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When the Democrats took control of congress in January 2006, unemployment was at 4.6%, the Dow was at 12,600, and the GDP had been growing like crazy since Clinton balanced the budget. In other words, what the democrats "inherited" in 2006 was a thriving, robust economy. Since 2006, the Democrats had control of all the committees. It was Democrats who pushed subprime mortgages. In my opinion, the worst you can say about the GOP was that they proposed the de-regulation of financial markets in 1999 (I think it was 99) that Clinton signed. However, no one knew what was going on with those crazy mortgage-backed securities. If it was so clear that Wall Street was abusing the de-regulation, why didn't the Democrats propose to re-regulate Wall Street when they took control in 2006? Answer? No one had a clue what Wall Street was doing. But everyone knew that banks were being reckless by writing so many subprime mortgages, which was based on liberal doctrine that everyone is entitled to a home, even if they can't afford one. Spence is 100% right when he says there is blame on both sides. I'd love to know what Spence thinks when he sees Obama, time and time again, putting all the blame on the Republicans, who had been out of power for almost 3 years when the economy collapsed. If Spence is right (and he is), then Obama is either an idiot or a liar, and there simply isn't another option. (In my opinion, Obama is BOTH an idiot and a liar). |
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Think of a big reason why the economy in the mid 2000's was doing well to begin with. A rise in International investment combined with low rates made credit easy to obtain and plenty of investors wanting to cash in on mortgage backed securities which seemed magical considering the housing market which continued to grow. Everybody was in on this, not just the minorities or poor, in fact they represented a fraction of the market. This drove the bubble that eventually got as big as it could and housing prices -- across the board -- started to decline rapidly for everyone, which resulted in the sub-prime ARM's to ratchet up their rates. Many of which were a result of predatory lending and people not knowing what they were really getting into. If properly regulated perhaps this could have been controlled (there still would have been a lot of sub-prime foreclosures) but considering the risky loans had been bundled with good loans (and sold off as AAA) nobody knew where the risk really was...and everybody pulled out. Crash... When the Dem's took Congress in 2006 they inherited this time bomb waiting to go off. Not a lot of liberal ideology here, unless you think the entire house of cards was build to satisfy some government mandate, largely during a period where the GOP held both the Executive and Legislative branches of our government. Oh wait, didn't President Bush push hard for more sub-prime lending because he felt that home "ownership" was good for America? Wasn't this conservative thinking? That the people owning their own home is more stable and responsible than looking for a government handout? "Fannie Mae, Freddie Mac and the federal Home Loan Banks -- the government-sponsored corporations that handle home mortgages -- will increase their commitment to minority markets by more than $440 billion, Bush said." Source: Bush aims to boost minority home ownership - CNN And shortly after the rate of sub prime lending goes through the roof. The primary Dem opposition to reform (in 2003 and 2006) was driven more by the accounting scandals rather than concerns over sub-prime lending. Some of their issue were valid, some not...but I don't believe much of this reform would have had an impact on the derivatives market and mortgage backed securities. And when Dems took over in 2007 they immediately pushed for more regulation to help ensure the same issues wouldn't arise again. Bush, focused on the present, was pushing taxpayer funded subsidies to help mortgage holders in over their head! What a RINO :hihi: The net is you're basing opinion off of a portion of the story...only a crazy person (i.e. mental disorder) would do this in good faith. Quote:
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If you want someone to blame for this mess blame your neighbor for pulling equity from his house to buy a boat he can't afford, the short-term'ism of our markets, shady lenders out to make a quick buck, politicians trying to hold their power, Wall Street, a lack of personal responsibility etc... etc... etc... Like I've said, there's plenty of blame to go around... -spence |
[Spence -
