this case, let’s assume Moore and Kudlow are correct, and the CRA did require banks to lend to unqualified, low-income buyers. What would that world have looked like?
Here’s what we should have seen:
- Home sales and prices in urban, minority communities would have led the national home market higher, with gains in percentage terms surpassing national figures;
- CRA mandated loans would have defaulted at higher rates;
- Foreclosures in these distressed urban CRA neighborhoods should have far outpaced those in the suburbs;
- Local lenders making these mortgages should have failed at much higher rates;
- Portfolios of banks participating in the Troubled Asset Relief Program should have been filled with securities made up of toxic CRA loans;
- Investors looking to profit should have been buying up properties financed with defaulted CRA loans; and
- Congressional testimony of financial industry executives after the crisis should have spelled out how the CRA was a direct cause, with compelling evidence backing their claims.
Yet none of these things happened. And they should have, if the CRA was at fault.
If that isn’t enough to dismiss the claim, consider this: Where did mortgages, especially subprime mortgages, default in large numbers?
It wasn’t Harlem, Philadelphia, Baltimore, Chicago, Detroit or any other poor, largely minority urban area covered by the CRA. No, the crisis was worst in Florida, Arizona, Nevada and California. Indeed, the vast majority of the housing collapse took place in the suburbs and exurbs, not the inner cities.
Now consider that much of the rest of the developed world also had a boom and bust in residential real estate that was worse than in the U.S. Oh, right -- those countries didn’t have the CRA.
What's more, many of the lenders that made the subprime loans that contributed so much to the collapse were private non-bank lenders that weren’t covered by the CRA. Almost 400 of these went bankrupt soon after housing began to wobble.
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