dont forget S&P rating subprime loans as AAA
Not only did the '96 amendments to the Community Reinvestment Act require the lowering of lending standards, ACORN and the NAACP ran around pulling Jesse Jackson Rainbow Coalition extortion rackets on banks that deigned to deny loans, "make these loans and we won't tell everyone what a racist bank you are."
Yoni's lying.
Nobody, esp not "community organizers", can force banks to do give their money away and take on bad borrowers.
Banks wrote (sub-prime) mortgages when it was to their advantage, not to hand out charity to red-line neighborhoods. It was mortgage flipping, to pocket fees and then sell mortages into the Wall St casino and/or FF as falsely rated AAA mortgages.
Again, most of the sub-prime mortgages to under qualified people were written by non-regulated non-banks. Regulated banks even created subsidiaries to be unregulated and get into the sub-prime game.
Yoni is a ing liar, and he knows it. ing shilling for and protecting/defending the banks as "victims" of the govt and communistic community organzers?
G M A F F B
Last edited by boutons_deux; 10-13-2011 at 09:46 AM.
pulling the race card to defend the banks
the black ppl and their ty credit caused it
The last of six findings in the report:
Why were unqualified mortgage applicants directed to the subprime loans? Because conventional mortgage rules would not tolerate the ACORN invention known as "undo ented income."The AHC used the Community Reinvestment Act provisions and coercive threats to force banks into lowering loan underwriting standards and entering into agreements that funneled profits to ACORN
Banks didn't trick anybody in to subprime mortgages. It was the only vehicle available to people who they were being extorted into loaning money.
Banks got bullied
True that.
Yoni, you're just wrong. Its not about the loans because if the deregulation of the financial industry has proven anything is that those smart people on Wall St will create instruments that they can use to make money even if the risk to the economy at large is too hard.
I can completely ignore your incorrect assertion that sub prime loans were due to the government and STILL pin the blame squarely on the Wall St because:
-of the way MBS were sold.
-of the ratings these horrible securities and the companies that sold them received
-of the way firms like Goldman Sachs not only sold these securities, but bet on them failing by buying CDS on the very MBS they sold as AAA. As much as you guys foam at the mouth over Climategate emails taken out of context I would have thought you would have a field day with the emails from some of these firms.
-By the way these firms manipulated the bailout to ensure that the CDS were paid out IN FULL even though they knew what was going on the whole time.
Its not about the loans. Its about the way Wall St leveraged our entire economy on bad investments and bet on the investments failing that is the real issue here.
I don't concede your points on the loans because they're flat out wrong but I don't even think its what matters.
To make an analogy, its like a homeowner taking out fire insurance on a home, lighting it on fire, collecting the money from the insurance and then turning around and saying it was the home builders fault for not making the house out of non flammable material.
Oh yeah, and since you don't have to prove a vested interest in order to get a CDS - you could extend this to the homeowner burning down all of his neighbors houses as well in order to collect on insurance he took out on their homes.
But yes, it was the homebuilders fault.
And, that's where Fannie Mae and Freddie Mac come in.
The activities in which they engaged in the early '00's are the real scandal. That's why Newt Gingrich suggested Barnie Franks should be in jail.
More on that later. Lunch!
Fannie and Freddie has absolutely nothing to do with every bullet point I outlined. Nothing. That was ALL Wall St.
so who exactly from ACORN has gone to jail for such blatant criminal activities?
"unqualified mortgage applicants directed to the subprime loans"
no lender WAS FORCED to sell the mortgage.
"the ACORN invention known as "undo ented income." "
You LIE. "stated income"/liar's loans were available in all the markets, certainly those that got hit bad, FL, CA, AZ, NV. Had NOTHING to do with ACORN or CRA. Same for 2nd and 3rd mortgages.
Yeah, right.
ACORN pulled the same racket on banks as Jesse Jackson did on major corporations. "Nice company you have there, be a shame if someone smeared it all over the country as being racist because your management is insufficiently diverse for our liking. Tell you what, promote a few brothahs and sistahs, and throw a bit of coin at my Rainbow Coalition, and we'll move on to some other racist company."
It wasn't any different except, ACORN had the Community Reinvestment Act with the threat of fines and penalties for not playing along. I believe Barack Obama was on a team of ACORN attorneys that filed a few suits against banks for not lending to people that were clearly unqualified. So, the banks capitulated or settled, lent money using the subprime mortgages (because traditional mortgages wouldn't tolerate the lax qualification standards that had to be developed for the borrowers), and even threw money at ACORN pet projects.
Yoni's consolidating his total lack of credibility and seriousness with every post. That's a damn deep hole he's digging for himself.
banks "capitulated"???
Ah, found the article...To make an analogy, its like a homeowner taking out fire insurance on a home, lighting it on fire, collecting the money from the insurance and then turning around and saying it was the home builders fault for not making the house out of non flammable material.