"didn't President Bush push hard for more sub-prime lending " No, he did not. He pushed banks to make loans to minorities that could be paid back, based on traditional qualifying criteria. Spence, let's put it out there, OK? If you have evidence to suggest that Bush was a fan of reckless mortgages (subprime), either post it, or admit that you made it up. For the 10th time, Bush was so alarmed by the recklessness of subprime mortgages, that he wanted to regulate Fannie and Freddie, with rules that they couldn't buy those crappy pieces of paper. The Democrats blocked that legislation. I'm sorry, Spence, if that fact doesn't support your personal agenda, but it's a fact nonetheless. "And when Dems took over in 2007 they immediately pushed for more regulation to help ensure the same issues wouldn't arise again. " Can you support that please? You may well be right, I have no knowledge. But you seem to take great liberties, at times, in creating your own realities which promote your agenda. If you can't back that up, please admit you made it up. "I don't believe Obama was sworn in until Jan 2009. By your reconing that would make today January 2nd 2012!" Do you ever, ever get tired of being 100% wrong? When I say the "Republicans" were out of power, I mean because they LOST CONTROL OF CONGRESS IN JANUARY 2006. You see, Spence, this country is not a totalitarian dictatorship. It's a democracy with seperation of powers and checks and balances. In our system of government, the LEGISLATURE, not the executive branch, writes legislation. I also see that once again, you cowardly dodged my other question, which was this. If you say there's blame on both sides (although you go on and on and on about the GOP, I haven't seen you post anything you think the libs did wrong), what do you think of Obama repeatedly saying it was all the Republican's fault? |
Spence -
I read that CNN link that you posted. If you had read that link before assuming that it supported your inane conclusion that Bush pushed subprime mortgages, you'd see that the bill called for the feds helping minorities come up with down payments. The bill would have subsidized down poayments for folks that could afford the monthly payment, but who didn't yet have a large enough down payment. You see Spence, the notion that sufficient down payments be part of a mortgage is NOT what the subprime mortgages were about. That's traditional financial underwriting. |
Spence, when the GOP proposed the bill to regulate Fannie and Freddie, here is what senator John Mccain said in support of the bill...
"If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.” Here is the link... The Squeaky Wheel: S. 190 - “Federal Housing Enterprise Regulatory Reform Act of 2005” Here was Barney Frank's response to the proposed bill: ""These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Here is a link... Barney Frank's Fannie and Freddie Muddle - Sam Dealey (usnews.com) And Barney Frank gets re-elected over a brilliant patriotic hero like Sean Bielat!! Kudos to the voters in Frank's district... |
Spence, you also say it's just "politics" that Obama puts all the blame on the GOP, even though you think there is blame on both sides. I agree, it's just politics, and most politicians do stuff like that.
But remember, Obama campaigned on some vague notion called "change". He had no accomplishments he could point to, so he promised that HE would be the one to bring change to Washington, HE would be the one to put "politics as usual" aside, He, and only HE, could do things differently. So I really, really love it when Obama defenders say things like "all politicians do that". Because that should NOT be an acceptable excuse from someone whose entire campaign was based on the promise of "change". Your response??? |
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Was it Bush's fault? Not directly, but he was the president at the time so he'll get the blame. Was it republican policies? I have seen NO reregulation initiated by repubs that had any impact to the recession. None. |
I've posted this link before - excellent read
Angelo Mozilo - 25 People to Blame for the Financial Crisis - TIME |
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The fact is (search able in old threads) that I've mentioned mistakes by Democrats many times. And have pretty much described this as a systemic problem in every instance, counter to the assertion that liberal ideology and (gasp) Barney Frank are the root cause of the financial meltdown. This simple isn't founded in the reality you claim is the basis for a clean bill of mental health. Obama gets to point the finger at the Republicans because he's the President and they're doing it to him. Hell, Obama wasn't even sworn in yet before the GOP was branding it his recession, and has blamed Obama for not being able to magically fix it every since. Do we really think that a hallmark of Republican party -- lower regulation -- is the answer to preventing a similar calamity with our economy? I'm not sure I know anyone who seriously thinks so. -spence |
From Spence "Yes, I did see School House Rock. Loosing Congress didn't mean that Bush was out of power, just as the GOP taking the House doesn't mean that Obama is not still ultimately in charge. i.e. the buck stops there" The king of blame Bush.:rotf2:LMAO
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I also remember reading a study that showed lending enhanced by CRA wasn't found to be any more risky than prime. Quote:
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I do question how serious Bush was about reform though. Considering in 2003 and 2005 the GOP was in control of Congress you'd think they could have gotten something passed if they really wanted. Additionally, you can't ignore other regulatory changes to the SEC made in 2004 under Bush that allowed all the giant banks to increase their leverage as well. From everything I've read, this pretty much created a pump between F/F and the banks to crank out loans, obfuscate all the risk and make a hell of a lot of money in the process. Quote:
-spence |
Spence -
"Do we really think that a hallmark of Republican party -- lower regulation -- is the answer to preventing a similar calamity with our economy? I'm not sure I know anyone who seriously thinks so." Spence, I don't think less regulation is what's needed. We need regulation to prevent financial institutions from selling mortgage-backed cecurities the way it was done before. But your memory is unbelievably selective. Part o fthe problem was subprime mortgages. I posted a link to a bill that the GOP proposed that would have tightened the controls a bit at Fannie and Freddie. That bill was defeated by the Democrats. Therefore, it seems to me that "less regulation" isn't an ide athat the GOP has a monopoly on. You keep bending over like a contortionist to avoid criticizing Obama. Obama has never conceded that the Democratic party did anything to cause the recession. All he does is blame Democrats. Yet you do admit that both sides were at fault. If you think the Democrats were partly to blame, but Obama says it was all the GOP's fault, why can't you criticize Obama for his stance? Answer? You are not rational. There is no fairy tale or excuse you won't hang your hat on to avoid critizing the Messiah. Obama's party controlled the legislature since January 2006, yet in his inauguration speech, all he did was blame Bush. |
Guys, does anyone think the people who signed up for these mortgages should be the ones to blame the most? I'm sick of hearing people saying they were mislead and they didn't know what they were signing up for. They are the ones most at fault. When you sign something, you have to do some due diligence and look into what you are signing. I bought my current house during the high peak of the market, I looked at what I made and what I could afford. Could I have bought a bigger house then? sure I could have but I didn’t get greedy and take a gamble on an adjustable rate staying where it was. I went with a fixed rate and a monthly payment I could afford (even re-financed since to a much lower fixed rate). Many people these days don’t take ownership for their actions and when things change (adjustable interest rates going up for example), they cry poor me and blame someone else (mostly looking to the Government to fix their problem). If they took 20 minutes to read about adjustable rates and how it effects monthly payments they should have been able to figure out the enormous risk. We wouldn’t need regulation and Government intervention if it weren’t for all these idiots running around buying houses they can’t afford. Since we have too many people in this Country without a clue, we now need the Government to step in once again and manage the rules. What a shame.
Am I being unreasonable here? |
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What ticks me off is that these people acted stupidly, and now there are govt programs to modify those loans so those idiots can afford them. I get no pleasure from seeing someone lose their house. That being said, it's not fair that those who did the right thing still have to work our fingers to the bone to stay in our homes, and those that acted stupidly get rewarded. |
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Instead, Democrats create massive entitlement programs for these "victims" that must be paid for by those who did absolutely nothing wrong. Then when the next election comes around, democrats (and the media, with the exception of one TV network) tell those victims that the scary republicans want to take away their welfare, so they better get out and vote democrat. It's a very effcetive political strategy. It's so effective that our culture takes it for granted that liberals care more about the poor than conservatives. That's despite the fact that (1) study after study shows that conservatives give more time and money to charity than liberals, and (2) conservatives want poor people to become successful; liberals want the poor to stay poor, so that there is a permanent underclasss (of democrat voters) that's addicted to the welfare that liberals promise. The last thing that liberals want is for poor people to get wealthy, because if they did...they'd vote Republican! |
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Considering that Bush had a majority in the Senate and the House, it would seem odd that they would drop such a substantial issue as they could have clearly gotten something passed had they wanted. The only reasonable analysis is that both sides still didn't get it. Quote:
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-spence |
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Spence, go ahead and google this... " Obama republicans drove car into ditch", and see how many hits you get. Obama: GOP Drove The Country Into A Ditch. 'Now They Want The Keys Back' (VIDEO) | TPM LiveWire OK, Spence. Time to see if you have a shred of intellectual honesty. Since you claim that both sides are to blame (and I agree), and you now know that Obama blames only the GOP (unless syou can show me a link where admits that liberal policies were also at fault), what do you think? What do you think of Obama putting all the blame on the GOP? Please Spence, don't say "that's what politicians do", OK? Because Obama, remember, campaigned on some vague notion called "change". So he can't do that stuff and say it's "just politics", because he said he'd be different. Good luck with this one. And good luck convincing yourself that you didn't already know what I was talking about. |
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Posted from my iPhone/Mobile device |
Guess I am late to the thread.