Oh yeah, and since you don't have to prove a vested interest in order to get a CDS - you could extend this to the homeowner burning down all of his neighbors houses as well in order to collect on insurance he took out on their homes.
But yes, it was the homebuilders fault.
Blame Fannie Mae and Congress For the Credit Mess
Once again, it can be boiled down to one root cause. Government.By CHARLES W. CALOMIRIS and PETER J. WALLISON
Many monumental errors and misjudgments contributed to the acute financial turmoil in which we now find ourselves. Nevertheless, the vast ac ulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) -- and their sponsors in Washington -- are largely to blame for our current mess.
How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse.
It is important to understand that, as GSEs, Fannie and Freddie were viewed in the capital markets as government-backed buyers (a belief that has now been reduced to fact). Thus they were able to borrow as much as they wanted for the purpose of buying mortgages and mortgage-backed securities. Their buying patterns and interests were followed closely in the markets. If Fannie and Freddie wanted subprime or Alt-A loans, the mortgage markets would produce them. By late 2004, Fannie and Freddie very much wanted subprime and Alt-A loans. Their accounting had just been revealed as fraudulent, and they were under pressure from Congress to demonstrate that they deserved their considerable privileges. Among other problems, economists at the Federal Reserve and Congressional Budget Office had begun to study them in detail, and found that -- despite their subsidized borrowing rates -- they did not significantly reduce mortgage interest rates. In the wake of Freddie's 2003 accounting scandal, Fed Chairman Alan Greenspan became a powerful opponent, and began to call for stricter regulation of the GSEs and limitations on the growth of their highly profitable, but risky, retained portfolios.
If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing? The answer was their affordable-housing mission. So it was that, beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to grow. Subprime and Alt-A originations in the U.S. rose from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period the quality of subprime loans also declined, going from fixed rate, long-term amortizing loans to loans with low down payments and low (but adjustable) initial rates, indicating that originators were scraping the bottom of the barrel to find product for buyers like the GSEs.
The strategy of presenting themselves to Congress as the champions of affordable housing appears to have worked. Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the "arrangement" with the GSEs at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing." The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure.
In light of the collapse of Fannie and Freddie, both John McCain and Barack Obama now criticize the risk-tolerant regulatory regime that produced the current crisis. But Sen. McCain's criticisms are at least credible, since he has been pointing to systemic risks in the mortgage market and trying to do something about them for years. In contrast, Sen. Obama's conversion as a financial reformer marks a reversal from his actions in previous years, when he did nothing to disturb the status quo. The first head of Mr. Obama's vice-presidential search committee, Jim Johnson, a former chairman of Fannie Mae, was the one who announced Fannie's original affordable-housing program in 1991 -- just as Congress was taking up the first GSE regulatory legislation.
In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.
Now the Democrats are blaming the financial crisis on "deregulation." This is a canard. There has indeed been deregulation in our economy -- in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few -- and this has produced much innovation and lower consumer prices. But the primary "deregulation" in the financial world in the last 30 years permitted banks to diversify their risks geographically and across different products, which is one of the things that has kept banks relatively stable in this storm.
As a result, U.S. commercial banks have been able to attract more than $100 billion of new capital in the past year to replace most of their subprime-related write-downs. Deregulation of branching restrictions and limitations on bank product offerings also made possible bank acquisition of Bear Stearns and Merrill Lynch, saving billions in likely resolution costs for taxpayers.
If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.
Mr. Calomiris is a professor of finance and economics at Columbia Business School and a scholar at the American Enterprise Ins ute. Mr. Wallison, a senior fellow at the American Enterprise Ins ute, was general counsel of the Treasury Department in the Reagan administration.
Its amazing that you think that article addresses anything I brought it up.
It addresses the origins of the 2008 financial meltdown. Who cares what you bring up...it's pretty much drivel, anyway.
This is just patently false. Wall St has concocted all sorts of investment vehicles for all manner of securities. Thinking that it had to be tied to homes is foolish as and ignores so much.If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.
I brought up extremely valid points. Anyone who was actually interested in understanding the causes of the financial crisis would have already come across all of them and made an effort to understand their roles as opposed to regurgitating some tired simplicity of "government and democrats are bad". Its sad to see the state of intellectual honesty and curiosity you display.
Furthermore, you're a weak man, Yoni. You challenge yourself to be a better poster and then fail to live up to it time and time again. I would be ashamed to have your lack of a spine and will power.
Carry on.
"Mr. Calomiris is a professor of finance and economics at Columbia Business School and a scholar at the American Enterprise Ins ute. Mr. Wallison, a senior fellow at the American Enterprise Ins ute, was general counsel of the Treasury Department in the Reagan administration."
AEI is about as fair-and-balanced as Fox Repug Network. Just another UCA-financed stink tank pumping out pro-UCA/anti-govt propaganda.
Well, Economics academia is quite a corrupt pile of crap in general (due respect, Scott). These guys take money to publish "studies" that say that isn't close to reality.
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