In my opinion, which I'd be happy to back up with a !@#$load of facts :rotf2:, President Obama did indeed inherit this mess. Culprits: Jimmy Carter, Bill Clinton and Alan Greenspan. |
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January 11, 2011 Let Them Eat Widescreen TVs and I-Phones Monty Pelerin The disparities in income between the lower and middle income Americans and those doing well continues to widen. In addition to the debt time-bomb, these income disparities represent another potential explosion. Ambrose Evans Pritchard provides some data: The retail data can be quirky but it fits in with everything else we know. The numbers of people on food stamps have reached 43.2m, an all time-high of 14pc of the population. Recipients receive debit cards - not stamps -- currently worth about $140 a month under President Obama's stimulus package. The actual number of jobs contracted by 260,000 to 153,690,000. The "labour participation rate" for working-age men over 20 dropped to 73.6pc, the lowest the since the data series began in 1948. My guess is that this figure exceeds the average for the Great Depression (minus the cruellest year of 1932). The US Conference of Mayors said visits to soup kitchens are up 24pc this year. There are 643,000 people needing shelter each night. Jobs data released on Friday was again shocking. The only the reason that headline unemployment fell to 9.4pc was that so many people dropped out of the system altogether. This schism continues to widen in American society. The well-off are doing just fine thank you. Many of the rest continue to descend into the abyss of joblessness, hopelessness, homelessness, poverty and bankruptcy. Social cohesion will not hold on our current path. A thesis that I offered several years ago is that the credit expansion was a deliberate attempt to cover up America's structural decline. Ironically, by not facing up to the structural and incentive problems ten to twenty years ago when they were tractable (economically if not politically), the political elite created this current crisis. It was not their intent to create a crisis, merely to avoid hard decisions. They did so by "kicking the can down the road" using credit as their vehicle. This "solution" enabled people to live beyond their means. "Let them buy widescreen TVs and I-phones" was the modern version of "bread and circuses." Pritchard points out a similar view: Raghuram Rajan, the IMF's former chief economist, argues that the subprime debt build-up was an attempt - "whether carefully planned or the path of least resistance" - to disguise stagnating incomes and to buy off the poor. "The inevitable bill could be postponed into the future. Cynical as it might seem, easy credit has been used throughout history as a palliative by governments that are unable to address the deeper anxieties of the middle class directly," he said. Now, "let them eat widescreen TVs and I-phones" appears to be the solution. It is equivalent to the "let them eat cake" remedy, with the same potential ending. The clock is ticking on the debt burden. It is only a matter of time before we are openly recognized as just another version, albeit a very large one, of the PIIGS. Just as important, however, is the ticking clock on social cohesion in this country. The sense of entitlement cultivated by government over the years may be as intractable as the debt problem. It has corrupted the spirits and souls of men. It has destroyed the family structure. It has left a generation or two without skills and no reason to obtain them. It has transformed human beings into zombie-like creatures with little purpose in their lives. Removing them from the government teat is equivalent of separating a new-born from its mother. There is no way out, as Pritchard alludes: There is no easy solution to creeping depression in America and swathes of the Old World. A Keynesian `New Deal' of borrowing on the bond markets to build roads, bridges, solar farms, or nuclear power stations to soak up the army of unemployed is not a credible option in our new age of sovereign debt jitters. The fiscal card is played out. The government is insolvent, both financially and morally. |
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History will show (has shown?) that Alan Greenspan's extraodinarily accommodative monetary policy was the fuel for the crisis (which, by the way, is not over). The dry tinder poised to set off the fuel was a dumbing down of lending standards via "Affordable Housing" goals, starting with the enforcement of the Community Reinvestment Act late in Bush I, and then even more aggressively through Clinton's term. CRA and affordable housing ultimately led to bad loans being made. Low interest rates led to a lot of bad loans being made. And, low interest rates led to massive leverage in the corporate sector as well. But it started with housing and consumer spending. As far as the Federal Reserve (which is neither, by the way), people have been trying to figure out why Alan Greenspan acted so recklessly, bringing interest rates to near zero percent from 2001-2004, even as the recession ended in 2001. Did he abandon his free market beliefs? Was he just plain dumb? Or was there another reason? John Williams of Shadowstats posits an interesting theory, and it is worth posting here: Quote:
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"It's too far into the future to worry about."
And there in lies the problem. Politicians only look out over 4 years and what they need to do to get re-elected, afraid to take bold and courageous stands for the benefit of the country. Not even a 5 year plan. :( |
[COLOR="Red"]Recognizing that the U.S. economy was sagging under the weight of structural changes created by government trade, regulatory and social policies — policies that limited real consumer income growth
ask yourself: has the "weight of structural changes created by government trade, regulatory and social policies — increased...or decreased.....and what does that mean for the future and real consumer income growth :confused: |
We can definitely show that real incomes are down ... if you're using a true cost deflator (i.e., measure of inflation).
The CPI as published by BLS sure as hell ain't it. http://i215.photobucket.com/albums/c...nflation-5.gif |
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I've not found a video of the testimony to assess the context, but I do know that David John is a die hard conservative in the Heritage Foundation. I'd like to see a detailed analysis of this... Quote:
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been waiting for a follow up to this...not sure I've seen the loans as a result of the expansion of the CRA cited as the cause of the crash but the expansion of the CRA is certainly the turning point that can be cited as the beginning of government forcing banks to abandon long held lending practices in order to expand home ownership and in order to not be punished by the government...lenders became creative and translated that to the rest of the market, the government was essentially insuring their risk.....Fannie and Freddie became a repository for questionable loans...the sheer number of loan writing institutions and the risky instruments grew exponentially out of that...
as your friend Thomas Sowell said recently...banks were doing fine for nearly a hundred years prior with established lending practices... "Prior to the rapid escalation of home prices, federal bank regulators began using the 1977 Community Reinvestment Act (CRA) to press for racial equality. The issue was the statistical difference in approval rates, not a claim that most blacks could not get mortgage loans. New regulations required that the banks not just look for qualified buyers, but make a requisite number of loans to low and moderate income buyers (quotas). Then, when legislation was proposed in 1999 to permit banks to diversify into selling investment securities, the Clinton White House urged "banks given unsatisfactory ratings under the CRA be prohibited from enjoying the new diversification privileges." The Congress happily obliged. Another factor was HUD's beginning legal action in 1993 against mortgage bankers that declined a higher percentage of minority applicants. HUD also set a 42% target for Freddie Mac and Fannie Mae (FM & FM) to buy mortgages for people whose income were less than an area's median. Banks, sensing that FM & FM were implicitly guaranteed, where only too happy to not only issue these mortgages, but to buy FM & FM debt as well. (In 2003, about 3,000 banks held FM & FM debt for 100% of their capital requirements.) The "icing" was FM & FM's creative accounting that misclassified $11 trillion of sub-prime assets. Then in 2002, Bush II urged Congress to pass the American Dream Down Payment Act, subsidizing down payments of prospective buyers with incomes below a certain level. Sowell has now set the stage, and readers have no problem understanding what happened. Interest-only teaser rate ARMs rose to counter rising prices and down-payments. By 2005, interest-only mortgages had risen to 31% of all new mortgages, up from less than 10% in 2002. In Denver, Seattle, and Phoenix it was 40%, and 66% in the S.F. Bay area. Speculators jumped into the fray (28% in 2005, 22% in 2006) adding further fuel to the fire, and happy homeowners took out $1.13 trillion in home equity loans in 2007. However, the storm on the horizon was the rise of interest rates to avoid inflation (1% in 2004, to 5.25% in 2006), making monthly payments more expensive and reducing the demand and prices for housing, and everyone takes a loss - including the banks (about $40,000 per foreclosed house), and especially speculators, minorities, and those with ARMs and interest-only loans. (Interesting Note: As of October, 2008, 7% of Bank of America's mortgages were CRA lendings, and 24% of its defaults.) Bailing out FM & FM, with their sub-prime laden inventories, cost the government more than that for all the private banks put together. Sowell also has no problems believing that many sub-prime loans were foisted upon unaware and uninformed buyers by predatory lenders - especially involving contracts for repairs or remodeling on credit. Bottom Line: The law of unintended consequences strikes again - helping minorities was a good intention, but backfired. We're all to blame, though admittedly some more than others. Deregulation was not the problem, rather misguided regulation. the government is now doing the same thing for healthcare:uhuh: |
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The CRA itself was a fairly innocuous law signed by Jimmy Carter in '77. It wasn't until the Boston Federal Reserve came out with a flawed study in 1992 (late in Bush I's term) that banks were discriminating against Black people re: home loans, that it began to be enforced. There were a slew of lawsuits that accelerated after that Fed report came out, under the auspices of the CRA. For example, AG Reno (Clinton I) sued several banks in 1993 (First National Bank of Vicksburg and Blackpipe State Bank for racial discrimination and in 1994 sued Chevy Chase Federal Savings Bank. Furthermore, the fed was under pressure to use CRA as a stick for banks seeking to open new branches and ATM machines and merge with other banks. For example, in 1993, the federal reserve denied an application by Shawmut to acquire New Dartmouth Bank. The transaction was only allowed to proceed after it paid a million fine to compensate minority applicants who may have been denied loans. This arrangement was squeezed out of the bank by AG Reno. And so on (I won't list all the lawsuits and enforcement actions here). Most people don't know this, but in 1995, at the behest of Pres Clinton, CRA regulations were revamped to give it more teeth. Quote:
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There are a good number of articles by economists (i.e. not pundits or pundit economists :hihi:) that basically come to the same conclusion. That the CRA hasn't changed much since 1995, yet the sub-prime issue didn't inflate until a decade later, that the default rate of sub-prime loans originated under CRA regulation was about the same as prime, and that a huge % of sub-prime lending was actually made by banks outside of CRA regulation. Sowell is being a bit misleading when he tosses out numbers like "HUD also set a 42% target for Freddie Mac and Fannie Mae (FM & FM) to buy mortgages for people whose income were less than an area's median." This was certainly true from 1997-2000, although lending "below median" is a pretty big group and doesn't necessarily indicate sub-prime borrowers. The target for those actually considered "low income" was only 14% and nothing in the CRA stipulates a bank has to knowingly make a bad loan. Interestingly enough, both these numbers were actually raised in 2001 (50% and 20% respectively) while Denny Hastert was Speaker. Further, the act that started these targets was put into place in 1992. I believe the general idea is to keep the GSE's aligned with what they believe the market will actually be doing over the coming few years. In other words, it's reactive rather than proactive. The net being that these regulations have been around for a while, but didn't seem to cause any problems until just recently. While the CRA may certainly be a factor -- as any regulation impacting the mortgage market would be -- it doesn't seem to deserve the "root cause" status that pundits like to give it. Sowell is going to oppose anything that smells of free market intervention, although I'd note that the first commercial bank in the USA was a government run institution :soon: -spence |
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